NEW YORK — July 17, 2012 — Berkery Noyes, an independent mid-market investment bank, today released its first half 2012 mergers and acquisitions trend report for the Healthcare/Pharma Information and Technology Industry.
The report analyzes merger and acquisition activity for the sector over the first half of 2012 and compares it with activity in the four previous six-month periods. This market includes information and technology companies servicing pharmaceutical, healthcare payer, and healthcare provider companies.
According to Berkery Noyes’ latest research, transaction volume increased 28 percent while transaction value decreased 14 percent. The largest overall industry transaction was Veritas Capital Partners’ acquisition of Thomson Reuters’ Healthcare Business, a subsidiary of Thomson Reuters, for $1.25 billion. Verisk Analytics’ announced acquisition of MediConnect Global for $324 million was one of the largest transactions in the Healthcare IT segment, which underwent a 23 percent increase in volume compared to second half 2011.
The median revenue multiple remained constant at 2.2x, while the median EBITDA multiple decreased from 13.7x to 12.2x. In terms of transaction type, 27 percent of industry deals were financed by private equity, venture capital, and other investment firms. This represented a seven percent increase over second half 2011.
According to Tom O’Connor, Managing Director at Berkery Noyes, “The overall deal flow showed in general more transactions but smaller enterprise value deals getting done. The current market, due to large macro/regulatory changes in healthcare and a massive shift to electronic solutions, presents a very favorable climate for sellers with unique offerings, scale and profitability that are looking to capitalize on the high level of interest in healthcare information and technology solutions.” O’Connor continued, “The robust level of M&A activity shows that there are plenty of desirable, fast growing companies – many privately owned – that are attracting very high multiples and appealing to both strategic and financial acquirers. We expect to continue seeing a strong number of small to mid-sized deals for the rest of the year.”
Lightyear Capital’s announced acquisition of FIS’ Healthcare Benefit Solutions Business, a financial technology company that provides processing solutions for consumer directed healthcare accounts, was one of the largest deals in first half 2012, with an acquisition price of $335 million. “The proliferation of consumer directed health plans fundamentally changes the way healthcare benefits are administered and transacted,” said Jonathan Krieger, Managing Director at Berkery Noyes. “The healthcare industry is quickly evolving from a business-to-business (BtoB) to a business-to-consumer (BtoC) marketplace.”
M&A activity across all of the Pharma segments in the report increased 86 percent relative to the last half year period. Many pharmaceutical and biotech companies are dealing with the expiration of their patents and are looking for new technologies to supplement their existing research and development (R&D) efforts.
“Life science organizations are placing a lot of importance on cloud and SaaS models to improve planning and enrollment services related to their clinical projects,” stated Jeffrey Smith, Managing Director at Berkery Noyes. “Oracle’s announced acquisition of ClearTrial and IMS Health’s acquisition of DecisionView were two especially notable software transactions pertaining to drug development and clinical trials in the first half of 2012.”
A copy of the FIRST HALF 2012 M&A REPORT FOR THE HEALTHCARE/PHARMA INFORMATION AND TECHNOLOGY INDUSTRY is available at the Berkery Noyes website.