Mergers and acquisitions (M&A) activity in the healthcare IT industry rose during the first half this year, with volume increasing 23 percent, from 101 deals in the second half of 2017 to 124 deals so far in 2018, according to investment banking firm Berkery Noyes.
The firm’s first half 2018 M&A trend report examines deals in the healthcare and pharmaceutical information and technology industries.
The industry’s largest sponsored transaction in the first half of 2018 was Veritas Capital-backed Verscend’s announced acquisition of Cotiviti, a provider of payment accuracy and analytics driven solutions, for $4.82 billion. Veritas Capital also completed another deal in the top ten list during the half year period with the announced acquisition of the value-based care division from GE Healthcare for $1.05 billion, according to the report.
Seven of the industry’s top ten largest deals year-to-date occurred in the healthcare IT segment.
Overall, for the pharma and health IT industries, total M&A transaction volume in 2018 declined by three percent over the second half of 2017, from 239 to 232.
Total transaction value in the first half of 2018 rose by 54 percent over the second half of 2017, from $13.63 billion to $20.93 billion, according to the report.
The median revenue multiple, after rising from 1.9x in the first half of 2017 to 3.0x in the second half of 2017, declined to 2.3x in the first half of this year. During the last 30 months the median revenue multiple was 2.1x.
Berkery Noyes tracked 1,154 healthcare and pharma IT transactions between 2016 and the first half of 2018, of which 244 disclosed financial terms, and calculated the aggregate transaction value to be $72.62 billion. Based on known transaction values, the firm projects values of 910 undisclosed transactions to be $9.22 billion, totaling $81.83 billion worth of transactions tracked over the past two and a half years.
