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Wednesday, June 7, 2017

Q1 2017 Healthcare Services M&A Pulse - Volume, Value, Multiples


Healthcare Services Continues To See Elevated Activity  

While debate continues over the repeal and replacement of Obamacare, the US Health Services industry continues to be a hotbed of activity as Q1 2017 deal volume ticked up by 0.9% and 2.6% over prior year and prior quarter. Deal value however saw a sharp decline primarily as reporting for this sector was not as forthcoming with $7.9 billion disclosed, resulting in a decline of 49.3% and 58.2% over prior year and prior quarter. The shift towards value based reimbursements continues to have an effect on health systems M&A activity as they look to exercise more control over referral streams and ancillary services. This was evidenced by the 48 transactions among Physician Groups which experienced the greatest deal volume growth of 109% and 78% over prior year and prior quarter.



By the Numbers – Deal Volume 


Healthcare Services deal volume in Q1 2017 saw a total of 235 transactions. Total deal volume was lead by Long-Term Care with 73 deals, followed by; Physician Groups (48), Other Services (47), Hospitals (19), Home Healthcare (13), Behavioral Health (12), Labs, MRI (10), Rehabilitation (9), and Managed Care (4). 


By the Numbers – Deal Value 


Healthcare Services deal value in Q1 2017 resulted in a total of $8B in transactions. Total deal value was lead by Physician Groups with a figure of $3.3B, followed by; Other Services ($2.9B), Long-Term Care ($1.4B), Behavioral Care ($150M), Hospitals ($68M), Labs, MRI ($29M), Rehabilitation ($18M), Home Health Care ($.4M) and Managed Care ($0). 


By the Numbers – Valuation Multiples 

Healthcare Services Q1 2017 industry-wide average enterprise valuation multiples (EV/EBITDA) saw a slight dip of 0.2x to 12.3x. Home Health/Hospice ended the quarter with the highest TTM multiple of 17.2x, which was followed by; Labs/Imaging (14.7x), Outsourcing (14.6x), Ambulatory Care/Dental/Rehab (12.0x), SNF’s/LTACH’s (10.3x), Managed Care (9.5x), and Acute Care (9.4x).

 

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

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