NEW YORK — January 18, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2017 mergers and acquisitions trend report for the Healthcare/Pharma Information and Technology Industry.

The report analyzes merger and acquisition activity for the industry during 2017 and compares it with data covering 2015 and 2016. This market includes information, technology, digital, and services companies servicing the pharmaceutical, healthcare payer, and healthcare provider spaces.

Total transaction volume remained almost constant on a year-to-year basis. Aggregate value also stayed nearly the same at $30.72 billion. As for strategic acquirers, the number of deals declined six percent, from 362 to 341. Private equity backed volume increased 24 percent, from 96 to 119. Three of the industry’s top five largest deals in 2017 were backed by financial sponsors. These three transactions, with a combined total disclosed value of $9.72 billion, accounted for nearly one-third of the industry’s total value during the year.

In terms of valuations, the median revenue multiple improved from 1.9x to 2.2x, while the median EBITDA multiple rose from 9.5x to 12.5x, which was close to its 2015 level. Over the past three years, deals in the $10-$40 million range received a median enterprise value multiple of 1.9x revenue, compared to 3.5x revenue for those in the $40 million and above range.

The combined Pharma IT, Pharma Business Services, and Pharma Information segments experienced a 16 percent increase in volume, from 80 to 93 transactions. Two of the industry’s top three largest transactions in 2017 occurred in the Pharma Business Services segment. Along these lines were Pamplona Capital Management’s announced acquisition of PAREXEL International Corporation, a global biopharmaceutical services provider, for $4.92 billion; and INC Research’s announced merger with inVentiv Health for $4.55 billion, which will lead to the creation of the world’s second largest biopharmaceutical outsourcing provider.

Other notable Pharma related deals during the year included McKesson Corporation’s acquisition of CoverMyMeds, which offers electronic prior authorization solutions to pharmacies, providers, payers and pharmaceutical manufacturers, for $1.4 billion (which includes a $300 million earnout); and PRA Health Sciences’ announced acquisitions of Symphony Health Solutions, which offers data, analytics, and technology solutions for biopharmaceutical manufacturers, healthcare providers, and payers, for $530 million.

The Healthcare Business Services segment underwent an 12 percent decline in volume. The segment’s largest transaction in 2017 was Express Scripts’ announced acquisition of eviCore healthcare, a medical benefit management services company, for $3.6 billion.

Deal volume in the Healthcare IT segment decreased six percent on an annual basis. High profile Healthcare IT transactions during the year included Fidelity National Financial’s announced acquisition of T System, which offers clinical documentation as well as coding software and outsourced solutions, for $200 million; and Allscripts’ announced acquisitions of McKesson’s hospital and health system IT business for $185 million.

Meanwhile, notable mobile-based deals in 2017 included ABRY Partners’ announced acquisition of MobileHelp, a provider of mobile medical alert and personal health management solutions, for $130 million; and athenahealth’s announced acquisition of Praxify Technologies, which offers streamlined workflows, intuitive mobile interfaces and real-time analytical feedback for the EHR sector, for $63 million; and Google’s acquisition of Senosis Health, a mobile health monitoring startup.

The Consumer Health segment experienced a 32 percent increase in deal activity, from 25 to 33 acquisitions. The segment’s largest transaction in 2017 was KKR’s Internet Brands’ announced acquisition of WebMD Corporation, an online health information provider, for $2.8 billion. Internet Brands also completed a similar deal during the year with, a dental and health savings online marketplace.

“There are many Healthcare IT companies experiencing operating momentum as healthcare providers, payors and life science competitors increasingly rely on them to structure and analyze data as well as engage patients,” stated Jonathan Krieger, Managing Director at Berkery Noyes. “The M&A markets are currently an attractive exit option as the buyer universe has never been bigger and the debt markets are contributing to high valuation multiples.”

According to Tom O’Connor, Managing Director at Berkery Noyes, “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, recurring revenue models and rapid growth in attractive niches that are looking to capitalize on the high level of interest in healthcare information and technology solutions.”

“Given the favorable conditions in the marketplace, acquirers should continue to demonstrate strong demand in quite a few areas,” added Jeffrey Smith, Managing Director at Berkery Noyes. “This includes patient engagement, population health and related data analytics, treatment plan adherence, mobile solutions, and regulatory compliance.”

A copy of the HEALTHCARE/PHARMA INFORMATION AND TECHNOLOGY INDUSTRY M&A REPORT FOR FULL YEAR 2017 is available at the Berkery Noyes website.