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Feb
5

yet ANOTHER work comp service company’s been sold

This time it is MSA firm Gould and Lamb.  The purchaser is IME firm Examworks, and according to WorkCompWire, the price is $75 million, or about 7.9 times earnings.

Back in the day, this would have been considered a pretty healthy price – but things have changed – big time.  With PMSI/Progressive going for 10x+, Align for 17x, OCCM for 13x, and other deals mostly in the double digits, this may be a reflection of the rather muddy forecast for the IME business.

And I’m not sure I see the strategic link between IMEs and MSAs.  Sure, there’s some “relatedness”, but it’s a bit of a stretch to see how 1 + 1 = 3 with this deal.


7 thoughts on “yet ANOTHER work comp service company’s been sold”

  1. Do you know what was the price was when Abry purchased G&L from HIG back in 2007? I can’t find where it was disclosed.

    1. It wasn’t published. But the number was 180MM.
      I guess six years of flat to declining revenue doesn’t warrant a profit. Also, based on the disclosed interest expense of 9.2M, I am guessing they had a 80-90M loan to capitalize the purchase in 2007. ABRY’s equity position was most likely completely wiped out. Couldn’t happen to a nicer P/E firm in my opinion. Karma for backing an RX physician dispenser.

  2. Fairly accurate intel on the purchase price and debt. Revenues and EBITDA have declined sharply since 2010 down +35% and +55%. Additionally, those 2013 financials don’t reflect the termination of G&L by their largest client starting in 2014. Presumably, ABRY lost 100% investment and the banks got out just in time. Likely the bottom has not been reached on revenue or earnings and the low multiple reflect the 3 year slide. ExamWorks has their work cut out for them.

  3. Good Point. I forgot about them losing GalBas. Problem with G&L is their brand is completely broken. ExamWorks is making a huge error keeping them as a standalone company and allowing current management to remain.
    I give it no more than 36 months until this sale is a 15x earnings deal. Dead man walking.

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Joe Paduda is the principal of Health Strategy Associates

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