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HIT M&A numbers up despite market downturn

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Despite recent turmoil in the financial markets, it looks like health IT transactions have had a surprisingly healthy few months. During the first quarter of 2008, 57 HIT deals were announced, equal to the number of deals announced in Q1 '07, according to a study by Healthcare Growth Partners. Not only did deal flow keep pace, valuations of companies involved actually grew. The media revenue multiple in such deals made a big jump in Q1 '08, hitting 2.1x, as compared with 1.4x during the same quarter last year. Meanwhile, the median EBITDA multiple climbed too, rising to 14.2x compared with 13.4x for 2007. More than half of the deals were for less than $50 million, though a few--such as the Misys/Allscripts combination--were valued at over $100 million.

For more data from the report:
- read this report (.pdf)

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Comments

The reality is that the HIT market is in a turmoil. Medical Economics recently stated in an article how "strong" EHR companies seem to be, yet if you look at their stock prices, they have performed much worse than the IT industry in general (see my last note on this page http://www.emrupdate.com/forums/t/13444.aspx?PageIndex=1 for the market report from the 4/2008 Health Data Management magazine). A big discussion where I ended up sending 3 letters to the editor to ME listing the list of troubled CCHIT-certified EHRs begins on that URL above. Some EMR companies have had their stock valuations decrease almost as much as Bear Stearns. The GE downfall on Friday is interesting, but unfortunately it's difficult to measure the full effect of the EHR market on that particular stock performance. All I could find in my research is that the "healthcare sector" went down 17%, but that includes radiology devices and other hardware related endeavors.

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