This report spotlights the UK healthcare and education sector for Q1 2021, aggregate sector valuations and private market activity. We have summarised our report below but, if you are interested in viewing the full document, click here to read more.
Public Company Valuations
Listed comparables can provide a good indication of value. We have summarised UK listed companies in both healthcare and education.
COVID-19, which led to national lockdowns and uncertainty, has driven and accelerated trends in these industries with markets projecting strong future performance.
The education sector is expected to grow particularly with the accelerated roll out of technology providing interactive online education as a result of schools and colleges shutdowns over the globe. This will likely spur further activity within the tech side of education.
Healthcare services, which is more face-to-face service based, is expected to experience slower growth compared to prior figures in this year's numbers. COVID-19 has impacted operations, with some closures and delayed operations, as well as additional costs compromising financials.
The healthcare technology space, despite the re-allocation of demand as priorities were forced to be revisited, is enjoying growth with incremental revenue streams resulting from COVID-19.
There is a positive outlook for hospitals and care centres sector where the pandemic has boosted certain activity with many GP’s, clinics, and hospitals busy inoculating millions of people with the COVID-19 vaccines. The pandemic and lockdowns have also inevitably delayed some other treatments and elective surgeries, which will result in increased demand going forward as these are addressed.
Revenue Multiples and Growth Rates
The education growth rate looks particularly strong with the COVID-19 related demand on the technology sector for online and interactive learning expected to drive both a short term uplift and a wider adoption benefiting future periods.
Healthcare services are expected to pick up in terms of growth rates as service based industries return back to pre-pandemic trends.
Healthcare technology had a high revenue multiple reflecting the inclusion of early stage businesses. Although the three year growth rate was not as high as other sectors reviewed, this is due to the earlier stage businesses or revenue streams where the development and commercialisation of technology can take a number of years. Growth of these is expected to build over the longer term as these high margin digital health solutions come fully to market.
Hospitals and care centres’ activities will increase as the vaccine roll out is implemented and delayed health services are resumed.
EBITDA Multiples and Margins
The education sector had a high EBITDA multiple but is reliant on is space were excluded due to negative EBITDAs. It should therefore be treated with caution.
Healthcare services had a low EBITDA multiple due to COVID-19 which impacted the sector with some closures/restrictions and additional costs.
Healthcare technology had one of the highest EBITDA margins, with low operating expenses in relation to total revenue. However, the EBITDA margin is measuring a company's overall profitability, but it may not take into account the cost of research and development depending on accounting polices adopted.
With Hospitals and care centres’ essentially making a return of significant past or current capital expenditure, EBITDA margin is expected to build as revenues come through from the vaccine roll out and resumption of postponed health services.
For operators in the healthcare and education sectors, the following leading players illustrate the high growth and valuation metrics that can be achieved across this space.
Private Company Metrics
The following charts show the number of deals in the education and healthcare sector. The healthcare sector is further broken down into its sub-sectors.
Biggest Deals per Sector
If you are interested in digging into the data, or seeing some of the key selected private transactions , the full report can be downloaded here.
Our data is sourced from a mixture of Capital IQ / Zephyr which are both reputable databases for M&A transactions across the globe. If you have any questions about our findings or would like to discuss how these trends may affect your business, feel free to reach out to us!
Acceleration of existing trends is supporting strong healthcare and education valuations, particularly in the digital/tech side of the industries as wider adoption has been proven globally during the pandemic.