Premier's $2.6 Billion Take-Private: Strategic Retreat or Value Play?

The $2.6 billion take-private of Premier, Inc. by Patient Square Capital has sparked debate over whether the deal represents a strategic retreat from a challenging public market or a calculated value play leveraging private equity (PE) expertise. To assess this, one must examine the transaction through the dual lenses of PE value creation strategies and broader healthcare sector restructuring.

Private Equity's Evolving Role in Healthcare

Private equity firms have increasingly targeted healthcare in recent years, drawn by its recession-resistant nature and the sector's structural tailwinds, including an aging population and digitization trends. According to a report by Bain & Company, healthcare carve-outs—where PE firms acquire divisions of larger companies—can deliver internal rates of return (IRR) approximately 20 percentage points higher than traditional buyouts when executed effectively. This premium stems from the ability to streamline operations, reduce complexity, and focus on scalable assets. For instance, KKR's acquisition of Eugin Group and Carlyle's purchase of Baxter's kidney care unit exemplify how PE firms reposition assets for innovation and growth.

Premier's deal aligns with this trend. Patient Square Capital, a healthcare-focused firm managing $14 billion in assets, has a history of investing in companies like Summit BHC and Access Telecare. By taking Premier private, the firm gains the flexibility to deploy capital toward enhancing supply chain services, data analytics, and consulting offerings—areas critical to healthcare's shift toward value-based care.

Strategic Rationale for Going Private

Premier's decision to go private offers several strategic advantages. First, the 23.8% premium paid to shareholders—$28.25 per share—reflects confidence in the company's potential to innovate without public market constraints. Public companies often face pressure to meet short-term earnings targets, which can stifle long-term investments. Going private allows Premier to prioritize initiatives such as AI-driven analytics and virtual care integration, which require sustained capital and operational agility.

Second, the transaction provides access to Patient Square's capital base, enabling Premier to accelerate its technology roadmap. As noted by PwC, PE firms in 2025 are emphasizing AI-driven strategies and operational efficiency gains to offset higher capital costs in a high-interest-rate environment. Premier's leadership has highlighted that the deal will suspend dividend payouts to reinvest in growth, a common tactic in PE value creation.

Strategic Retreat or Value Play?

Critics might argue that the deal signals a retreat from regulatory and competitive pressures in the public healthcare sector. The No Surprises Act and post-pandemic market volatility have made it harder for healthcare companies to navigate public scrutiny. However, the transaction's structure—backed by a healthcare-savvy PE firm and not contingent on financing—suggests a value-oriented approach. Patient Square's prior success in scaling healthcare technology firms, such as its $4.1 billion acquisition of Patterson Companies, underscores its ability to unlock value through operational and technological enhancements.

Moreover, the deal fits broader industry patterns. A 2025 midyear outlook by PwC notes that PE firms are prioritizing pricing optimization and long-term operational transformation to meet IRR targets. Premier's focus on data and supply chain solutions directly addresses these priorities, positioning it to capitalize on healthcare's shift toward cost containment and efficiency.

Conclusion

Premier's take-private deal is best characterized as a value play rather than a strategic retreat. By leveraging Patient Square's capital and expertise, the company gains the flexibility to invest in innovation and operational efficiency—key drivers of PE value creation. While regulatory and macroeconomic headwinds persist, the transaction aligns with industry trends that favor private ownership for strategic repositioning. As healthcare continues to evolve, Premier's transition to private ownership may serve as a blueprint for how PE can catalyze growth in a sector ripe for transformation.