The healthcare services landscape has seen notable shifts and challenges in Q1 2024, reflecting a mix of industry changes and financial pressures. Pitchbook’s latest “Q1 Healthcare Services Public Comp Sheet and Valuation Guide” indicates the healthcare services sector continues to deal with a mix of market corrections, operational challenges, and strategic pivots.

A few sector highlights are below:

• Healthcare services sector continued to lag behind major indexes in Q1, with payers and value-based care companies particularly affected.
• Behavioral health & home-based care group maintained financial resilience, albeit with slight dips in EBITDA and revenue multiples.
• Hospitals, rehabilitation & long-term care groups stood out with robust EBITDA margins and steady revenue growth, benefiting from scale and operational track records.

Major announcements came from a variety of groups, including:

• BrightSpring Health Services made its public debut in January. The IPO, backed by KKR, priced below expectations due to its concentration in specific markets and limited free cash flow.
• Despite beating Q4 2023 earnings expectations, UnitedHealth faced a 6.7% stock decline in Q1, amid an ongoing Department of Justice antitrust investigation and a cyberattack on its Optum subsidiary. Still, UnitedHealth persists in its M&A pursuits, recently acquiring the physician group affiliated with Steward Health Care, a troubled for-profit health system.
• Cano Health announced in February its intentions to file for bankruptcy to try to stay afloat after incurring nearly $1 billion in debt.
• In March, Walgreens reported a $6.0B write-down on its VillageMD acquisition and intensified its initiative to close unprofitable locations. The company has faced challenges in converting the VillageMD acquisition, originally a walk-in retail clinic buoyed by pandemic demand, into a center for managing patient care within value-based frameworks.

To download the Pitchbook report, click here.