Valuation multiples in healthcare services

BVWireIssue #160-4
January 27, 2016

The S&P Healthcare Services Index increased 2.6% over the last three months, performing worse than the S&P 500, which increased 4.6% over the same period, according to the December 2015 Healthcare Sector Update from Duff & Phelps. The best-performing sectors were specialty managed care (up 19.0%), assisted/independent living (up 6.2%), and home care/hospice (up 4.7%). The worst-performing sectors were acute care hospitals (down 23.4%), skilled nursing (down 16.8%), and diagnostic imaging (down 12.7%)

The current median LTM revenue and LTM EBITDA multiples for the healthcare services industry overall are 1.51x and 12.4x, respectively. The sectors with the highest valuation multiples include: healthcare REITs (12.0x LTM revenue, 17.9x LTM EBITDA); psychiatric hospitals (0.3x LTM revenue, 20.3x LTM EBITDA); HCIT (3.6x LTM revenue, 17.7x LTM EBITDA); and emergency services (2.7x LTM revenue, 18.1x LTM EBITDA).

Please let us know if you have any comments about this article or enhancements you would like to see.