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Berkery Noyes: Health IT dwarfs entire market in 2012 transactions

By Kyle Murphy, PhD

Continuing a trend since 2010, health IT continues to outpace other health, medical, a pharmaceutical products and services by a significant margin, according to trend report published by Berkery Noyes. With many predicting 2013 to include a number of changes in the health IT space, driven by demands of healthcare organizations and providers to compete with their competitors and qualify for incentives such as meaningful use, these figures are likely to continue their upward trend and unlikely to surprise.

The independent mid-market investment bank’s full-year report for 2012 demonstrates the significant spending power within health IT industry, which more than doubled the next-highest market segment (healthcare business services), and shows no signs of letting up.

All told, health IT accounted for 41 percent of transaction volume for in 2012, 76 percent of this volume involving strategic buyers.

Source: Berkery Noyes

Of the 93 transactions that were financially sponsored in the past year and constituted $7.72 billion in aggregate value, they represent 24 percent of the total volume and 54 of the total value of the health IT market in 2012. Combined with transactions and values from 2010 and 2011, that’s more than 960 transactions worth more than $27 billion.

Source: Berkery Noyes

The 380 transactions that took place in 2012 comprise 287 strategic and 93 financial transactions. Of the active players in the market, McKesson came in as the most active acquirer in 2012 with 6 transactions, TPG Capital the most active financial sponsor with 5. And four of the top ten deals in the industry were the responsibility of private equity acquisitions.

Source: Berkery Noyes

Presumably, the health IT industry should benefit from the volatility in the market in 2013, with the year representing a make-or-break moment for EHR and health IT vendors trying to remain competitive as incentive amounts diminish.

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