GCG’s Q3 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:
- Q3 2019 saw a slight downfall within the Healthcare industry and across the broader U.S. equity markets from the previous quarter. The Healthcare industry overall exhibited strong performance on a 12-month basis with some sectors performing stronger than others. The industry has been led by the Homecare/Hospice and Managed Healthcare segments, both of which outperformed the S&P 500 with stock gains of 136.5% and 57.6%, respectively, over the past three years.
- Q3 2019 M&A activity displayed a slight increase in transaction values since Q2 2019 in the Healthcare sector. While transaction volume fell from the previous quarter, transaction values increased roughly 4%. Strategic buyers continue to dominate overall deal activity and have sought acquisitions to offset slowing organic growth and to diversify their offerings. The Biotechnology sector led activity, accounting for 17% of transaction volume. The Pharmaceuticals sector proved to be an attractive target as well with 16.5% of deal flow.
- Based on a representative set of publicly traded companies in the Healthcare industry, public companies traded at an average multiple of 15.3x EBITDA and 4.1x revenue. Among the sectors, the strongest trading multiples were observed in the Homecare & Hospice and Biotechnology sectors.
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