Slight increase in valuation multiples for healthcare

BVWireIssue #138-4
March 26, 2014

Marginally increasing valuation multiples for the healthcare provider industry reveal that the sector is regaining investor confidence, says a new analysis of healthcare M&A activity from Frost & Sullivan. The healthcare industry sees M&A as a key means to reverse the trend of declining profits and operating margins caused by the economic downturn and tougher regulatory environment.

"The full-fledged implementation of the Affordable Care Act—that aims to improve access to healthcare among U.S. citizens—is expected to drive consolidation in the healthcare provider industry over the next 12 months," says Dr. E. Saneesh, a Frost & Sullivan analyst. In particular, the post-acute care, surgical, and emergency center segments are expected to drive M&A activity.

The new report, Analysis of Mergers and Acquisitions Trends in the United States Healthcare Provider Industry, also points out that, while deal activity has increased, there has not been a relative increase in deal value, indicating the increase of deals with a low average deal value.

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