# Water Street Healthcare Partners
Water Street Healthcare Partners is a Chicago-based private equity firm that invests exclusively in middle-market healthcare companies; founded in 2005, it remains independent and in May 2026 closed its sixth fund with $1.9 billion in commitments.[1](https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund) The firm's investment adviser, Water Street Healthcare Partners, LLC, is a Delaware limited liability company registered with the SEC (registration approved March 29, 2012) with affiliated general-partner entities for each fund; its Form ADV was last updated March 30, 2026.[2](https://www.9at.com/Adviser/801-73050)
| Fact | Detail |
|---|---|
| Founded | 2005, Chicago, Illinois[3](https://www.sec.gov/comments/s7-18-09/s71809-170.pdf) |
| Founders | Tim Dugan, Jim Connelly, Kip Kirkpatrick[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) |
| Sector | Private equity, healthcare only[5](https://www.sec.gov/Archives/edgar/data/310764/000031076407000082/sykex991.htm) |
| Funds | Six funds, I through VI[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) |
| Latest fund | Fund VI, $1.9 billion, closed May 13, 2026 at its hard cap[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) |
| Capital under management | $9.4 billion per the firm; ~$7.5 billion of equity capital per third-party analysis[6](https://waterstreet.com/about) • [4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) |
| Deal record | More than 180 investments and acquisitions building 48+ companies (firm figure)[1](https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund) |
| Status (September 2026) | Independent, SEC-registered adviser, actively investing[2](https://www.9at.com/Adviser/801-73050) |
## History and founding
The firm was founded in 2005 by partners who had invested in healthcare businesses together at [One Equity Partners](https://www.edgepedia.org/one-equity-partners), the investment arm then associated with a global money-center bank.[3](https://www.sec.gov/comments/s7-18-09/s71809-170.pdf) • [4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) The founding partners were Tim Dugan, Jim Connelly, formerly president and chief operating officer of Caremark International, and Kip Kirkpatrick.[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) In its own 2009 comment letter to the SEC, the firm described itself at founding as a small "emerging firm" with no dedicated fundraising staff.[3](https://www.sec.gov/comments/s7-18-09/s71809-170.pdf)
Its first two fundraises were placed by [Credit Suisse](https://www.edgepedia.org/credit-suisse): $370 million for the first fund in 2006, exceeding an original $300 million target, and $650 million for the second fund in 2008.[3](https://www.sec.gov/comments/s7-18-09/s71809-170.pdf) The first fund's $370 million was invested in eight healthcare businesses.[3](https://www.sec.gov/comments/s7-18-09/s71809-170.pdf) An early deal set the pattern of corporate carve-outs (buying a business unit split off from a larger corporation): in June 2007 the firm bought Physiotherapy Associates, Stryker's outpatient physical therapy business operating 475 clinics in 31 states, for approximately $150 million in cash.[5](https://www.sec.gov/Archives/edgar/data/310764/000031076407000082/sykex991.htm)
## Strategy
Water Street buys middle-market healthcare companies, often as carve-outs from larger corporations. Transactions typically range from $50 million to $500 million in enterprise value, across three sub-sectors: medical products and diagnostics, pharmaceutical and life sciences companies, and healthcare services.[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) • [1](https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund) The firm excludes biotechnology, hospitals and nursing homes, and early-stage companies without positive cash flow.[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) In 2007 it described its expertise in corporate divestitures from healthcare companies including [Johnson & Johnson](https://www.edgepedia.org/johnson-and-johnson), Smith & Nephew, and DuPont.[5](https://www.sec.gov/Archives/edgar/data/310764/000031076407000082/sykex991.htm) Carve-out counterparties over the firm's history have included [Medtronic](https://www.edgepedia.org/medtronic), Gentiva, and Matria.[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
## Funds by the numbers
Per a May 2026 trade-press analysis, the firm manages approximately $7.5 billion of equity capital across six funds:[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
- Fund I, 2006 vintage, ~$370 million[3](https://www.sec.gov/comments/s7-18-09/s71809-170.pdf)
- Fund II, 2008 vintage, $650 million[3](https://www.sec.gov/comments/s7-18-09/s71809-170.pdf)
- Fund III, ~$750 million (vintage disputed, see below)[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
- Fund IV, 2017, $860 million per the analysis; the Form D filed September 14, 2017 lists a total offering amount of $800 million[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
