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.
Following!
https://cigcapitaladvisors.com/dermatology-industry-trading-multiples-a…
https://firstpagesage.com/business/healthcare-ebitda-valuation-multiple…
https://practicaldermatology.com/topics/practice-management/the-dermato…
Sources are a bit old but that should give you an idea.
This is really helpful. I saw some of these too, but wasn't sure if it was appropriate to give the commentary "there are not that many appropriate comps / precedents, but the multiple I am proposing is consistent with my research X, Y , Z." Thanks!
This helps with provider assets. However, what about other types of healthcare, like HCIT? Let's say I get a case on some healthcare analytics company. Privia is trading at 66.5x TEV / LTM EBITDA... that is wild, and I do not want to explain bring that up and have to explain why I'm submitting a bid at 12x LTM EBITDA lol. "Why are you tossing yout Privia? I thought you just said that's the best comp?" Or do I start comparing it with totally different HCIT companies, like EHR vendors or RCM?
McKesson, NextGen, R1 RCM.. get what I'm saying?
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