GCG’s Q1 2023 Healthcare Industry 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:
- Q1 2023 saw modest losses in public equities across the Healthcare landscape compared to the broader equity market. Investors in the healthcare industry are experiencing intensified competition for investment opportunities, increased interest rates from the Fed, a surge in labor costs, stricter lending conditions, and more recently, uncertainties resulting from disruptions in the banking sector.
- Q1 2023 middle-market M&A deal volume and average deal value declined from Q4 2022. Strategic buyers continue to comprise a majority of the overall deal activity, representing 75.5% of total transaction volume in the quarter while financial buyers continue to deploy capital into the market.
- Based on a representative set of publicly traded companies in the Healthcare industry, public companies traded at an average multiple of 12.8x EBITDA and 2.9x revenue in Q1 2023. Additionally, two of the strongest sectors in the Healthcare industry were the Biotechnology and Medical Equipment sectors, with an average multiple of 17.2x and 17.1x EBITDA, respectively.
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