Healthcare Insurance Services Market Analysis – February 2016

The healthcare insurance services market has been undergoing diversification, innovation and consolidation.

As a direct result of the Affordable Care Act, from 2011 to 2019 the profit margins of U.S. insurers could decline by more than 40 percent¹. Recognizing that low-cost services will be fundamental to their success, numerous industry leaders are lowering administrative costs by restructuring their practices and specializing on their core business along with other initiatives to improve efficiency. These regulatory changes to the health insurance industry have led to an increase in acquisitions that promote a more consumer-driven health insurance business model.

Over the past seven years, our Healthcare Insurance Services Index has generally tracked the S&P 500 Index. Given the dynamic nature and complexity of changes in the health insurance industry, the companies that have been more active in pursuing inorganic growth have been able to stay ahead of the competition.

The median revenue multiple for public companies in the space has recently softened to 1.9x while EBITDA multiples have remained around 12.5x for the last-twelve months. Median reported valuation multiples from M&A transactions over the past year have been just under 1x revenue and in the 13-15x range on EBITDA.

Healthcare Staffing Market Analysis – October 2015

M&A activity in this industry has continued to grow as market leaders seek to consolidate this highly fragmented industry.

Revenue multiples in the public markets are currently tracking at a median of 1.2x, while EBITDA multiples have a median of 13.7x.

Transaction multiples are tracking in a higher range, with median revenue multiples of 2.0x and median EBITDA multiples of 19.8x over the past two years.

Brocair’s index of healthcare staffing companies has outperformed the S&P 500 index since 2011. In the last 6 months, the index reached a 10-year high. Share prices have been pushed higher due to increased M&A activity in the space, with two large companies having received takeover offers in the last 3 months.

M&A activity in the space has been robust as a result of the consolidation among larger players in the healthcare staffing industry. Market leaders have also been active in consolidating the highly fragmented industry that consists mainly of small businesses servicing local healthcare facilities.

Pharma Business Services Market Analysis – September 2015

As the pharmaceutical market undergoes changes, pharma business services companies continue to expand the breadth and depth of their service offerings.

Valuations in the space continue to rise, with revenue multiples in the public markets currently tracking at a median of 1.2x, and median EBITDA multiples of 12.2x.

Median revenue transaction multiples are higher, at 2.5x while median EBITDA multiples are 9.3x for transactions over the past two years.

Brocair’s index of pharma business services companies has largely tracked the broader S&P index. However, since late 2012, our index has consistently performed above the S&P 500. In the last 12 months, the index reached a 10-year high.

M&A activity in the space has been robust as companies have been trying to strengthen and broaden their capabilities and geographic reach.

Pharmaceutical Distribution Market Analysis – September 2015

Domestic and international expansion spurs acquisitions as the pharmacy market continues to vie for growth

Over the past three years, revenue multiples in the public markets have remained consistent at a median of 0.5x while EBITDA multiples have increased to a median of 10.5x. Since 2012, mean EBITDA multiples have increased by approximately 62%.

Transaction multiples are in a similar range with median revenue multiples of 0.6x and median EBITDA multiples of 11.4x over the past two years.

Our pharmacy index has largely outperformed the S&P 500 index over the past three years. The recent spike in the number of transactions within the industry has fueled the unprecedented growth. In an effort to gain market share, the top players in the industry continue to acquire smaller companies. The competition between these market leaders has led to the inflation of both public and private multiples.

Medical Reprocessing Market Analysis – August 2015

Medical reprocessing market sees renewed growth as healthcare providers face pressures to manage costs and increase sustainability

The global medical sterilization, repair, and refurbishment industry is expected to reach roughly $13 billion by 2017.¹

In the last 24 months, the medical reprocessing index has seen renewed growth and has outperformed the S&P 500. In the last three years the S&P has increased 23%, while the medical reprocessing index has increased 57%.

Median revenue multiples in the public markets are currently tracking at a median of 2.5x, while EBITDA multiples have a median of 11.9x. Since 2013, these have seen growth rates of 7% and 23%, respectively.

Transaction multiples are tracking in a somewhat lower range, with median revenue multiples of 1.5x and median EBITDA multiples of 8.1x over the past two years. These numbers remain similar to 2013 results.

Healthcare Insurance Services Market Analysis – July 2015

The healthcare insurance services market has been undergoing diversification, innovation and consolidation.

Over the past five years, our Healthcare Insurance Services Index has roughly lagged the S&P 500 Index. Given the dynamic nature and complexity of changes in the health insurance industry, the companies that have been more active in pursuing inorganic growth have been able to stay ahead of the competition.

