NEW YORK — January 19, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2016 mergers and acquisitions trend report for the Healthcare/Pharma Information and Technology Industry.

The report analyzes merger and acquisition activity for the industry during 2016 and compares it with data covering 2014 and 2015. This market includes information, technology, and digital companies servicing the pharmaceutical, healthcare payer, and healthcare provider spaces.

Total transaction volume remained constant on a year-to-year basis. Aggregate value gained 75 percent, from $17.47 billion to $30.51 billion. Excluding IMS Health’s merger with Quintiles Transnational Holdings for $8.75 billion, value rose 25 percent. As for strategic acquirers, the number of deals improved three percent, from 351 to 363. Private equity backed volume fell 12 percent, from 101 to 89.

In terms of valuations, the median revenue multiple decreased from 3.0x to 2.6x, while the median EBITDA multiple moved slightly from 13.2x to 13.9x. Over the past three years, deals in the $10-$20 million range received a median enterprise value multiple of 2.0x revenue, compared to 2.4x revenue for those in the $20-$80 million range and 3.8x revenue for those in the $80-$160 million range and above.

Regarding private equity, three of the top five and six of the top ten highest value acquisitions in 2016 were completed by financial sponsors. The industry’s largest private equity backed deal during the year was Blackstone Group’s announced acquisition of TeamHealth, a provider of outsourced physician staffing solutions for hospitals in the U.S., for $6.02 billion in the Healthcare Business Services segment. Other notable sponsored deals in the Healthcare Business Services segment included EQT’s acquisition of Press Ganey Associates, a healthcare performance improvement company that offers patient experience measurement, performance analytics and strategic advisory solutions, for $2.4 billion; and Bain Capital’s announced acquisition of Epic Health Services, a provider of pediatric skilled nursing, therapy, developmental services, and home adult home healthcare services.

Deal volume in the Healthcare IT segment decreased five percent on an annual basis. This followed a 20 percent rise in 2015. Strategic acquirers were dominant and comprised 86 percent of Healthcare IT volume over the past year. The segment was also responsible for five of the overall industry’s top ten highest value deals in 2016.

Notable Healthcare IT transactions during the year included IBM Watson Health’s acquisition of Truven Health Analytics, a provider of healthcare data, analytics and insights, for $3.58 billion; GI Partners’ acquisition of Netsmart Technologies, a provider of electronic health records, patient management, billing and other solutions, which was acquired in a joint venture with Allscripts, for $950 million; Veritas Capital Partners’ announced acquisition of Verisk Health, a data services and analytics company, for $820 million; ResMed’s announced acquisition of Brightree, a cloud-based software company that serves the post-acute care sector, for $800 million; Wipro’s acquisition of HealthPlan Services, a technology and Business Process as a Service (BPaaS) provider that serves the U.S. health insurance sector, for $460 million; and Wolters Kluwer Health’s announced acquisition of Emmi Solutions, a patient engagement software company primarily used by value-based payers and providers, for $170 million.

"One of the most active spaces in healthcare M&A is behavioral health," said Jon Krieger, Managing Director at Berkery Noyes. "It’s a high growth, fragmented market driven by very favorable industry tailwinds."

“We continue to see workflow tools that make practicing medicine, performing a clinical trial or smoothing the operations of healthcare entities as areas with lots of entrepreneurs developing unique solutions,” stated Tom O’Connor, Managing Director at Berkery Noyes. “In addition, there’s a high level of interest in solutions that help move hospitals and other healthcare organizations off client server, on premise solutions to SaaS and cloud opportunities. This entails lower upfront cost, less IT hassles and a better environment for updates.”

Upon examination of additional markets covered in the report, the combined Pharma IT, Pharma Business Services, and Pharma Information segments saw a 76 percent increase, from 45 to 79 transactions. Deal flow in the Pharma IT segment nearly doubled, from 25 to 47 transactions. “The pharmaceutical market is experiencing strong demand in the areas of pharma technology, proprietary data, compliance tools, and drug safety information,” added Jeffrey Smith, Managing Director at Berkery Noyes.

A copy of the HEALTHCARE/PHARMA INFORMATION AND TECHNOLOGY INDUSTRY M&A REPORT FOR FULL YEAR 2016 is available at the Berkery Noyes website.