Welsh Carson bolsters healthcare portfolio

The New York-based private equity firm is helping to fund the acquisitions strategy of dental company GeoDigm, as the healthcare sector gains ground on the S&P 500.

New York-based private equity firm Welsh, Carson, Anderson & Stowe is investing $100 million in dental prosthetics company GeoDigm Corp., part of a recent flood of investments that has caused the healthcare industry to overtake information technology as the largest industry on the S&P 500.

The investment by Welsh Carson will go toward supporting future acquisitions by GeoDigm, including a new deal for Green Bay, Wisconsin-based Lord’s Dental Studio. The acquisition will be GeoDigm’s fifth purchase of a dental lab, while the company is actively seeking out other targets of varying sizes.

“The dental lab industry is highly fragmented and ripe for consolidation,” Welsh Carson general partner Sean Traynor said in a statement. “We believe GeoDigm has a truly differentiated technology platform upon which to build an industry leader.”

Welsh Carson, which focuses on information and business services and healthcare, is in the midst of raising its eleventh fund with a target of around $4 billion. The firm held an initial close last July on $2.5 billion, and expects to wrap up fundraising by May or June of this year.

In addition to GeoDigm, the firm has previously invested in healthcare providers Aptuit, Select Medical and Lincare Holdings, while it recently added former InnerPulse chief Daniel Pelak as a senior operating partner with a focus on healthcare activities.

Earlier this week, healthcare stocks became the largest of the 10 sectors traded on the S&P 500, representing 16.98 percent of the index. Many investors expect such companies to fare better in the recession as consumers will likely cut back on leisure goods rather than medical needs.