Apollo Medical Holdings, Inc. (NASDAQ: AMEH) announced that it entered into a definitive agreement to acquire Community Family Care Medical Group IPA, Inc. (CFC), including the CFC independent physician association (IPA), the CFC Health Plan (HP), and CFC's management services organization (MSO) entities. CFC's provider group includes more than 350 primary care physicians and 500 specialists, and manages the healthcare of over 200,000 members in the Los Angeles, California area. The group serves patients across Medicare, Medicaid, and Commercial payers.
Multi-Provider Network EBITDA Multiples (ACOs, CINs, DCEs, IPAs, MSOs, PHOs)
While the relative contribution of each CFC business line is undisclosed, we believe the transaction likely fits within the multi-provider network subsegment of the managed care industry, although it contains elements of the health plan and possibly physician group subsegments as well. According to the press release, the purchase price was $202 million for a business with $190 million of estimated 2023 revenue and $25 million EBITDA, implying multiples of 1.1x revenue and 8.1x EBITDA.
The implied EBITDA multiple is lower than for the three most comparable disclosed managed care transactions in recent years:
Steward Value-Based Care: In November 2022, CareMax acquired Steward Health Care System’s Medicare value-based care business, including an accountable care organization (ACO), a Medicare Advantage plan, and a Direct Contracting Entity (DCE), for total consideration of $399 million ($25m cash, $134.4m stock, $212.4m fair value of contingent consideration, $27.2m other consideration). This implies a multiple of 21x estimated 2023 EBITDA of $19m. However, this isn't the cleanest multiple (and is excluded from the table below) as: 1) over 53% of the consideration is contingent, and 2) extreme projected growth to $109m EBITDA in 2025, $202m in 2026, and $408m by 2028 (more on this one here).
Allied Pacific California IPA: In 2019, Apollo acquired 1) the portion of Allied Pacific of California IPA (APC) it did not already own, and 2) Alpha Care Medical Group, for a combined $545 million. The Alpha Care portion of the deal was $45m, implying a purchase price of $500m for the acquired interest in APC. Also according to the investor presentation filed with the SEC, the APC portion of the deal resulted in an increase of $53.7m to Apollo's pro forma 2018 EBITDA less NCI (non-controlling interests), implying a deal multiple of 9.3x EBITDA.
New Century Health: In 2018, Evolent Health acquired oncology and cardiac focused value-based care entity New Century Health for total consideration of $211 million ($124.7m cash, $83.1m stock, and $3.2m fair value of contingent consideration), or $205m net of cash acquired. New Century reportedly had EBITDA of $20m at the time, implying a multiple of ~10.3x EBITDA.
About Scope Research
The Scope Research Healthcare M&A Valuation Database currently has financial details for 124 managed care deals going back to 2010, 73 of which include reported EBITDA multiples. The managed care database 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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