Despite the perception that valuations have risen in the post-pandemic era, the valuation tide has not lifted all boats equally. Following the pandemic, Health IT M&A valuations increased an impressive 36% from 5.1x revenue to 6.9x revenue. Meanwhile, the expanding universe of publicly traded Health IT, now 70 companies strong thanks to 35 recent IPO and SPAC transactions, contracted 16% in 2021 compared to a 22% rise in the NASDAQ. Publicly-traded Health IT also trades at a significant and growing discount to Enterprise SaaS – the 70 company HGP Health IT Index trades at 7.4x TTM revenue versus 17.2x TTM revenue for the 90 company Enterprise SaaS Index. The Virtual Care Index, comprising once highflyers such as Teladoc and Amwell, declined a staggering 53% last year. The sector isn’t alone – nearly 40% of the NASDAQ Composite constituents declined over 50% from highs during the year, reflecting a drastic correction in part due to looming higher interest rates.
All the while, the rate of investment flowing into US Health IT nearly doubled in 2021, from $16.4 billion in 2020 to $29.1 billion in 2021, largely at multiples that look more like Enterprise SaaS than Health IT. Investors are betting on a future that looks more promising than the past – the Health IT investment thesis is predicated by the expectation that strong fundamentals of the digital health transformation will drive higher growth rates, a key metric that has thus far proven to be elusive for most of the public company set.
The Semi-Annual Report includes the following:
- Health IT Valuations in the Post-Pandemic Era
- Health IT Company Performance, as compared to Public Markets
- Health IT Market Trends
- Health IT M&A and Investment Activity
- Healthcare Capital Markets Performance and New Entrants
- Macroeconomic Trends
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