Remedient Biomed Technologies: Valuation Multipliers
Several EBITDA and revenue multiples have been identified. The EBITDA multiples identified are unusually high, because companies producing medical devices usually have intellectual property and other intangibles that need to be factored into their valuation. The industry that most closely resembles the one in which Remedient Biomed Technologies plans to operate is the dental products industry.
EBITDA Multiples — Dental Products
- Brocair Partners, a financial adviser for healthcare companies, estimated (by analyzing over 80 recent transactions) that the median EBITDA multiple in the dental products industry is at 16.9.
- The Brocair Partners report also found that its index of companies operating in the dental products industry "has risen 148% compared to a 46% increase in the S&P 500" over the past five years.
Revenue Multiples — Dental Products
- The same report from Brocair Partners also identified the median revenue multiples for companies in the dental products industry. The median revenue multiple is 2.4.
- The report also noted that the most recent median revenue multiples are 4.4, but that the figure is probably skewed because the recent transactions "mask significant differences in multiples depending on the market segment within the industry."
Revenue and EBITDA Multiples — Orthopedics
- Mercer Capital identified the 2017 trailing last-ten-month multiples for transactions in the orthopedic industry in its 2018 Medical Device Industry Report.
- The revenue multiple determined by Mercer was 3.44, while the EBITDA multiple was 16.3.
- Mercer Capital also explained that companies in the medical devices industry tend to have high multiples because their products are usually protected by patents and the industry tends to have high research and development costs.
EBITDA Multiples — Medical Devices
- Stout found that EBITDA multiples in the medical devices industry have been increasing over the past five years. It estimated that The EBITDA multiple for the industry is currently at 19.
- IMAP identified multiples for mergers and acquisitions transactions in the European medical device industry. The median EBITDA multiple was determined to be 14.
- IMAP's findings are not particularly relevant here because, as Mercer Capital noted, healthcare companies in the US tend to have higher multiples than their European peers. However, the report did conclude that multiples for small and medium enterprises (SMEs) tend to be about 15% lower than those for listed companies. This could be relevant for determining the valuation for a private company.