EMEA’s Top 100 largest groups by revenue revealed
HBI’s inaugural HBI Health Care Services Top 100 lists the largest 100 companies by EMEA health care services revenue. In total revenue their revenue came to over €105bn – and we’ve uncovered some surprising winners and losers.
HBI Intelligence is our instant research service comprising over 400 sector/country reports with market sizes and growth rates plus a global database of the top 4,000 private health and care operators across 116 countries enabling you to quickly calculate market share. Click here to find out more.
Take a look at our interactive chart, below, and then scroll down for our detailed analysis.
Click on the three dots top right of our infographic below to expand to full screen.
Covid-19 makes 2020 a unique year – we hope
There has never been a year like 2020. Lockdowns often forced operators to close for months, and severely restricted access for others. Overnight, Covid transformed PPE from a mundane purchase to a scarce essential commodity. For many, revenues plummeted. Some smaller operators considered selling up and getting out.
But as our HBI Health Care Services Top 100 shows, that isn’t the full story. Companies in a handful of key sectors very clearly bucked this trend. Groups in certain geographies were similarly shielded from the worst of the pandemic’s effects, often thanks to government help. And there were deals to be done.
This is how the revenues for the companies in our top 100 combined breaks down for 2020.
Key Trends
The HBI Health Care Services Top 100 shows clear trends. A handful of sectors – the most lucrative, or the most consolidated – or in many cases both – dominate. Hospitals, elderly care, and labs all feature heavily, with a sprinkling of outpatient heavy-hitters.
- Labs was the business to be in throughout 2020 as the Covid-19 pandemic took hold. How sustainable that will be is questionable but they have seen massive growth. Dialysis also saw a significant rise in revenues.
- Businesses in the Middle East, Germany and parts of CEE were better placed to weather the storm.
- Businesses which saw reasonable growth outside of labs or the regions above generally did so through substantial M&A. The pandemic created a climate where, in some sectors, smaller groups were either looking for security or the owners had simply had enough and wanted to sell up.
- If you want to build big and have a revenue to match, be international. Some 60% of our Top 100 are international. But only 28% of the top 50 are in just one country.
The fastest growers
Based on actual revenue figures either reported or confirmed by the companies to HBI, rapidly expanding Colosseum Dental, which is the Nordics largest private dental chain, tops our fastest growing chart – 50% up on the previous year. Scroll down to our dentistry section for our explanation as to why. We suspect it was beaten by pan-European lab giant Cerba Healthcare. Based on HBI estimates, we forecast 54% revenue growth 2019-2020. We estimate Germany’s largest for-profit lab group Limbach was up around 40%. And France-based health and social care platform DocteGestio saw revenues rise 34%.
The groups with the greatest falls – by percentage revenue drop – include Care UK, and Netcare. In the case of Care UK, this is because it sold its healthcare division as part of a strategic re-positioning to focus on residential care for older people and 2019 to 2020 is not a like-for-like comparison. Care home revenue alone increased 3% to £364m in 2020. As for South African hospital group Netcare, see below for an explanation, and how if fared compared to its two largest domestic competitors.
Hospitals – a mixed bag for the best represented sector in the top 100
There are 43 groups whose core activity is hospitals in the HBI Health Care Services Top 100, with Fresenius Helios, Asklepios and Ramsay holding the top three spots, and hospitals holding six of the top 10 spots. The average EMEA revenue growth across all the hospital groups in our list was 3.78%, and they represent just under half of all the revenue at around €52bn.
Fresenius Helios tops our chart with 2020 revenue in EMEA of €9.8bn, a reasonable 6.3% jump. In its home market Germany hospital providers were indemnified against the suspension of elective procedures. In Spain, its other large European stronghold, where it owns Quiron, it was compensated for the additional costs related to Covid patients.
A strong M&A pipeline also helped – in Germany it acquired four hospital centres and six medical centres from the Malteser not-for-profit group. The acquisition of Eugin Group added a global network of fertility clinics at the end of 2020.
In second place is Germany-based Asklepios, the country’s second-largest for-profit operator by revenue. The most significant event for the group was the July acquisition of Rhoen and its subsequent integration – so comparing the 2019 revenue to 2020 is misleading as, post July 1, 2020, Rhoen’s revenue is included in the Asklepios figure, accounting for 19.1% of the group’s total revenue. Asklepios and Helios have both been investing hard in digital health with Asklepios buying a dozen start-ups.
