Healthcare IT M&A activity up 19%

Mergers and acquisitions activity in the healthcare information technology sector jumped 19% for the first three quarters of 2012 compared to 2011, according to a recent report from Berkery Noyes, an independent mid-market investment bank.

The Healthcare/Pharma Information and Technology Industry report analyzes M&A activity for the industry that includes information and technology companies servicing the pharmaceutical, healthcare payer, and healthcare provider spaces.

Outlook strong: While M&A activity year-to-date improved, both transaction volume and value fell seven percent from the second to third quarter 2012. Even so, the outlook in this sector is strong, according to Jonathan Krieger, managing director at Berkery Noyes.

“Legislative incentives continue to increase the velocity of deal flow in the healthcare IT M&A market,” said Krieger in a press release. “Focuses on the interoperability and connectivity of clinical and financial information are heavily dependent on enabling technologies. The healthcare payer side of the business is seeing a lot of deal activity as health insurers continue to diversify revenue streams and acquire third-party vendors," he said. "Recent deal activity in the healthcare audit recovery niche highlights this trend.”

Tom O’Connor, managing director at Berkery Noyes, added: “Both strategic and financial buyers are looking to acquire companies that are experiencing rapid growth. Companies offering unique software tools and solutions and have scale, rapid revenue growth and recurring revenue models are receiving a premium acquisition price.”