How do comps and precedent transactions work in healthcare? (they are all private!)
Question says it all. Doing some buy side case studies, and I do not know how to pull comps in healthcare. I am not in healthcare, but started recruiting for a healthcare shop. Our firm only has access to CapIQ, and a lot of the companies do not have "quick comps" available on the left side.
The quick comps that are available are horrible. Let's say you're doing a case study on a dermatology chain in Arizona. There are no publicly traded derm chains.... what, I compare it with HCA Hospital? That's a terrible comparison.
Or let's say you're doing a case study on electronic health records? Yeah, I guess you can compare to Cerner Corp.
Any tips?
Example: these precedent transactions for Privia are totally ridiculous.
I have been working for a sell-side healthcare shop for about 11 months. Almost all of our comps are proprietary that the senior bankers get from connections/friends/colleagues. PitchBook can be helpful, but like you mentioned multiples are really not that great, especially if you are looking at a niche sector (like Autism or Dermatology). I would say that multiples have come down since 2020/2021 so you could leverage that as you see fit.
This is helpful. This is language I can use in voiceover. Yeah, just seems ridiculous comparing a Dermatology chain or a Home Health company with HCA Healthcare, Molina. Similarly, ridiculous to compare some healthcare data analytics company to McKesson, R1, or some EHR vendor like NextGen. The only thing they share is they are HCIT lol.
Perhaps it's still worth doing the exercise to show I tried, IDK. If not, at least I can explain what you described.
Thanks!
I know what case study you’re doing. lol good luck!
>niche sector
>finance
>"autism"
>#NUM!
So your MDs are distributing confidential info publicly?
Not affiliated with them but Physician Growth Partners (a healthcare IB boutique in Chicago) has some solid reports - especially about specialty rollups.
Should be a lot of precedent for specialized private practice roll-ups that have been sold/bought. American Vision Partners is one. I know there are some dental ones, oncology ones, maybe even vets, etc, but just look at those. They don’t all need to be the same practice/type just same kinda business model.
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