Revenue multiples among public companies in the space have been tracking at 0.9x while EBITDA multiples have remained around 11.1x from the third quarter of 2014.

Dental Products Market Analysis – March 2015

Geographic expansion and advanced technology help drive acquisitions in the dental products market.

The dental products market is expected to grow at an annualized rate of around 7%, reaching $27.6 billion by 2015. The market for dental implants and dental biomaterials is expected to grow at 6% and 10.5% respectively from 2010 – 2015.¹

Revenue multiples are currently tracking at a median of 1.8x, while EBITDA multiples have a median of 14.2x. Since 2012, these have seen 71% and 35% increases, respectively.

Since the acquisition of Astra Tech by DENTSPLY in August 2011 and the acquisition of BioHorizons by Henry Schein in December 2013, there has been further consolidation among the top players in the market. In April 2014 Zimmer announced an agreement to acquire Biomet for $13.4 billion. Seven months later, Nobel Biocare, the world’s second-biggest maker of dental implants, was sold to Danaher Corp. for $2.4 billion.

Wound Care Market Analysis – March 2015

Wound care companies are consolidating their position in the market through geographic and portfolio expanding acquisitions.

The global wound care industry is currently valued at $20 billion and is expected to grow at a CAGR of 7% for the next four years to reach approximately $26 billion by 2018.

Median comparable public company multiples are currently tracking at 1.9x latest twelve months revenue while median EBITDA multiples in the same period are 12.4x. There has been a 37% and 55% increase in the sales and EBITDA multiples respectively since 2012.

Median transaction revenue multiples in the last two years are tracking at 4.0x while EBITDA multiples are at 10.9x.

The Wound Care Index has been largely tracking the S&P 500 but has consistently outperformed the S&P 500 since the beginning of 2013.

Recent M&A transactions in the wound care industry show an ongoing trend of companies looking to deepen and strengthen their portfolio through acquisitions.

Most recently in February 2015, Medtronic closed its acquisition of Covidien, the second largest player in the wound care market, for $48 billion. Covidien, based in Ireland, had a 11.4% market share in 2013.

In September 2014 Kinetic Concepts (KCI), LifeCell and Systagenix came together to form Acelity, a global leader in advanced wound care therapeutics and regenerative medicine.

Healthcare Insurance Services Market Analysis – October 2014

The healthcare insurance services market has been undergoing diversification, innovation and consolidation.

As a direct result of the Affordable Care Act, from 2011 to 2019 the profit margins of insurers could decline by more than 40 percent¹. Recognizing that low-cost services will be fundamental to their success, numerous industry leaders are lowering administrative costs by restructuring their practices and increasing automation along with other initiatives to improve efficiency. These regulatory changes to the health insurance industry have led to an increase in acquisitions that promote a more consumer-driven health insurance business model.

Insurance services companies are seeking to expand their product offerings in order to offer payers and providers more efficient products. IMS Health Holdings, an insurance services industry leader, has made 11 acquisitions in the last 18 months mainly focusing on information technology geared toward the healthcare industry. One example is its announced acquisition of Cegedim SA’s information solutions and customer relationship management businesses for approximately $520 million. The acquisition will add a suite of CRM solutions used by clients in over 80 countries to drive sales effectiveness, optimize marketing programs and mitigate new regulatory compliance risks.

CRO Market Analysis – September 2014

The CRO market favors a full service model and strategic partnerships

The U.S. CRO industry is currently valued at $24 billion and is expected to grow to $33 billion by 2018.¹

Revenue multiples are currently tracking at a median of 1.7x, while EBITDA multiples have a median of 12.9x. Since 2012, these have seen compound annual growth rates of 55% and 32%, respectively. Since the end of 2013, the CRO Index has consistently outperformed the S&P 500. Transaction multiples are tracking in a similar range, with median revenue multiples of 2.5x and median EBITDA multiples of 11.3x over the past 2 years.

Recent M&A activity in the CRO industry indicates a continuing trend toward a full service model. Top players have been acquiring small niche CROs to expand service offerings and form strategic partnerships with large pharmaceutical companies.

In the past two years, some notable expansion trends have been moves into technology platforms and widespread geographic expansion.

An example of a large player targeting technology is Quintiles’ acquisition of Patient Reminders in June 2013. This equipped Quintiles with a new service that allows clients or sponsors to reach patients directly with personalized messages and reminders of their study. The goal of this transaction was to increase subject compliance and retention in clinical trials.