KUHN CAPITAL Wednesday, March 21, 2018
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A Rash of Health IT M&A

May 2

Two recent purchases illustrate the rising market for healthcare industry IT consultancies.

In late April IBM agreed to buy Healthlink, the biggest US player in the game. Houston-based Healthlink employs 625 and generates a revenue run-rate of $100 million. The company boasts an unusually strong roster: out of 550 billable consultants, 300 are MD�s, nurses or pharmacists. The buy marks the sixth purchase this year for IBM.

Only a week earlier, IBM services rival Accenture agreed to pay $175 million for the 600-employee healthcare consulting practice of troubled Capgemini. In contrast to Healthlink, the Capgemini practice consists of only 30 clinical professionals.

In both cases, the acquirers see growth ahead for the industry as new regulations drive demand for modernized medical record-keeping in a business heretofore characterized by its primitive levels of automation. In addition, both IBM and Accenture are attempting to offset the increasingly narrow IT services margins resulting from the offshoring of more generic processes to competitors largely based in India.

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