Healthcare M&A rose in first half of year

Mergers & acquisitions continue to grow within the healthcare sector, with M&A volume and value both on the rise in the first half of the year, according to a report from investment bank Berkery Noyes.

Total deal volume was up 3 percent in the first half of 2016 compared to the second half of 2015, according to the report. Aggregate value of that M&A increased from $10.44 billion to $17.96 billion, a 72 percent increase, largely due to healthcare consultancy IMS Health’s $8.75 billion merger with Quintiles Transnational Holdings.

The M&A activity was largely driven by healthcare information technology, representing six of the 10 highest-value deals of the year thus far, including ResMed’s acquisition of cloud-based software company for $800 million, according to the report. Strategic acquirers accounted for 85 percent of deal volume within healthcare IT, and a full 76 percent of volume for the aggregate healthcare industry, according to Berkery Noyes.

“Many healthcare technology companies are enjoying rapid revenue growth, high cash flow margins, low capital expenditures and defensible positions in the marketplace,” Berkery Noyes Managing Director Tom O’Connor said in a statement to press. “These characteristics make them attractive acquisition targets. The challenge in the marketplace today is to find a HIT company with little or no institutional capital that is growing rapidly with recurring revenue that is willing to entertain a sale.”

The report comes amid an increased federal crackdown on M&A within the healthcare sector, such as that of Advocate Health Care and NorthShore University HealthSystem, with the Federal Trade Commission concerned healthcare mega mergers hurt competition, FierceHealthcare previously reported.

- read the report

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