Tag: m&A

Medical Spa

healthcare transactions

Growing Medical Spa Market is Primed for Investment and M&A Consolidation

The Medical Spa market is attracting significant investor interest with an astounding projected CAGR of ~15% through 2030, high profit margins, and service line expansion. The sector is continuing to provide a wider variety of treatments available at price points appealing to a broader patient base. The highly fragmented industry is a ripe opportunity for consolidation by institutional investors and strategic buyers.
Beyond providing a broader service offering, patient demand and demographics (young and middle-age patients) are currently providing exceptional recurring revenues with repeat patient visits representing ~65% of visits. There is also an exceptional market opportunity that is largely untapped amongst men as they currently represent only 12% of Medical Spa patient population.
The sector also maintains positive reimbursement characteristics with essentially no exposure to both commercial and government payors. Many providers also see additional runway for further service line expansion across medical and non-medical treatments (e.g., Bio-stimulatory treatments, massages, and acupuncture), as technology advancements expand treatments, and more locations vertically integrate services.
And while the sector has many positive tailwinds supporting its growth, we do see a challenge through present and potential regulatory requirements and oversight. Corporate practice of medicine and non-physician provider supervision and regulation are likely to increase given the growth, which will require operators to adapt and be nimble in order to comply as more states impose greater regulations.
M&A and Private Placement activity in the Medical Spa sector is light relative to other sectors. However, with the sector’s continued growth, it has exhibited an increased velocity with the number of completed transactions doubling annually since 2021. As the sector continues to mature, transaction volume and values are expected to increase and achieve premium values.
Going forward, we anticipate growing private equity investment and interest in the space as the sector’s resiliency, growing market opportunity, and fragmentation provide elements that allow private equity to consolidate.

For more information or questions, please contact the Healthcare Services team:

Paul Kacik, Managing Director: pkacik@hexagoncapitalalliance.com

Brad Erhart, Director: berhart@hexagoncapitalalliance.com

Daren Oddenino, Director: [email protected]

Veterinary

healthcare services transactions

Pet Ownership Trends Accelerating Veterinary M&A Activity

Since the number of households with pets increased to ~70% in 2022, it is no surprise that interest and activity in veterinary clinics has continued to be strong and see steady growth. Pet expenditures have grown from $53.3 billion in 2012 to $136.8 billion in 2022. Additionally, 23 million households adopted pets during the pandemic and millennials show a higher adoption rate than older generations, providing a backdrop for sustained industry tailwinds.
As pets have increasingly become part of peoples’ families, owners have been choosing to spend more on the high-quality goods and services for them. Sustainability trends have also affected this industry, with pet food manufacturers looking to reengineer their products towards more sustainable ingredient sources to cater to the concerns of their consumers. The resulting expenditures on pets on a per household is expected to propel further market expansion.
This growing market, combined with a highly fragmented veterinary practice sector, has attracted substantial investor and strategic interest, as they see an opportunity to build scale and create greater operating efficiencies and regional market power.
M&A activity over the past few years has been strong, increasing to 169 transactions in 2021 equating to $121 billion in transaction value. In 2022, there were 119 transactions representing $130 billion in transaction value. In 2023, there has been more modest deal flow, however, we continue to see valuations hold strong with multiples of up to 20x EBITDA as competition for clinics remains intense.
With over 20,000 vet practices continue to be independently owned, favorable industry tailwinds, and early private equity success, we see a long and sustained runway for veterinary consolidation to continue and drive an active M&A market for the foreseeable future.

For more information or questions, please contact our Healthcare Services team:

Paul Kacik, Managing Director: pkacik@hexagoncapitalalliance.com

Brad Erhart, Director: berhart@hexagoncapitalalliance.com

Daren Oddenino, Director: doddenino@hexagoncapitalalliance.com

m&A veterinary market

Market Monitor: Packaging Materials

Add Your Heading Text Here

Read Market Monitor

Highlights:

Making the right decisions for your business starts with having the most accurate and current information available. Our Packaging Materials Market Monitor keeps you up to date on the events, trends, and market forces that shape and guide the industry.

Middle-market M&A volume generally began trending lower about one year ago and softness continued into the first half of 2023. Many completed transactions in H1 2023 tended to be carryover, or backlog, from 2022 deals well underway.
Transaction volume in Packaging Materials was down approximately 25% in H1 2023 as compared to H1 2022. Not surprising and is representative of broader declines across various sectors of global economies. Even so, transaction activity was by no means decimated, rather more representative of levels seen pre-pandemic.
For many packaging business owners, 2023 has been a stabilize and rebuild type of year coming off 2021’s and 2022’s pandemic induced highs. While full-year 2023 M&A volume is likely to be muted year-over-year, we are optimistic the back half of 2023 will pick up steam and carryover to 2024.

For more information or questions, please contact our contributor:

Andrew Suen, Managing Director: asuen@hexagoncapitalalliance.com

m&A packaging materials

Banker Insights: Dental Services

dental industry

healthcare services transactions

As we enter the middle stage of the DSO consolidation across the U.S., we are seeing continued strategic and investor interest in the large and growing market as it approaches $200 billion by 2027.
Growth drivers include:
- Increasing coverage and financing options for dental services
- Pediatric and Medicaid reimbursement rates are improving
- Increasing access to care through growing number of practicing dentists
- Aging population requiring more frequent care
As the market continues to consolidate and mature, we are seeing investors place an increasing emphasis on differentiation in the form of specialty services and service extensions which leverage operators retail expertise. Further, we are witnessing operational rationalization occurring as consolidated entities streamline systems and improve automation to drive profitability. The acyclical demand and resiliency of the sector coupled with the current interest rate environment is driving exceptional private equity add-on transaction activity.
Strategics and private equity groups see positive macro tailwinds for the foreseeable future which has contributed to the strong transaction activity with 200 M&A transactions completed in 2021 and 2022 and has led 2023 to a strong start. With fragmentation still present in the market, we see a long runway for the consolidation play to continue. We also see a more favorable reimbursement profile relative to other PPM sectors, which helps prop up activity relative to those other sectors.