IPO Window Closed. M&A Door Wide Open In Health IT

As health IT investors for nearly 20 years, it is no surprise to us that Berkery Noyes reports strong M&A activity in the health IT industry in 2012, compared to the past two years.

Health IT merger and acquisition deals have increased over the past year, according to a report by investment bank Berkery Noyes.  The report examined health care industry activities in 2012 and compared it with data from 2010 and 2011.

Most venture capital investors these days (or even ever) don’t invest in a company with the ultimate goal of taking it public…M&A is a much more realistic exit route.

Here are some take-aways from the report:

  • Health IT merger and acquisition deals increased by 11% in 2012 and accounted for 41% of the aggregate transaction volume for the health care industry.

The report also found that from 2011 to 2012, merger and acquisition activity increased by:

  • 50% for mobile health applications;
  • 37% for revenue cycle management technology;
  • 35% for consumer health information tools; and
  • 27% for health care business services.

We are seeing a lot of M&A activity associated with large healthcare companies pivoting very quickly to buying new platforms to help drive their new strategies in healthcare IT.

VCs expect hospitals, insurers and other large organizations to adopt new technologies more readily as they seek to keep pace with mandates from the healthcare reform law and other changes in the medical & health marketplace.

Startups are certainly positioned very well to lead the way in innovation in as the healthcare ecosystem is undergoing a significant transformation.