On this episode of Across The Table, McGuireWoods partner Alyssa Campbell is joined by Colin McDermott and Savanna Ganyard of VMG health for a discussion of the publicly traded healthcare operator’s Q1 earnings reports, along with expectations for the rest of 2023. They also touch on whether today’s investment climate reflects a return to typical healthcare acquisition trends or if we’re entering a new post-pandemic era.

Public sector earning reports didn’t indicate any new trends across the industry as a whole for Q1, most of the notable trends were sector or company specific.

According to Savanna, the valuations during this earnings season have been interesting. Colin echoes these observations, noting that, “as we see multiples trend down in the public sector, even slightly, that's going to compress what their [buyers] are willing to pay for private companies.”

VMG Health regularly follows 23 publicly traded healthcare operators so they can provide their clients with industry expertise. Each quarter they produce a one-page earnings summary with quotes on major themes. This information was made publicly available to all clients last year due to high interest, especially following COVID. The summaries can be found here.

Featured Guests

Name: Savanna Ganyard

Organization: VGM Health

Connect: LinkedIn

Name: Colin McDermott

Organization: VGM Health

Connect: LinkedIn

Acquired Knowledge

Top takeaways from this Across the Table episode

• Q1 earnings reports varied by company and by sector. Of the healthcare companies VMG follows, 15 had positive revenue surprises and 12 had positive EBITDA surprises this quarter, with no major industry-wide trends. Valuation multiples remained flat or decreased slightly, and EBITDA decreased for half of the companies, indicating more sector or company-specific than industry-specific trends.
• This earning season has driven an interesting commentary on valuations. Companies that VMG is following have indicated they may be focused on targeting smaller companies and smaller deals compared to past years.
• Buyers are resetting purchase prices more quickly than sellers. This may result in an unwillingness to sell, or broken deals when prices must be reset. Private transaction pricing changes tend to be reflected more slowly, causing tension between buyers cautious with their investments and sellers who want to stick to their pricing.

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