HealthL & # 39; IT remains a very attractive investment sector, despite concerns over the fact that these companies are overvalued, according to KPMG-Leavitt Partners 2019 Investment Outlook, a survey on health investment professionals .
Looking at 2019, more than a third of respondents (34 percent) said they were more interested in healthcare investments, followed by care management (31 percent), home health (23 percent), medical groups focused on retail sales (22%) and primary care practices (21%).
KPMG of New York and Leavitt Partners, based in Salt Lake City, interviewed 175 online respondents from companies, healthcare systems, investment banks, venture capital firms and private equity firms between 17 September 2018 is October 21, 2018. Of those interviewed, 32% were executives of the C-suite; 29 percent were principal, partner or CEO; 32% were vice-president or director; Six percent were analysts / associates and 2 percent held other titles.
"We are not surprised by the great interest in health care and health care outside the hospital," Governor Mike Leavitt, founder of Leavitt Partners, based in Salt Lake City Utah The Secretary of the United States Governor and Health and Human Services stated in a statement. "As health care continues to progress towards value, the emphasis on transferring assistance to low-cost sites and improved coordination will continue and those who can increase quality and reduce costs win ".
According to an October report by Rock Health, 2018 is already the most funded year for digital health start-ups. Funding for digital healthcare in the last quarter rose to $ 3.3 billion in 93 agreements, pushing funding for 2018 to $ 6.8 billion, already exceeding the annual total of last year's funding, which was $ 5.7 billion, more than a billion dollars.
By examining respondents' forecasts for investing activities in 2019, in the health care and life sciences market, 96% of respondents see a consistent or moderate investment in IT and health data in the next year, while a similar percentage (90%) see significant or moderate investments in outpatient services. 44% expect many investments in post-acute care services, 39% expect significant investments in provider services and about a quarter of respondents believe there will be many investments in managed public programs, payment service providers and pharmaceuticals and biotechnology manufacturers. Eighteen percent believe there will be significant investments in medical devices, diagnostics and medical equipment.
The results of the survey indicate that there is concern that health is overvalued, but investors believe there is room to rise.
Most investment professionals consider IT investments in the health sector as an over-valued sector (64%), however 40% expect ratings to increase in 2019, while 51% will see them as usual. About two-thirds of respondents (62%) believe that the health IT sector will grow faster than the market in 2019, and three-quarters of investment professionals see increasing competition in the health IT market. Investors also estimate that the average multiple purchase price, in terms of EBITDA, will be 12.5 for the IT health sector in 2019. Respondents interviewed expect the constant demand for tools to help consumerism have an impact on investment and production in the sector, according to the survey.
About four out of ten respondents believe that the health market is experiencing a "moderate bubble", while 9% believe that the bubble will probably break out.
Service management solutions for risky service providers, a highly competitive industry that helps to coordinate care for chronically or severely injured patients, should be the second largest investment industry behind IT of health, also guided by consumerism trends and greater attention to early care interventions.
Looking at potential drivers of M & A activity in the health and life sciences sector in the coming year, 64% of respondents cited cost consolidation and economies of scale, while 45% cited accrescription acquisition strategies. 40% of respondents see payment patterns change as drivers of merger and acquisition activity and 38% have cited competitive pressure. Other drivers mentioned by respondents include expansion / sale of service areas (25 percent), geographic expansion / contraction (24 percent), revenue synergies (22 percent), need for cash-on-balance (17 percent), and legislation and legislation (13 percent).
"Bids are largely driven by the need for savings, economies of scale and improved cash flow or gains per share," Carole Streicher, A leading healthcare advisory and life sciences consultant at KPMG, based in New York, said in a statement. "Secondly, there is a bit of a defensive posture that motivates investments while health organizations are confronted with competition and reimbursement models linked to quality and efficiency, as well as Entry of technology companies investing in the sector ".
