The Unilabs sales process is well underway, in what will likely be the biggest deal in healthcare services since EQT unexpectedly snapped up Cerba earlier this year. Virtually all of Europe’s big private labs have traded this year – so what’s the wider growth story?
EQT bought out Partners’ majority stake in Cerba Healthcare in March for a ball-park enterprise value of €4.5bn, which was roundabout a 12x multiple on its 2020 EBITDA. Then Lifebrain sold to Cerba, Amedes sold to a consortium led by Canadian investors OMERS, and Synlab went public on the Frankfurt Stock Exchange.
There was a raft of smaller deals too, including Biogroup/Analiza, Charme/Bianalisi and Biogroup/Oriade Noviale.
Apax has reportedly targeted the same price tag as Cerba Healthcare at around $5bn but it is a tricky market on the buy-side. There are three bidders left in the process (we look at names in our news story) made up of strategic and financial buyers.
But the big question across the board is what’s the growth story? Covid has swelled revenues and profits, and while this has lasted much longer than HBI expected, there will come a price and demand pressure at some point.
One operator has told HBI that he gets frustrated that Synlab has published margins at a country level, aware policymakers could clock on to the big profits being made. Across the group, Synlab’s EBITDA margin was 33% in the first nine months of 2021.
So if Covid won’t last forever and prices come down on other tests, where are labs able to go? HBI understands that Unilabs is partly selling itself on the potential of AI and more consumer testing.
This is a market that is yet to really catch on. However, we are starting to see the emergence of digital health ecosystems across Europe that combine online appointments and e-prescriptions. Many have been partnering with lab groups in order to fulfil the necessary diagnostic part.
A survey by L.E.K. Consulting found that 40-50% of remote consultations need a diagnostic test. If Unilabs is able to grab a share of those, by taking a bigger step into these ecosystems, then the market potential is huge.
It has already started to consider this. Its chief innovation officer Esther Talboom-Kamp spoke to HBI about those plans back in October 2020, explaining how she’d built similar products at Saltro (bought by Unilabs).
Considering the deal flow in the lab sector this year, there’s a lot of new investment and a lot of new drive to see huge growth and explore new revenue streams. The next four/five years will be very exciting.We would welcome your thoughts on this story. Email your views to Rachel Lewis or call 0207 183 3779.