According to a report, the volume of medical service transactions is soaring, with a record high of 426 transactions in the first quarter of 2021. PwC’s new report.
The report released on Tuesday showed that the transaction volume in the first quarter of 2021 was 21% higher than the 352 transactions in the fourth quarter of 2020. This is the highest quarterly transaction volume ever recorded.
Specifically, compared with 2020, the transaction volume of the rehabilitation sub-industry has increased by 59%, and the transaction volume of the managed medical sub-industry has increased by 55%. In contrast, transaction volumes in the hospital and long-term care sub-sectors fell by 9% and 6%, respectively.
As the volume of transactions increases, so does the value of transactions. In the 12 months ending May 15th, there were 6 large transactions in the healthcare industry, each valued at more than US$5 billion. Including the acquisition of the remaining 60% by Humana Shares of relatives in the family And Walgreens Boots Alliances sell their Alliance Healthcare business Acquired AmerisourceBergen for USD 6.5 billion.
In addition, the report pointed out that in the year ended May 15th, there were two transactions for contract research institutions with a value of more than 10 billion U.S. dollars.
In contrast, according to PwC’s mid-year forecast, there will be only one huge transaction each in 2019 and 2020.
One of the key factors driving medical service transactions is regulatory changes. According to the report, these include the suspension of Trump administration-era plans and renewed attention to antitrust issues, which have led stakeholders to diversify their income sources, expand their scale or consider alternative cooperation models.
In addition, the entry of non-traditional companies into the healthcare sector, such as Amazon and Walmart, and the transformation of medical services, such as the increasing popularity of virtual and home healthcare, are encouraging stakeholders to enter new care models or collaborations.
Nick Thangka, head of US medical services transactions at PricewaterhouseCoopers, said in the report: “The progress of the pandemic means that traders are refocusing on the pursuit of competitive advantage.” “We see investors increase their capabilities and rethink the ecosystem. The focus is on value and patient-centricity.”
The report pointed out that despite the high multiples, interest in medical service transactions will continue to rise. In the 12 months ended May 15th, the industry-wide average enterprise value and EBITDA multiplier reached 16.1 times.
So far, the multiple of family health and hospice care is the highest in the industry, at 26.2 times. However, the multiples in three sub-sectors declined slightly: managed care; laboratory, imaging, and pharmacy; and outpatient care, rehabilitation, and dentistry.
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