Q2 2019 Healthcare M&A Update

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GCG’s Q2 2019 Healthcare M&A Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples and the state of the middle-market M&A environment.

Key findings include the following:

    • Q2 2019 saw some recovery in the Healthcare industry and the broader U.S. equity market from the previous quarter. On a 3-year period ending June 30, the S&P 500 returned 39.9%. A majority of the Healthcare industry exhibited strong performance on a 12-month basis, with certain segments performing stronger than others. The industry has been led by the Home Care/Hospice and Managed Healthcare segments, both of which outperformed the S&P 500, with stock gains of 123.9% and 77.0%, respectively, over the past three years.
    • Q2 2019 M&A activity displayed a slight increase in transaction values since Q1 2019 in the Healthcare sector. While transaction volume fell from the previous quarter, we’re seeing continued optimism in the sector moving forward with nearly a 9% increase in deal volume year-over-year. Strategic buyers continue to dominate overall deal activity and have sought acquisitions to offset slowing organic growth and to diversify their offerings. The Services category led activity, accounting for over 19% of total Healthcare transaction volume, with Biotechnology following closely behind at about 17% of deal flow.
    • Based on a representative set of publicly traded companies in the Healthcare industry, public companies traded at an average multiple of 16.0x EBITDA and 3.3x revenue. Among the sectors, the strongest trading multiples were observed in the Homecare & Hospice and Biotechnology sectors.

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