- Fund V, 2022, $1.4 billion[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
- Fund VI, 2026, $1.9 billion[1](https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund)
**Fund VI** closed on May 13, 2026 at a first and final closing, oversubscribed and at its $1.9 billion hard cap. The firm's announcement and [Kirkland & Ellis](https://www.edgepedia.org/kirkland-and-ellis), which advised on the closing, both confirmed the amount and structure.[1](https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund) • [7](https://www.kirkland.com/news/press-release/2026/05/kirkland-represents-water-street-healthcare-partners-on-close-of-fund) At $1.9 billion it is the firm's largest fund, roughly 2.9 times the size of Fund II and about $500 million larger than Fund V.[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
Two record discrepancies remain unresolved. The Form D for Water Street Healthcare Partners III, L.P. was first filed on July 25, 2012, while the trade-press analysis gives Fund III a 2014 vintage; and the Fund IV size differs between the $800 million Form D offering amount and the $860 million in the analysis.[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
## Portfolio and exits
The firm reports more than 180 investments and acquisitions building 48+ healthcare companies since 2005 (its About page gives a slightly higher figure of more than 185).[1](https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund) • [6](https://waterstreet.com/about) Notable deals and outcomes include:
- Physiotherapy Associates, acquired from Stryker in 2007 for approximately $150 million[5](https://www.sec.gov/Archives/edgar/data/310764/000031076407000082/sykex991.htm)
- Premise Health, exited to OMERS Private Equity in 2018[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
- MedSpeed, investment made August 2024[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
- Pillr Health, acquired from Renovus Capital Partners in January 2026[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
- Performance Health, exited March 9, 2026, the most recent of approximately 32 exits per PitchBook data cited in the analysis; the buyer and terms were not reported in the sources reviewed[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/)
Other portfolio companies named in the analysis include Long Grove Pharmaceuticals, Solvias, Viant Medical, Pathnostics, Alcor Scientific, and Discovery Life Sciences.[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) The firm's own "at a glance" disclosure reports 22 current companies, over 22,000 employees worldwide, $5.6 billion of total company sales, and 10.7% aggregate revenue growth.[6](https://waterstreet.com/about)
## Recent developments
Three developments mark the period. First, fundraising: Fund VI's $1.9 billion close in May 2026, the firm's largest vehicle to date.[1](https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund) Second, senior hires: Joseph C. Papa, former CEO of Bausch + Lomb and Perrigo, joined as an operating partner in 2023, and David M. Johnston, former President of PPD, joined in 2025.[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) Third, deal activity: the MedSpeed investment (2024), the Pillr Health acquisition (2026), and the Performance Health exit (March 2026).[4](https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/) Tim Dugan is the firm's managing partner.[1](https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund) The adviser's Form ADV remained active as of its March 30, 2026 update.[2](https://www.9at.com/Adviser/801-73050)
## References
1. "Water Street Closes $1.9 Billion Fund," waterstreet.com, https://waterstreet.com/news/water-street-healthcare-partners-closes-1-9-billion-fund
2. "WATER STREET HEALTHCARE PARTNERS, LLC - Summary" (Form ADV-derived record), 9at.com, https://www.9at.com/Adviser/801-73050
3. Water Street Healthcare Partners comment letter to the SEC, File No. S7-18-09, https://www.sec.gov/comments/s7-18-09/s71809-170.pdf
4. "Fund of the week: Water Street Healthcare Partners," p05.org, https://www.p05.org/fund-of-the-week-water-street-healthcare-partners/
5. Stryker Corporation press release, June 4, 2007 (SEC exhibit), https://www.sec.gov/Archives/edgar/data/310764/000031076407000082/sykex991.htm
6. "About | Water Street," waterstreet.com, https://waterstreet.com/about
7. "Kirkland Represents Water Street Healthcare Partners on Close of $1.9 Billion Fund," kirkland.com, https://www.kirkland.com/news/press-release/2026/05/kirkland-represents-water-street-healthcare-partners-on-close-of-fund
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*Topic: Encyclopedia › Society and history › Economics and business › Finance › Venture capital and private equity › Private equity and buyout firms of the Americas › Buyout and control firms*
*Initially written Sep 17, 2026 · Edited: Oct 11, 2026; Oct 15, 2026; Oct 25, 2026*
*Copyright 2026 EdgeChat AI, a subsidiary of Biostate AI.*
License: Edgepedia Community License 1.0, https://www.edgepedia.org/edgepedia/license