No Match Found
Coming off banner years for health services deals in both 2021 and 2022, volumes have remained resilient through May 15, 2023, despite multiple headwinds — including higher interest rates, increased antitrust regulatory review concerns, elevated (though softening) valuations, and general recessionary fears and macroeconomic concerns.
We continue to remain optimistic about the health services deals outlook for the remainder of 2023, with corporate and private equity (PE) players alike holding large levels of capital that needs to be deployed, and sector dynamics driving a need for health services companies to adapt and reinvent themselves.
Health services deal volumes in the 12 months ending May 15, 2023 declined a modest 4% from levels seen in 2022. However, volumes remain at nearly twice the levels seen from 2018 to 2020. Deal values declined by a more meaningful 15%, a continuation of the trend seen in 2022 where a greater portion of deal volume is being driven by smaller value roll-up and add-on transactions as opposed to transformational platform deals and megadeals.
Industry-wide enterprise value (EV) to EBITDA multiples have remained steady since the end of 2022 but have declined from heightened levels seen at the end of 2021. As of May 15, 2023, the average multiple across health services subsectors was 13.6x, versus 13.7x as of Dec. 31, 2022, and 15.9x as of Dec. 31, 2021. Multiples in five of the seven subsectors we track have dropped since Dec. 31, 2021, led by outsourcing (down from 19.2x to 12.6x) and managed care (down from 17.3 to 14.6).
Over half of announced deal value in the 12 months ending May 15, 2023 was from megadeals, defined as deals valued at $5 billion or greater, consistent with the ratios seen in 2021 and 2022. The 12 months ending May 15, 2023 had six megadeals, including:
Companies face markets being reshaped by technology and disrupted by geopolitical unrest, a global pandemic, and economic shocks. As a result, CEOs are turning to transformative acquisitions to reposition and reinvent their businesses for long-term success. Companies are also beginning to crack the code on how to make big, transformative deals successful: leveraging experience, early and sustained investment in integration, and a commitment to creating and implementing new long-term operating models.
Learn more about leading practices and transformational mindsets in PwC’s 2023 M&A Integration Survey.
“Even in the midst of macroeconomic headwinds, health services deal volume remained resilient when compared to recent historical record years, with positive underlying trends yielding incremental deal volume for the remaining year and into 2024.”
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