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Healthcare RCM EBITDA Multiples: PE firms Invest in Bon Secours Mercy's Ensemble (~16.7x EBITDA)

Ensemble Health Partners, a provider of technology-enabled revenue cycle management solutions for health systems, including hospitals and affiliated physician groups, announced that Berkshire Partners and Warburg Pincus have entered into an agreement to make a significant investment in the Ensemble. Former 100% interest owner Bon Secours Mercy Health (BSMH) will continue as a commercial partner, a shareholder, and will remain on the Ensemble board. Prior investor Golden Gate Capital will also retain a minority interest in the Company. Ensemble partnered with nearly 300 hospitals across the United States at the time of the announcement.

Revenue Cycle EBITDA Multiples

According to reporting by Axios, the deal values the RCM company at $5b+, implying a multiple of approximately 16-17x its roughly $300 million of annual EBITDA. Prior transactions involving Ensemble are summarized below:

Golden Gate Capital: Golden Gate acquired a 52% interest in Ensemble in a transaction that closed August 1, 2019 for approximately $1.2 billion, according to BSMH's audited financial statements. Combining the consolidated pre-transaction and deconsolidated post-transaction revenue and EBITDA generated by Ensemble results in FY revenue and EBITDA of $592.5m and $152.9m, respectively, implying multiples of 3.9x revenue and 15.1x EBITDA for that deal.

Bon Secours Mercy: On May 3, 2016, BSMH purchased the remaining controlling interest in Executive Revenue Cycle Partners, LLC dba Ensemble Health Partners for ~$60m. At the time, BSMH's existing non-controlling interest was valued at ~$46, implying a total enterprise value of ~$106m. According to the AFS, on an unaudited pro forma basis, had the BSMH owned Ensemble at the beginning of the year ended December 31, 2016 (January 1, 2016), Ensemble would have contributed approximately $48,000 of operating revenue and approximately $13,000 of excess of revenue over expenses, which is equivalent to EBITDA since depreciation is negligible and taxes and interest are not applicable (NFP, zero debt).

Implied multiples from three Ensemble Health Partner's M&A deals
Revenue Cycle Management EBITDA Mutliples

About Scope Research

The Scope Research Healthcare M&A Valuation Database currently has financial details for 51 revenue cycle management (RCM) and healthcare billing deals going back to 2010, 38 of which include reported EBITDA multiples. The revenue cycle data can be purchased individually, while our affordable annual subscriptions provide access to all of our healthcare M&A databases and segments, updated continuously.

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