Steven Richards
Appearances
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And I'm a big believer in market studies as an important tool to demonstrate total addressable market, market share, differentiation, defensibility, et cetera. But speak to your advisors early because these processes are not always a linear path and they are extended processes in most cases over the last couple of years. So if you think you're too early, you're probably not.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And those are the areas that I would sort of focus on because that's where you're really going to get hammered in diligence.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Well, I don't even know if I can answer the Michigan-Ohio State game for fear of retribution here, but – I would say I'm going to go based on my son's preference there. He's more of a Michigan guy over Ohio State. He's six years old, loves Tom Brady. And so anything that Tom Brady did or does, he wants to do. So we're going to roll with Michigan there, although it sounds bad.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
You know, sounds weird saying that out loud as an Indiana guy. But I'm an Indiana guy through and through. I will root. I will root for the kiddies when, you know, when my son wants to go to a game, as long as they're not playing Indiana. But I'm a Hoosier.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Uh, I love Cignetti, but I, you know what? I didn't grow up in Indiana fan, believe it or not. I grew up a Kansas Jayhawk fan. I've got family that kind of has roots in Nebraska. And, uh, as a matter of fact, my, my freshman year in Indiana, Kansas was on the opposite side of the final four.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And I wasn't sure who I was going to cheer for if Kansas one, as it turned out, Indiana ended up playing Maryland and did not win that game. But, um, So I don't know that I have a personal affinity to Bobby Knight aside from the fact that he's an Indiana legend. I didn't grow up watching him per se, but you can't go wrong with Coach Knight.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Well, yeah. And a bunch of the guys that he coached at Illinois that made that final four run, I went to high school with and knew pretty well. So I do love Bill Self. But when I was growing up watching Kansas, it was Roy Williams at the helm. Oh, sure. Yeah. But yeah, I still like the Jayhawks. I still root for the Hoosiers, but we'll follow the Jayhawks just due to family ties.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
sort of slowed down to a pace that no one was really used to and it was uncomfortable for most. And amidst an increasing interest rate environment or unfavorable interest rate environment, we saw hold periods that have extended to record highs and record lows with return capital to LPs. And I think what we had all hoped
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
But yeah, we're a Hoosier family now.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Thanks for the kind words, Scott. Thanks for having me.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
after 2024, where we did see an uptick across deal value and volumes, generally speaking, we thought that 2025 was going to come off to a faster start. So I think we've really kind of not had the start that we'd hoped for in 2025. And I think there's a few reasons for that.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
You know, there's some policy changes that are abound in Washington, and that's creating some uncertainty, whether it be with tariffs or reimbursement policy and things of that nature that are just causing some pause. We've also had more regulatory oversight
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
with private equity involvement into provider services businesses and we've had much more regulatory oversight at the state level so there's been a lot of dust that has needed to settle and i think a lot of that did happen last year and now i think what we're seeing is we're dealing with some uncertainty with with tariffs and you know cost of capital inflation and really what that's causing is
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
more of a flight to quality. And the A plus assets are trading and folks are paying out the nose for those assets. But that's setting some unrealistic expectations for the B plus assets because the bid ask spread remains very wide.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And so when you have unrealistic expectations, what happens is the deals kind of pull to the right, the deals get extended or timelines get extended, sometimes fail altogether. And I think that Many times, whether you're an entrepreneur or you're a private equity seller, nobody wants to be the guinea pig and run the risk of a failed process or the well being poisoned, so to speak.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
So you see really a slowdown. And if you're not ready to bring an A-plus asset out to market, I think that a lot of folks have elected to look to the continuation vehicle as an option or just hold for longer periods.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
That's always a concern for me. And I think that in some cases, it's a strategy for buyers to hold very firm on their bids and in the hopes that the deal will come back to them. And once it does, the perception is, well, you've got a busted process and
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
we're going to now sharpen our elbows during diligence, find more than what we likely would have originally, and use that as an opportunity to retrade down. So ultimately, I think it leads to leakage of value in most cases, not all cases. There's been many processes that I've been a part of in the past where we elected to pull
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
the asset out of market because we knew that we had an inflection point, you know, a big contract or some opportunities where we really hit some tailwinds. And we wanted to get a little bit more time in the rear view mirror so that we would get full credit on a run rate basis for that growth.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
So it depends on the circumstances, certainly, but I think in an environment where there is uncertainty, the perception is generally going to be that there was something wrong. And yeah, Once you go out to market and you got to go back to the same universe, I think it just presents opportunities to have a less than ideal outcome when it's all said and done.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Thank you for the kind words, Scott. It's nice to be with you today. First and foremost, I want to thank you for the opportunity. You've done so much for the healthcare industry, broadly speaking, so it's a pleasure to be here with you today. I don't know if the Hoosiers are ever going to come back to prominence, but we are waiting with bated breath now that we have a new basketball coach.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
We're seeing a ton of activity in... pharma and pharma services. I think the outsourced services spend compressed a little bit in the last couple of years with funding kind of being pulled back, but I think we're seeing some uptick in funding into the biotechs, and that's creating an uptick in the broader pharma services landscape.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
We're also seeing a much higher need for clinical IT infrastructure, data and analytics. With growing trial complexity, there's a need to accelerate cycle times, increase productivity. and overall reduce the trial timeline, which then improves access to therapies. And the faster you can get to market, the better advantage that you have. And so I think
