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The 30 Largest Healthcare Deals of 2018: Who Got the Lowest Valuations?
Will Hamilton • February 11, 2019
We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple. The lowest reported price to EBITDA multiples (10x or lower, sorted alphabetically) are listed below.
Aurora Diagnostics: Sonic Healthcare Limited announced it entered into an agreement
to acquire Aurora Diagnostics, one of the leading providers of anatomical pathology services in the U.S., in December. Aurora is a frequent acquirer of hospital-based pathology groups and their associated independent laboratories, having accumulated 220 pathologists and 32 practices as of the announcement date.
BrightSpring Health Services: Louisville-based BrightSpring Health Services and PharMerica Corp, a KKR portfolio company, agreed to merge
in December as well. Similar to Civitas below, BrightSpring (FKA ResCare) is a national provider of home- and community-based health and human services to complex populations, and is primarily funded by local and state governments.
Civitas Solutions: Publicly-traded Civitas Solutions agreed to be acquired
by funds managed by Centerbridge Partners. Civitas, which primarily operates under the National MENTOR name, is a leading national provider of home- and community-based health and human services to individuals with intellectual, developmental, physical or behavioral disabilities and other special needs. In most of its markets the primary payer is local and state governments, which Moody's cites
as a significant source of business risk.
Envision Healthcare: Envision, a national provider of physician and ambulatory surgery services, was acquired
by global investment firm KKR. The acquisition occurred amid controversy
surrounding the company's out-of-network billing practices.
Express Scripts: Cigna Corp. acquired Express Scripts, creating one of the biggest providers of pharmacy benefits and insurance plans in the United States. Express Scripts' inclusion on this list is almost exclusively due to the loss of Anthem, Coventry, and Catamaran as clients. Eliminating the income included in the historical results related to these transitioning clients results in a more robust 12.5x multiple.
LifePoint: Hospitals, with their high capital investment requirements, make up the remainder of this list. The 68-hospital LifePoint Health and RCCH HealthCare Partners, which is owned by private equity firm Apollo Global Management, merged in 2018, creating one of the largest healthcare providers in the country.
Mission Health: Mission Health, a six-hospital non-profit health system in western North Carolina, was acquired by HCA.
Oklahoma University Medical Center: OUMC, a large academic health system based in Oklahoma City, was sold by HCA
to OU Medicine.
See who got the highest valuations here.
We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple.
We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple. The highest reported price to EBITDA multiples (15x or higher, sorted alphabetically) were as follows:
Healthcare services organizations rely on a variety of intangible assets to create business value, including patient and customer relationships, medical records, trade names, assembled workforce, licenses and certifications, non-compete clauses, proprietary technology, software, and others.
For those of you who’ve been involved in a transaction where the only asset transferred is a certificate of need, you’ve probably found that market data is scarce for CON-only deals.
CON Laws, Scope of Practice Restrictions, and Provider Non-Compete Clauses Targeted in New Trump Adm
On Monday, December 3, 2018, the Department of Health and Human Services (HHS) – in collaboration with the Departments of the Treasury and Labor, the Federal Trade Commission, and several offices within the White House – released a report detailing recommendations for improving choice and competition in the healthcare industry.
One of the questions we get asked a lot is how valuations have changed over time.
One of the many benefits of tracking healthcare transactions closely and maintaining a very large database of deals where we can get reliable price to EBITDA and revenue multiples is that it provides insight into profit margins for segments where other financial benchmarking information is sparse.
The most important component of a valuation of an accountable care organization (or other multi-provider network that relies on risk-based shared savings models) is the revenue forecast, which involves “probability-adjusting” future shared savings payments in some manner.
CMS' offers a helpful online tool that shows provider market saturation levels at the national-, state-, and county-levels for the following health services:
Earlier this year, radiation therapy provider SightLine Health reached a $11.5m settlement with the DOJ in a lawsuit alleging it knowingly violated the federal physician self-referral and anti-kickback laws.
