The healthcare IT market comprises businesses that engage in the development, distribution and integration of different types of software and IT systems for the healthcare sector. We segmented the European market into: (i) healthcare information systems, (ii) communication systems, (iii) business intelligence, (iv) business processes, (v) medical analysis and (vi) multidisciplinary.

The European market is fragmented, with most incumbents acting on a regional level. This is primarily driven by differences in regulatory requirements between European countries. Executives interviewed by Gain.pro expect market consolidation to continue into the foreseeable future. There are two main drivers: (i) a consolidating customer landscape is demanding larger one-stop-shop IT partners and (ii) M&A is an important growth strategy given the often already significant local market shares and organic internationalisation being a less viable option given high entry barriers.

Sponsor-led interest has been high, mainly driven by the market’s favourable macroeconomic drivers, resilience and recurring sales nature, as well as players’ high bottom-line margins, cash generative capacity and customer switching costs. Where public healthcare IT providers trade at an average LTM EV/EBITDA multiple of ~22.2x (mid-2021), add-ons are typically valued at ~8-10x EBITDA (interview by Gain.pro).

ESG topics primarily relate to potential social and governance issues. As data breaches are becoming more prevalent, healthcare IT providers need to invest heavily in cybersecurity to adequately address potential breaches. From a social perspective, healthcare IT systems are mission-critical for patient health and are improving efficiency in the healthcare system. As such, system uptime is of the utmost importance.