NEW YORK — October 13, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2017 mergers and acquisitions trend report for the Healthcare/Pharma Information and Technology Industry.

The report analyzes M&A activity for the sector during the first three quarters of 2017 and compares it with data covering 2016. This market includes information, technology, and digital companies servicing the pharmaceutical, healthcare payer, and healthcare provider spaces.

Transaction volume year-to-date saw a slight uptick on a quarterly basis, from 103 to 107. Aggregate value declined by 51 percent, from $14.9 billion to $7.3 billion. However, total value in second quarter 2017 increased more than fivefold, which was the peak for value during the past seven quarters covered in the report. In terms of valuations, the median revenue multiple remained constant at 2.1x while the median EBITDA multiple experienced a minor shift from 12.5x to 13.2x. 

The industry’s highest value third quarter deal was KKR’s Internet Brands’ announced acquisition of WebMD Corporation, an online health information provider, for $2.8 billion. Internet Brands completed another industry transaction during the quarter with the acquisition of, a dental and health savings online marketplace. Meanwhile, the largest strategic transaction in third quarter 2017 was Optum’s announced acquisition of The Advisory Board Company’s healthcare business for $1.3 billion.

Deal flow in the Healthcare IT segment declined 26 percent over the past three months, returning to its first quarter level. Notable Healthcare IT transactions in third quarter 2017 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 and NantHealth’s provider and patient engagement solutions for $62 million.

M&A activity in the combined Pharma segments increased 67 percent on a quarterly basis, from 12 to 20 transactions. Notable deals in the Pharma related segments during the third quarter included 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 and Parallel 6, a SaaS platform designed to recruit, enroll, engage and manage patients in clinical trials, for $40 million; and Evotec BioSystems’ acquisition of Aptuit, a provider of drug discovery and development services, for $300 million. As for other select markets covered in the report, volume in the Healthcare Business Services segment improved 53 percent over the past quarter, from 15 to 23 transactions.

“Both strategic and financial buyers are looking to acquire companies that are experiencing rapid growth,” stated Tom O’Connor, Managing Director at Berkery Noyes. “Companies offering unique software tools and solutions that have scale and recurring revenue models are receiving a premium acquisition price. This includes revenue cycle management, point-of-care information solutions, and many other attractive niches.”

“The breadth of acquirers for HIT companies continues to expand as buyers look to capitalize on the size, rapidly evolving dynamics and growth characteristics of the healthcare market,” said Jonathan Krieger, Managing Director at Berkery Noyes. “Acquirers are aggressively looking to broaden product suites, leverage distribution channels, and realize revenue and cost synergies.”

“M&A driven expansion of strategic healthcare technology and information platforms has been a dominant trend,” added Jeffrey Smith, Managing Director at Berkery Noyes.  “Independently owned companies providing software, information, data, communications and services solutions to the healthcare and life science industries are experiencing an active market with competitive sales processes and excellent valuation opportunities.”