GHA: Did the COVID-19 pandemic affect your deal process with USOA, and will it have an impact on how you value practices this year?
Castleford Capital: COVID-19 did not have an impact on the formation of USOA Strategic Capital, as the underlying rationale for investment is robust. However, when we think about the investments to be made and the managing those investments, COVID is definitely a factor.
Through the end of 2020, practice volumes returned to 90%+ of pre-pandemic levels after hitting rock bottom in March. The practice procedures to deal with COVID took some time and careful thought to implement, and it also took time for patients to develop confidence that their provider was managing the COVID risk.
With the recent surge and shutdowns in certain geographies, practice volumes are bound to be impacted in the short-term. However long-term demand will return. Promise of the COVID vaccines’ effectiveness will add to the confidence.
From a valuation standpoint, given the competitiveness in the sector, we don’t see COVID impacting valuation multiples.