Ramsay Health Care, in the number three spot, fared less well. In all of its markets, revenue fell, and it had the misfortune of not being in markets like Germany, or the Middle East which bucked the trend, In March 2020, it said the ‘extraordinary circumstances posed by the Covid-19 pandemic” on the company’s operations meant it had to withdraw its guidance. Elective surgery restrictions were imposed in its major regions, including UK and France and revenue and EBITDAR were hit hard
Large South Africa-based hospital group Mediclinic is a great advertisement for the benefits of internationalisation, especially when compared to rival Netcare.
With a presence in the UK, Switzerland and the Middle East it was able to offset some of its domestic difficulties. The Middle East in particular looked not to suffer from the same sort of structural problems as Europe and had governments more willing to splash the cash when needed.
South-Africa based rival Netcare, on the other hand, was hit very hard (South Africa was Mediclinic’s worst-performing segment) leading to a big drop in revenue.
As for Life, its revenue was hit too – though only half as badly as Netcare. Trading was significantly impacted by the pandemic, with its international business holding up far better than its South African core market.
Other notable strong years for hospital groups in the top 10 outside Germany spring from successful M&A. The likes of Elsan and Ribera Saud benefitted from a successful deals pipeline.
Labs – the standout success, but will it last?
There are eight lab groups in our top 100. The average EMEA revenue growth across all the hospital groups in our list was around 10.5%, and from a revenue perspective, labs represent 9-10% of all the revenue in our 2020 Top 100 at around €10bn.
It’s not hard to see why labs were among the standout successes. 2020 was a bonanza with revenue growth driven by pandemic-related testing. M&A boosted sales further.
Opportunities for large and bolt-on acquisitions remain as there are still many large, family or PE owned independents in countries such as Spain, Norway, Poland, Switzerland and Italy. Deals continue to fuel their growth in 2021.
Initially the lab market took a hit in March and April of 2020 with a fall in routine revenues of anywhere between a third and three-quarters across major markets, but the summer turned into a gold rush as scaled-up Covid testing for governments, employers and even sports tournaments pushed like-for-like growth by July to around 30% for the biggest lab groups.
In the third quarter alone, three of Europe’s largest labs – Unilabs, Synlab and Cerba, collectively saw their EBITDA grow 98% organically with revenue up 49% organically.
Synlab, Europe’s largest lab group has IPOed following a year in which almost a third of its 2020 revenue came from Covid-19 testing, with 2020 group revenue (not limited to EMEA) growing 38% to €2.6bn with EBITDA up 71% at €679m. For the year, Synlab’s revenue in EMEA grew around 24%.
‘How resilient is Covid revenue?’ nags at investors however, and Synlab’s IPO in April 2021 was priced at the bottom of its range (€18) at just 8.8 times 2020 EBITDA.
But Synlab’s geographic spread makes it a strong contender. The pessimistic pricing may not have been fully justified, with Synlab upping its guidance for revenue growth from 17% to 25% in the summer of 2021 as Covid-19 tailwinds showed little sign of dissipating. But the shares are still trading low compared to the upper price range it hoped for before the listing which was €23; at the time of writing in July 2021 Synlab is trading at just €18.12.
And what of France-based rival Cerba, which also has a presence in Belgium, Luxembourg, Italy and Africa, and was the subject of the biggest health care deal in 2021? Its EBITDA alone tells a story – for the FY it grew 50% to around €380m on huge volumes of COVID testing, and this explains its subsequent March 2021 sale with EQT buying Partners Group’s stake for a ballpark enterprise value of an eye watering €4.5bn, a 12x multiple.
Limbach and Unilabs also saw very significant jumps in revenue for similar reasons. Q4 revenue for Unilabs was 51% up, with adjusted EBITDA up 73%. The EBITDA margin for the full year was a very healthy 29.5%. Despite this, HBI understands Unilabs, in its fifth year of ownership when the pandemic hit, is still in no rush to sell.
