Valuations for Health IT Companies

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?

Mike

One response to “Valuations for Health IT Companies

  1. Pingback: Tweets that mention Valuations for Health IT Companies « eHealth Musings -- Topsy.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s