I know that Mark simply cannot resist a good debate about anything to do with investments, venture capitalists, or merger and acquisitions. So, I immediately thought of Mark when I came across a report on the acquisition of HealthGrades by Vestar Capital Partners. HealthGrades is a publicly traded healthcare ratings organization.
According the report, Vestar has offered a 32% premium over HealthGrade’s 30-day average closing stock price. Purchase price is $294M. HealthGrade’s revenue for 2009 was $53M, with a reported net income of $7.1. For the most recent quarter, HealthGrade’s revenue was $15.6M while their net income was $3.2M.
It appears that Vestar is prepared to pay approximately 5.5X last year’s revenue. Mark, what do you think of the valuation? Do you think that we’ll see similar valuations for other health IT vendors?