A trying year for elderly care, but large groups were surprisingly resilient
There are 18 elderly care groups in our top 100. But average EMEA revenue growth was just 1.44%. In total they represent 19% of our 2020 Top 100, at €19.6bn.
If labs was the standout success of 2020, elderly care was under the cosh. As lockdown hit, homes saw new residents drop to zero. Huge reputational damage was done as death rates in nursing homes jumped as staff struggled in vain to prevent the pandemic entering and spreading. Private pay was hit harder than public, with wealthier families more able to keep their elderly at home and use alternative homecare services.
And yet, as we can see from the biggest players in the market in our top 10, the likes of Korian and Orpea were able to weather the storm proving that being big and having the ability to conduct M&A was key. Bigger groups, of course, with access to equity markets and low cost debt are better placed to pick up cheap (and potentially struggling) assets.
And – Covid notwithstanding – the fundamentals driving the nursing home market remain solid. Drivers like the increase in dementia patients tied in with the baby boomer generation starting to retire, prolonged life expectancies and a shift away from the public sector all stand in the sectors favour.
Across all regions, Korian’s revenue increased by 7.2%, while Orpea’s rose 5%. Yet both companies reported a fall in EBITDA. Staff costs were up for both too. For Korian, staff costs as a percentage of revenue increased by 2% to 57% of revenue, likewise Orpea’s staff costs increased 3.4% as a percentage of revenue to 56.4% reflecting the difficulty maintaining staffing levels during the pandemic.
Organic growth was down hugely too – for Korian this was especially true in Italy where it dropped from 2.9% (2019) to -8.2% in 2020.
But the saving grace for the large groups was their ability to diversify and extend their geographical footprints. Both nursing home heavy-hitters saw revenue growth thanks to M&A and greenfield investment.
Korian added 5,977 beds in 2020, including the acquisition of French mental health operator, Inicea, in October 2020. Adding to this diversification strategy, Korian acquired ITA, the third largest mental health provider in Spain, in March 2021, making it the third largest mental health provider in both France and Spain.
Korian also expanded into the UK for the first-time buying Berkley Care Group, a high-end nursing home provider with six homes and 425 beds. In the past, major European operators have avoided the UK market.
Not to be outdone, Orpea added 8,769 beds in 2020 of which 5,808 or 66% came from greenfield investment. This included acquiring beds in Ireland for the first time with the acquisition of TLC Group and Brindley Healthcare in 2020. On top of this Orpea further diversified, buying Sinoué & Clinipsy a French mental health provider.
The shift towards mental health makes sense, because it can provide significant synergies with elderly care and requires a similar skill set.
Elsewhere, in a difficult year, France-based Domus Vi made little headway with less than a 2% increase in revenue. In December 2020, Moody’s changed the group’s outlook from stable to negative driven by the increase in Moody’s adjusted gross leverage profile of the company and its somewhat more aggressive M&A strategy than previously anticipated by the rating agency. But the group saw a leveraged buyout in H1 2021 from private equity firm ICG.
Scandanavian elderly, disability and psychosocial support care group Ambea grew by less than half of one percent, with Covid-related drops in occupancy and a hit to new starts despite some acquisitions during the period. The group estimates Covid took around SEK 110m of its EBITDA of SEK 829m. Sales were adversely impacted by terminated elderly care contracts in Stendi (Norway) and Vardaga (Sweden).
Meanwhile, the likes of Barchester and Four Seasons in the UK struggled as infected hospital patients were returned to nursing homes ill-equipped to isolate residents. Four Seasons carved off its adult specialist care business in November. Three of the UK’s biggest groups – Barchester, HC-One and Care UK – all struggled to find investors willing to take on the challenge posed by a lack of funding, the Brexit effect on staffing and the pound and the risk of low occupancy rates thanks to COVID.
Dentistry
There are only four pure-play dental care groups in our top 100. The average EMEA revenue growth across those groups in our list was around 16%, but with such a small sample pool, that figure is unduly skewed upwards by the success of Colosseum Dental. From a revenue perspective, they represent just over 2% of our 2020 Top 100, at around €2.45bn.
At the start of 2020, there was a lot of optimism around dentistry. Dentistry was seen as one of the biggest, most exciting opportunities for investors as it is largely unconsolidated across Europe. Covid derailed all expectations and the sector was particularly badly hit.
