On October 12, American Renal Associates announced it was was being acquired by an affiliate of private equity firm Nautic Partners for $11.50 per share, which implies an enterprise value of $853m. ARA operates 251 dialysis centers across 27 states, primarily in partnership with physician investors. The fairness opinion prepared in support of the deal includes estimated EBITDA less non-controlling interests (the portion of profits attributed to physician JV partners) of $91m in 2020, implying a multiple of approximately 9.4x.
ARA was previously taken private by Pamlico Capital in 2010 for $415m, representing a multiple of 9.2x EBITDA less NCI at the time.
Both multiples are typical for sizable dialysis platforms, which have remained steady over the past decade while multiples have expanded significantly in many other healthcare industry segments. This could be related to the fact that the dialysis industry was already highly concentrated by 2012, reducing the number of potential buyers and lowering the potential for future growth through acquisition. Other factors may include the regulatory overhang from several significant qui tam lawsuits in the industry, as well as continued reimbursement pressure.