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Thursday, November 10, 2016

Q3 2016 Healthcare Services M&A Pulse - Volume, Value, Multiples

Volume Down, Values Up

Based on available data, Q3 2016 M&A activity in the US healthcare services industry saw a decline in deal volume and an increase in deal values when compared to Q2 2016. Overall YTD M&A activity in this sector remains frothy and on-par with the record breaking numbers that were seen in 2015. However, with the US presidential elections in the rearview mirror and president elect Trump promising as part of his campaign platform to repeal and replace “Obamacare”, the healthcare services industry could be headed into rough waters that could dampen activity as we look to close out Q4 2016 and into 2017.

By the Numbers
Healthcare Services total deal volume in Q3 2016 came in at 214, which was a decrease of 15% from Q2 2016 and a decrease of 18% on a year-over-year basis. Total deal volume was again lead by Long-Term Care with 69 deals, followed by; Other Services (53), Physician Groups (30), Hospitals (19), Labs, MRI (13), Home Healthcare (10), Rehabilitation (9), Behavioral Health (7), and Managed Care (4).

Healthcare Services total deal value in Q3 2016 was $20B, which was up by almost 24% when compared to Q2 2016, however it was down 82% when compared year-over-year. Total deal value was lead by Hospitals with a figure of $8.3B, followed by; Labs, MRI ($5B), Other ($3.1B), Long-Term Care ($2.9B), Home Health Care ($422M), Managed Care ($159M), and Rehabilitation ($112M).

Healthcare services average TTM 2016 enterprise valuation multiples (EV/EBITDA) in Labs/Imaging again had the highest figure for the third quarter of 16.9x followed by; Home Health/Hospice (15.0x), Ambulatory Care/Dental/Rehab (13.9x), Outsourcing (13.1x), Managed Care (11.0x), SNF’s/LTACH’s (9.7x), and Acute Care (9.6x).

(Sources: Health Care M&A Information Source, S&P Capital IQ, PwC)


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