Most operators reliant on private pay saw losses of between 10-20% of revenue for the year, and flat to low single-digit growth was the best many could hope for. Markets like Norway and Denmark, which took swift and decisive action to lockdown during wave one, normalised faster.
The pure-play dentistry businesses in our top 100 are Praktikertjanst, mydentist, Colosseum, and European Dental Group. None are in the top 40 and revenues for 2020 show a clear delineation between groups which had a payor mix including a strong public component and were supported by the government, and those which did not. Groups like Colosseum continued to be paid by the likes of the UK government with reduced/negligible patient targets at the pandemic’s height, scaling up as it began to lift albeit subject to clawbacks. That, and a big M&A pipeline as the group continues its European expansion accounts for its substantial rise in revenue 2019-2020. Colosseum benefitted from a substantial presence in markets like Norway and Denmark which recovered to pre-Covid levels quickly once brief short, sharp, lockdowns ended, and from a swathe of retirements and small groups looking for the protection of a larger parent prompted by the pandemic.
There is some promise ahead, too. Looking at the most attractive markets, like Germany, and behind that, Italy, there is huge scope for consolidation and the continuing emergence of pan-European players (the likes of Colosseum, Nordic, Bupa, perhaps Auctus in Germany).
But enthusiasm is tempered by the threat of recession, economic uncertainty, and a lack of patient disposable income. Even after the dust has settled and the risk of infection has gone, people may be reluctant to return. Some operators tell HBI we are witnessing the birth of a reactive rather than proactive market, so rather than going for regular checkups people will put off going to the dentist until there is a painful problem.
Homecare
There are 11 medicalised and domiciliary homecare groups in our Top 100. The average EMEA revenue growth across all the homecare groups in our list was 3.58%, and from a revenue perspective, homecare represents around 7% of all the revenue in the Top 100, or around €7.6bn.
UK drug-delivery-at-home group Healthcare at Home tops the list by revenue, but almost all the homecare groups in our Top 100 fall outside of the Top 50.
During 2020, demand for homecare picked up in most European countries. The highest growth rates in Europe are to be found in Germany, France and the UK. But, on the flip side, in countries like the Netherlands and Italy the disruption of domiciliary care services during national lockdowns hampered market growth.
Other sectors
No other sectors have a particularly significant presence in our Top 100. There are only three dialysis groups in our Top 100, Diverum, Fresenius and Davita. In developed markets, operators’ volumes have been largely maintained during the COVID-19 pandemic because patients cannot live without dialysis and the service is covered in full by the state.
The average EMEA revenue growth across the three groups in our list was around 15%, and from a revenue perspective, dialysis represents less than 2% of all the revenue in our 2020 Top 100.
Just two psychiatry/mental health groups (Priory, and Cygnet Health Care), and one adult care (CareTech Holdings), primary care (Practice Plus Group), and one imaging company (Affidea) make up the constituents.
Waiting in the wings – telehealth
Despite crazy Covid growth rates, telehealth players have yet to hit the Top 100. But with the likes of Babylon (revenue $80m in 2020) announcing last month it will IPO through a $4.2bn merger with SPAC Alkuri Acquisition Corp, and predicting four-fold growth in 2021, that could bring it into the €300-€400 revenue bracket which would comfortably give it a place.
Methodology
Whenever possible, we have used actual revenue figures from the companies concerned. On occasion, we have used HBI Intelligence’s estimated revenues. In all cases where our 2020 estimates are based on anything other than the previous year’s actual figures, we have contacted the company concerned and asked if they take issue with our estimations.
HBI estimates are based on a myriad of relevant factors. Where appropriate, HBI calculates revenue per bed and multiples of other measurable metrics, with reference to similar companies (using GDP per capita comparison where relevant). Revenue estimates are supplemented by estimates from industry experts, news sources, the size of company operations, and the growth rate of company.
Where a company’s financial reporting year differs from the Western European norm (often the case with South African or Australian groups, for example) we have taken half-yearly figures for the appropriate period to establish similar points of comparison – especially important this year as the figures would otherwise be skewed and not full account of the impact or otherwise of the pandemic.
We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.
