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Performance Split: Hospitals, rehabilitation & long-term care sectors significantly outperformed major indexes, whereas payers, payviders, value-based care (VBC), and other healthcare services have underperformed the S&P 500 and Nasdaq. The VBC sector has seen particularly hard declines due to falling valuations amidst persistent unprofitability and rising utilization rates.
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IPO Watch: PACS Group, a skilled nursing facility operator, successfully completed its IPO in April, raising $450 million. The company projects robust growth, expecting to increase revenue at a double-digit rate annually while maintaining an approximate 10% EBITDA margin. Ardent Health Services, backed by Equity Group Investments, has confidentially filed to go public. Its comparable companies, CHS, HCA, Tenet, and UHS, trade at high single-digit EBITDA multiples.
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Retailers Re-positioning: Walgreens, previously expanding through partnerships like Pearl Health and a significant stake in VillageMD, is now reducing its stake in VillageMD to a minority position. Meanwhile, CVS is exploring partnerships with private equity firms to support the growth of Oak Street Health, which operates a capital-intensive model focusing on building new senior-focused primary care clinics.
These insights provide a comprehensive overview of the current landscape in the healthcare services public market, highlighting key performance indicators, investment opportunities, and strategic shifts within the industry.
