Update 29 March 2022

Update 29 March 2022

The war in Ukraine continues and the news is filled with a strange combination of terrible pictures of homes bombed and people being forced to flee, and Ukrainians showing incredible bravery and resilience. I am a music fan, and a huge fan of The Clash. See here for an updated version of their most classic song by the Ukrainian band Beton.

Even in these strange times there is news from the Dutch healthcare sector. In this update we cover:

  • Valuations and volume of acquisitions in the sector are rising. Will this continue?
  • Actief Zorg continues to grow. When will profits catch up?
  • Mental healthcare and psychedelics – what is the situation in the Netherlands?

Valuation of Dutch healthcare companies increasing

Brookz is an online platform for selling and purchasing companies across all sectors of the Dutch economy. Brookz recently released data highlighting the growing value of Dutch healthcare companies. According to Brookz in 2018 the average valuation of an acquired Dutch healthcare company in 2018 was a factor 6.05*EBITDA. In 2021 the average value has increased to a factor of 6.3*EBITDA. Brookz also believes that there is more room for growth as the average valuation of a healthcare company in the UK is a factor 8.5*EBITDA.

According to Deloitte the increased valuation is due to more investors entering the sector. This is also highlighted by the increase in number of deals. In 2018 there were 205 M&A deals in the Dutch healthcare sector. In 2021 this has almost doubled to 350 deals with a total value of €2.7 billion. International organizations (40% of the deals) and private equity (64% of the deals) were drivers of the market for Dutch healthcare companies. Deloitte expects that the interest in the Dutch healthcare sector will increase in the coming years.

Actief Zorg continues to grow

In the update of 26 February 2019 we provided a snapshot of Actief Zorg and analyzed their acquisition of Joost Zorgt. Since then, Actief Zorg has made numerous other acquisitions (often of bankrupt homecare companies). The most recent example is the acquisition of BFM thuiszorg. This is a small company, with 2020 revenues of €2.0 million and 40 employees.

Through its acquisitions Actief Zorg has grown to an organization providing a wide range of home care services to 25.000 clients with 5.500 employees. Since 2018 revenues have grown by more than 40% per year reaching €71 million in 2020. Unfortunately, it appears that acquiring bankrupt companies is not good for the bottom-line. In the same period EBITDA has declined by 8% per year to €0.5 million in 2020.

The Dutch homecare sector is definitely ripe for consolidation. How long will Actief Zorg continue growing before focusing on increasing profitability?


Mental healthcare and psychedelics in the Netherlands

Internationally, there is a large and growing interest in the use of psychedelics as part of a treatment process for a wide range of mental healthcare issues (depression, PTSD, addiction, etc.). Inspired by a recent webcast by LEK, I thought it would be useful to provide an overview of the situation regarding psychedelics in the Netherlands.

In principle, we are not talking about recreational drug use nor the market for “recreational” drug-use where people try to recreate themselves through a combination of retreats and use of drugs (ayahuasca, etc.). However, as we will explain there is overlap between these segments due to the current Dutch legal structure related to drugs.

While the “drug-scene” in the Netherlands is not as permissive as many people think, we do have “coffee shops” that sell a broad range of marihuana-related products. We also have “smart-shops” selling products including “truffles”. Psilocybin is not legal in the Netherlands, and “magic mushrooms” cannot be sold legally. However, “truffles” (the underground part of the mushroom containing the same active ingredients and the part of the mushroom growing above-ground) are legal (or at least last not illegal).

Because of this slightly strange difference in legality, there are several providers of structured sessions using psilocybin. This includes local players such as Triptherapie and Essence, but also international companies such as Field Trip Health. The marketing is focused on terms such as “personal development and inner health” but also talks about “treatments” and typically have a team of psychiatrist and psychologists. A program with Field Trip costs around €4.000 and is private pay as the programs are not covered by the compulsory Dutch healthcare insurance scheme.

There are currently no Dutch-based psychedelic pharmaceutical companies visibly active in the market. Many of the international companies (Compass Pathways and Mindmed) are actively carrying out trials with Dutch universities and Mydecine is planning to open a psychedelic Center of Excellence in the Netherlands. It appears that the combination of the Dutch legal situation and experience within medical use of psychedelics makes it an attractive market for experimenting with different business models.