Risk factors that affect the value of an imaging center

Healthcare Value Wire reports that the current success of the imaging center industry has triggered increased acquisition of controlling interests in these entities by the operators. “Through our experience in the industry, we have observed that imaging-center operators typically pay a multiple of approximately four to five times a normalized level of EBITDA for a controlling interest,” writes Eric Heath (VMG Health) in an article in Imaging. VMG is a national healthcare transaction advisory and valuation company. Of course, these multiples will vary depending on the specific transaction. “The marketplace typically relies much more heavily upon EBITDA value indications (as opposed to net revenue) because a center’s EBITDA serves as a more accurate proxy for future cash flows than does revenue,” says Heath.

Five primary categories of risk factors can drive the fair market value of an imaging center toward the lower or higher end of the range of acquisition multiples. These are market, operational, equipment, referring-physician, and reimbursement risk factors. Favorable market risk factors include the existence of a certificate of need, favorable patient demographics, and high historical population growth.

For further discussion of these risk factors, see the February issue of Healthcare Value Wire (free registration required).