86
HEALTHCARE
NEWS
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ADVERTISER
ASC valuation
amid COVID-19:
9 cash flow
considerations
By Laura Dyrda
A
SCs have been an attractive investment
over the years because they can bring in
consistent revenue and distributable cash
flows on a reliable basis, according to VMG Health.
But beginning in early March, ASCs began to halt
elective surgeries in accordance with requests from
the federal government and other organizations to
reroute supplies to the front line caregivers for CO-
VID-19 patients and stem-the-spread of the virus.
e postponed and canceled surgeries are disrupt-
ing the ASC's ability to thrive as usual, but centers
will "remain attractive over a long-term investment
horizon," says VMG in a new report.
e report also laid out key considerations for the
cash flow impact. Over the next six months, the key
considerations for cash flow impact include:
• How much volume is expected to drop
• How long the center's cash flow will be dis-
rupted
• ASC location, as some communities will expe-
rience longer disruption and higher infection
rates
• Increased bad debt and unemployment levels
e cash flow considerations for impact more than
six months into the future include:
• How quickly delayed elective cases can be
rescheduled
• ASC capacity for rescheduling cases
• Local and macroeconomic conditions, includ-
ing the impact on payers
• Whether the center needs additional credit
facilities, temporary rent or other expense
deferrals
• Government relief extended to healthcare
providers and small businesses
"Some centers may choose to delay equity trans-
actions for a period of time, hoping for private
markets to stabilize and for increased clarity on the
magnitude and duration of impact. However other
transactions will move forward and will require
thoughtful assessment of risk, short-term and long-
term cash flow impacts," according to the report.
n
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