In 2021, more private equity companies will list their healthcare provider portfolio companies more than ever before, and a research company believes that this number will almost double by 2022.

Data analysis and research company PitchBook predicts that at least 10 private equity-backed healthcare provider platforms will go public next year, breaking the record of 6 such IPOs in 2021.The prediction is part of PitchBook U.S. Private Equity Outlook in 2022.

PitchBook found that there are 6 IPOs of PE-backed healthcare providers in a year that may not sound like many, but in contrast, there have been 0 to 2 IPOs per year in the past 10 years.

So what explains the unprecedented surge this year and the larger projected surge next year? Rebecca Springer, a private equity analyst at PitchBook and one of the authors of the report, said that this is actually very simple: the stock market is performing well.

“Currently, the open market multiples are very, very strong, so under the same conditions, if you list the company instead of selling it to strategic investors, you can get a better return on investment,” Springer Say. It is pointed out that the forecast of more PE-backed companies going public in 2022 is not limited to healthcare.

PE support companies that went public this year include doctor support companies Agilon Health and Privia Health, home care providers Aveanna Healthcare and InnovAge, behavioral health provider LifeStance, and non-surgical fat-reduction chain Elite Body Sculpture.

PitchBook excluded two PE-backed healthcare providers that went public in 2021 through the merger with special-purpose acquisition companies Cano Health and CareMax Medical Group. Both Cano and CareMax focus on providing value-based primary care for the elderly.

Private equity investments in the healthcare sector have driven growth in many areas of the industry, including Annual transaction value almost tripled Between 2010 and 2019.

As we all know, private equity firms are tight-lipped about how to operate their business. Springer said that even so, the increased public information disclosure required by listed companies does not seem to deter those who are prepared to take this step. She said that, on the one hand, disclosure is done at the company level, not at the private equity company level. Any listed company must decide whether the return is worthwhile, but it is not so flexible in strategy.

“These multiples are so attractive on the open market that they are rewarded for being able to do this,” Springer said.

The PitchBook report stated that there is reason to believe that public investors will want to buy companies whose business models revolve around value-based reimbursement, which are gradually gaining momentum among primary care providers, hospitals, and experts, and gaining bipartisan political support. Most of these are achieved through Medicare Advantage, a health insurance plan for people over 65 years of age that provides Medicare benefits through commercial health insurance companies.

“They think this is the future of the industry, and they want to be on the right side of this trend,” Springer said.

The PitchBook report emphasizes that cosmetic dermatology is an area where PE-supported suppliers can list their companies next year. Others include home care, behavioral health, and veterinary medicine. Springer said that large PE-backed dental groups like Aspen Dental can also do well on the open market.

Since the IPO this year, the stock prices of some PE-backed suppliers have fallen. For example, as of Friday, Agilon’s stock price has fallen by nearly a quarter since its April IPO. Aveanna’s stock price fell nearly 44% in the same time period.

Springer said that this may be a consideration for some PE companies considering listing their companies, but it will not discourage everyone.