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
IT infrastructure and analytics are supporting that. We've seen a big uptick in specialty pharmacy and in home infusion with an aging population, chronic disease prevalence increasing. And in these chronic disease states that are often recurring patients or even lifetime patients,
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
There's been a really good business model that you can build around specialty pharmacy, which used to have really thin margins. But whether it's autoimmune, neuro, oncology, gastro, rheumatology, dermatology, I think what you're seeing is those that can create a sticky relationship either with the health systems or with the patients or with the drug manufacturers.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And then you throw a little bit of technology enablement for the case management, clinical management, analytics, etc., You're seeing really, really high outlier type valuations in specialty pharmacy slash home infusion. We've also seen a resurgence in healthcare IT. I come from the health system world myself, so I'm all too familiar with the financial pressures that
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
operators are facing and shifting reimbursement, wage inflation. You know, if you were to draw a baseline or develop a baseline forecast for a health system, it would look like a falling knife. And so every year, Hospital boards have to figure out where they're going to find improvement.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And I think healthcare IT is a really good place to improve workflow management, improve revenue cycle, disintermediate cost, improve quality, improve access, all those things that kind of create those sticky revenue streams. So those would be some of the areas that I think are really, really hot right now. Market access also being one of those in the pharma services side of things.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Provider services to me is a tricky one for all the reasons that I mentioned about shifting reimbursement models and just uncertainty as to what reimbursement rates are going to be as we move forward, what the budget's going to be to support that in Washington, regulatory oversight at the federal level with private equity involvement. And as I mentioned before, the state level
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
We kind of became a football school this year, right? So we'll see how things go.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
regulatory oversight. I think for us in particular, we've sort of decided to focus on more narrow swim lanes within provider services. We love behavioral with the aging population. We love home health and hospice. And there's some others, but we generally are looking at outsourced business services platforms that are supporting that ecosystem.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And whether that's healthcare IT or more human capital, clinical staffing, things like that, that will help improve efficiencies is probably a better lane for us right now because of those uncertainties. But I think when you see any kind of specialty practices, right, women's health, gastro-oncology, things like that, I think you're going to see more successful outcomes there.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
But at the end of the day, I always think about it's really your buyer's buyer that you have to be concerned about. And, you know, there is... more momentum from payers as a buyer and for these really scaled assets. Whereas before, I felt like when you got into that, call it 20, 30 million, 40 million of EBITDA range, you start having a problem as to who's going to buy this.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And I think that's starting to transform a little bit with more of the provider involvement in those processes. But that's an area where we're trying to more narrowly define our swim lanes, frankly.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
yeah i agree i think historically those have been areas where private equity was not quick to rush into and what we've seen you know from a size standpoint 10 million of arr break even or better that's an entry point for a lot of middle market sponsors to acquire uh tech enabled i would say more on the software you know sas you know truly sticky recurring revenue But it varies, right?
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
How truly differentiated are you in the market? How sticky are those customer relationships? And what value are you providing to your customers? Are you able to demonstrate a true ROI to the customer, whether it's cost or revenue, that's repeatable?
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
And if you can do that, you're going to improve the valuation substantially, but not all tech companies are created equal, particularly in healthcare, where if you're a point solution and a health system, you know, chief IT officer is evaluating different opportunities.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
I mean, if you have 50 million different options out there and you got to figure out which ones you're going to choose and what's the cost of having all those different options out there, it's going to be taxing, right? So you have to be broad enough to serve more than one need, but also be specialized enough to get some true ROI out of it too. So-
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Yep. So I think we're, we're very focused on specialty RCM revenue cycle management. You know, you don't want to go against the R1s and the ensembles of the world, but you,
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
I think the denials management is a key area that a lot of folks are, are paying attention to, you know, on the front end, mid cycle, pre-auth, coding compliance, verification of benefits and other technologies that are, you know, disintermediating cost into the health system. Um, particularly, you know, inpatient rooms and operating rooms where a lot of the costs are, uh, specialty EHR, EMR, uh,
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Behavioral being one of those subspecialty areas where getting outcomes data that's reliable is challenging and marrying that with the clinical data and the billing and the revenue cycle. So those are areas that we're particularly paying attention to on the healthcare IT side of things. And then pharma and pharma services, specialty pharmacy and home infusion is an area.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
Pharmaceutical compounding, data and analytics. and in pharma i.t broadly speaking as it relates to what should sellers do in this marketplace i think given the regulatory complexity policy uncertainties inflationary pressures supply chain disruption potential with tariffs and just
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
the broader sharp elbows that are in diligence right now, you have to have a clear and actionable value creation plan to present when you go to market. Many firms, even sponsor-owned firms, are finding that their finance and accounting functions, particularly their data, presents risks that could leak value.
Becker Private Equity & Business Podcast
Navigating Healthcare Investment Banking: Insights from Palm Tree’s Steven Richards 3-21-25
So making sure that you kind of cross all the T's and dot all the I's, whether it's quality of earnings and things of that nature before you go to market. And doing a gut check on your regulatory cybersecurity and broader risk management are things that you want to get in front of.