top of page

HEALTHCARE M&A AND VALUATION
NEWS & INSIGHTS

Healthcare EBITDA Multiples - 2023 Overview

Scope Research maintains what we believe to be the largest and most reliable database of private healthcare M&A transactions with disclosed valuation metrics (e.g. price to revenue and EBITDA multiples) in the U.S. The median multiple in our database is 10x EBITDA, and the multiples range from 7.2x to 13.9x EBITDA at the 25th and 75th percentiles, respectively. The lowest multiple is 1.9x for a critical access hospital in Puerto Rico and the highest multiples are in the 45-55x EBITDA range for a variety of large, fast-growing healthcare technology companies in the life sciences, digital health, and medical device sectors. Understandably, participants within the broad healthcare industry are subject to a diverse range of growth and risk factors, which are the primary drivers of the valuation multiple implied by an acquisition or other change of control transaction.


EBITDA Multiples by Healthcare Services Sector

The following table presents EBITDA multiple ranges by size grouping for a few general healthcare services sectors based on Scope Research data.


These multiple ranges reflect "normal" situations, with plenty of outliers to these ranges; on the low-end for businesses where key man or customer concentration / referral pattern risk is elevated, for example, and on the high-end for early-stage and other high growth organizations. Even excluding these outliers, there is significant variation on a deal by deal basis. The wide range of implied multiples are primarily due to 1) the impact of company-specific growth opportunities and risk factors, 2) economic and industry conditions at the time of the deal, and 3) subsector variation within each sector.


Drilling Down into Healthcare Subsectors

We always recommend reviewing multiples from the relevant broad healthcare sector or sectors, but also a more narrow set of the most comparable transactions to your specific situation. The behavioral health sector, for example, consists of a number of unique subsectors, including inpatient psychiatric facilities, outpatient mental health practices, addiction treatment services and facilities, and a variety of intellectual and developmental disease (I/DD) programs that may or may not include housing. The addiction treatment subsector alone can then be broken down further into residential facilities (which range from private resorts to Medicaid-funded facilities, and usually include a real estate component), medication assisted treatment (MAT) programs, intensive outpatient and partial hospitalization (IOP/PHP), as well as more general outpatient addiction counseling programs.


Impact of Size on EBITDA Multiples in Healthcare Services M&A

The size of the acquired business has an impact on EBITDA multiples in every industry, but it is particularly important in the healthcare services industry (less so for more technology-based healthcare sectors). The following chart compares the implied multiple from each deal in our database to the size of the acquired company in terms of EBITDA. While there is significant variation within the data, as expected, there is also a strong trendline indicating that buyers typically pay higher multiples for larger healthcare businesses. This relationship generally gets even stronger when you drill down into certain sectors and subsectors.



More Healthcare EBITDA Multiple Information

Scope Research's database resources are available on an annual subscription basis, and we also offer one-time downloads for specific sectors and subsectors. However, there is much more to estimating the value of a healthcare business than slapping a multiple on LTM EBITDA... so feel free to email me with questions or to set up a few minutes to chat about your specific situation.

Comments


Thanks for subscribing!

bottom of page