Mid-Year Healthcare Services Sector Updates
With summer on the heels of business owners looking to unload their business on the market, it is time for The Ambulatory M&A Advisor to present to its readers an middle of the year Healthcare Services Sector Update. According to Duff & Phelps, a valuation and corporate finance advisory firm, the most recent update presented in April 2016 presents some market increases in numerous healthcare areas, and some significant decreases in others.
These reports are based on a three month timeline, and The Ambulatory M&A Advisor is dedicated to keeping its readers up to date on any financial changes in the healthcare field.
Based on the most recent report presented by Duff & Phelps, as of April, 2016, the S&P Healthcare Services Index has seen an increase of 7.2% percent since March 2016. This increase also displays that the Healthcare Services Index outperformed the S&P 500; an index that saw an increase of 0,1% over the same studied period.
Highlight Market Increases and Decreases Based on the April Study
According to the market study, since March 2016, the highest performing sectors included Assisted/Independent Living, Emergency Services, and Psychiatric Hospitals.
According to the study Assisted/Independent Living saw an increase of 17.9 %, Emergency Services reported an increase of 12.6%, and Psychiatric Hospitals saw an increase of 11.2%.
As with all aspects of a market study, there are also negative areas that go hand in hand with the positive.
According to the April report, the poorest performing sectors were Other Services, Managed Care – Government and Care Management / TPA. As far as specifics, Other Services experienced a decrease of 17.1%, Managed Care – Government decreased 4.6%, and Care Management/TPA saw a decrease of 2.9%.
Current LTM Revenue and LTM EBITDA Multiples:
Based on the information provided in the report, the current LTM Revenue, and LTM EBITDA multiples for the Healthcare industry are 2.37x (LTM Revenue), and 14.2x(LTM EBITDA multiples).
According to the study, the highest healthcare sector multiples include HCIT, Pharmacy Management, Healthcare REITs and Clinical Laboratories.
The LTM Revenue for HCIT multiples currently stands at 3.38x with an LTM EBITDA multiple of 28.3x. LTM Revenue for Pharmacy Management is currently a multiple of 1.07x, with an LTM EBITDA multiple of 28,0x. Healthcare REITs have an LTM Revenue multiple of 13.24x, and an LTM EBITDA multiple of 20.5x. Finally, Clinical Laboratories see an LTM Revenue multiple of 6,38x and an LTM EBITDA multiple of 18.0x.
The complete study provides detailed, up to date information on numerous market sectors, current interest rates, market indices and more. For a complete list of the results of the most recent Healthcare Services Sector Update view the full report here.
If you have an interest in learning more about the subject matter covered in this article, the M&A process or desire to discuss your current situation, please contact Blayne Rush, Investment Banker at 469-385-7792 or Blayne@AmbulatoryAlliances.com.