ASC valuation multiples are increasing, according to HealthCare Appraisers 2019 ASC Valuation Survey.
HealthCare Appraisers partnered with the Ambulatory Surgery Center Association to develop the survey, collecting responses from 26 companies representing 1,000 ASCs across the U.S.
Five details to know on ASC valuation multiples:
1. Forty percent of respondents said ASC multiples are increasing. According to the report, one of the major reasons multiples are on the rise is the influx of private equity investment. However, 47 percent of respondents said they haven't observed a change in the multiples from the previous year.
2. ASCs with a certificate of need often face more challenges during the construction and development phases. When centers in CON states decide to sell, they are often more valuable than centers in non-CON states.
Most survey respondents paid more than a .50x multiple for an ASC with a certificate of need:
- < .50x multiple: 21 percent
- .50 to 1.00x multiple: 55 percent
- 1.01x to 1.50x multiple: 10 percent
- 1.51x to 2.00x multiple: 10 percent
- > 2.00x multiple: 4 percent
3. Valuation multiples for controlling interests in ASCs are increasing. Thirty-six percent of respondents said over the past year valuation multiples for single-specialty ASCs with controlling interests ranged from 7.0x to 7.9x; another 24 percent report multiples hit 8.0x or more.
4. For multispecialty ASCs, 44 percent of respondents said valuation multiples ranged from 8.0x to 8.9x, and 12 percent reported observing valuation multiples of 10.0x or more.
5. There was a wider range in valuation multiples when buyers took a minority interest in both single- and multispecialty ASCs. Most respondents reported multiples for minority interests in the 3.0x to 5.9x range for multi- and single-specialty ASCs.