Healthcare Insurance Services Market Analysis – July 2015

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 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.

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