More than half of respondents in a recent survey are projecting the healthcare IT and data subsector to have “a lot” of investment activity in 2018 to 2019.
In surveying 265 finance executives at healthcare corporations, investment banks, and private equity firms, KPMG and Leavitt Partners found that 36 percent of respondents see the current state of the healthcare/ life sciences market as a “moderate bubble” and an additional 22 percent see the market as a “bubble likely to burst.”
When asked about overvalued sectors, respondents most frequently cited biotech (71 percent), specialty physician practice management (67 percent), behavioral health (63 percent) and healthcare IT (58 percent). Medicaid plans (23 percent) and population health/primary care (17 percent) were described as the most undervalued, according to the survey data.
“Healthcare stakeholders are anticipating accelerated investment activity in sectors that are enabling the transition from volume to value, such as digital technology, data analytics and outpatient services”, Gov. Mike Leavitt, founder of Leavitt Partners and Chairman of Leavitt Equity Partners, said in a statement. “We believe this report can provide insights to executives and investors as they navigate in an evolving health care ecosystem.”
Regarding health IT, a slight majority of respondents (52 percent) say they are projecting the healthcare IT and data subsector to have “a lot” of investment activity in 2018 to 19, followed by outpatient services (44 percent) and 33 percent each for pharma and biotech, and post-acute care services.
Healthcare/life sciences has been among the most active sectors for M&A activity with organizations looking to add scale, provide new services or products, or gain geographic breadth,” said Carole Streicher, leader of KPMG’s deal advisory practice for healthcare/life sciences. “Survey respondents see continued investment and acquisition activity in 2018, but we are seeing some concerns about valuation among market participants.”
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