Dec 13, 2023

Healthcare IT M&A Update – December 2023

Healthcare IT M&A
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Administrative Automation Demand Drives Healthcare IT M&A

The Healthcare industry has become increasingly reliant on automation and analytic technology to drive performance improvement, supporting Healthcare Information Technology (IT) sector demand, and buoying the Healthcare IT merger and acquisition (M&A) market. Of note, effectively deploying automation technologies, such as artificial intelligence (AI), has the potential to eliminate $200 billion to $360 billion of annual U.S. healthcare spending, according to McKinsey & Company.1 In addition, roughly one-fourth of the estimated savings is anticipated to be realized in administrative functions with the adoption of revenue cycle management (RCM).

Despite meaningful declines from peak acquisition multiples in 2021, the Healthcare IT M&A market continues to demonstrate resiliency, with YTD M&A volume remaining nearly on par with completed transactions in 2022. Further, Healthcare IT multiples continue to outperform the broader technology market.

David DeSimoneManaging Director, Capstone Partners

Healthcare IT IPO Market Remains Muted, Spurring M&A Exits

Consistent disruption in capital markets has proved worrisome for Healthcare IT sector participants seeking an exit via initial public offering (IPO). Although sector demand has remained strong with healthcare services providers looking to remedy inefficiencies through technology, disruptions in the Banking sector have caused volatility in the public equity markets. As a result, the Healthcare IT IPO market has remained muted, with IPOs representing only 3.3% (five deals) of total venture capital exits year-to-date (YTD). This marks a 50% decline from YTD 2022 and a 78.3% drop from YTD 2021. Later stage Healthcare IT sector players have undoubtedly been wary of potential discounted issue prices. This has forced many venture capital-backed businesses to look to M&A as their primary exit strategy, namely transacting with strategic buyers (69.5% of YTD venture capital exits) to gain access to sufficient growth capital and ensure longevity of the business.

Healthcare IT M&A Volume Persists Compared to Broader TMT Industry

 The Healthcare IT M&A market has remained robust with 222 transactions announced or completed through YTD. Although this marks a YOY decline of 4.7%, the broader Technology, Media & Telecom (TMT) M&A market has registered a significantly deeper decline, with total industry deal volume dropping 24.7% YOY through YTD. Strategic and financial buyers in the space have continued to prioritize businesses with advanced technologies, strong margins, and exposure to key end markets such as Primary Care. To-date, strategic buyers have continued to control the Healthcare IT M&A market, accounting for 56.3% of transactions. However, private equity activity firms have maintained their presence in the space, comprising 43.7% of deals to-date compared to 42.9% in YTD 2022. Amidst an elevated interest rate environment, sponsors have prioritized add-on acquisitions (38.7% of transactions to-date) to bolster current portfolio companies while minimizing the amount of debt required to finance acquisitions.

M&A multiples in the Healthcare IT sector have remained healthy, with the average YTD M&A multiple amounting to 5.0x EV/Revenue, outpacing the broader TMT industry average of 3.9x EV/Revenue during the same period. Middle market businesses in the sector have also attracted strong valuations, with an average YTD purchase multiple of 5.0x EV/Revenue compared to the middle market TMT industry average of 2.6x EV/Revenue. Sector targets with a high degree of recurring revenue and interoperability have continued to garner healthy multiples despite a modest slowing of sector deal flow. Throughout 2024, the TMT and Healthcare industries are expected to capture the highest M&A valuations, as noted by 64% and 58% of M&A advisors polled in Capstone’s 2023-2024 Trends in Global M&A Survey. Sitting at the intersection of the TMT and Healthcare industries, Healthcare IT sector M&A valuations are slated to remain robust relative to historical averages.

 Healthcare Providers Adopt RCM Software to Mitigate Staffing Shortages

 Amidst rapid digitalization, the Healthcare space has faced a growing number of data siloes and unorganized workflows, propelling demand for RCM solutions. RCM software typically aggregates data from third-party payors, payment models, and providers’ patient network, organizing the information in a single workflow. The benefits of which have increasingly piqued healthcare providers’ attention, with 61% of providers indicating an interest to outsource RCM processes to external parties, according to CWH Advisors’ 2022 PatientPay Survey.2 In addition, 63% of providers surveyed noted a staffing shortage in their RCM department, further necessitating automated software solutions. The culmination of staffing shortages and unorganized workflows has created a strong M&A interest in the RCM segment.

Acquirers Increasingly Pursue RCM Targets to Bolster Automation

 Acquirers in the Healthcare IT M&A market have increasingly targeted RCM providers to automate accounts payable/accounts receivable (AP/AR) functions, enhance payor data transparency, and ensure compliance with federal and state regulations. Although RCM businesses have only comprised 6.8% (15 deals) of total sector M&A targets YTD, the number of RCM targets has doubled compared to YTD 2022 and YTD 2021 (seven deals respectively). RCM providers have garnered healthy M&A valuations from both strategic and financial buyers through YTD, illustrated by the notable transactions outlined below.

  • Computer Programs and Systems Acquires Viewgol (October 2023, $67.5 Million) – In October 2023, Computer Programs and Systems (Nasdaq:CPSI) acquired Viewgol for an enterprise value of $67.5 million. Viewgol specializes in RCM, business intelligence solutions, and data analytics solutions for the Healthcare industry, with a focus on the Ambulatory sector. The acquisition is expected to bolster CPSI’s presence in the Ambulatory market, enhance its RCM capabilities, and expand its addressable market to more than 20 specialty healthcare areas, according to a press release.3 In addition, Viewgol is anticipated to generate $4.5 million of adjusted EBITDA and $1.5 million of GAAP net income in 2024, demonstrating public players’ willingness to acquire middle market providers with scalable RCM technology offerings. “The scalability of this direct offshore presence marks a critical step towards our priority: ensuring our RCM offerings remain affordable, profitable, and scalable by leveraging the global marketplace. Together with Viewgol, we will not only be able to achieve greater efficiencies and drive margin at scale, but we also expect to capture meaningful synergies by utilizing its existing offshore infrastructure,” said Chris Fowler, CEO of CPSI, in the press release.
  • LGI Healthcare Solutions Acquires Boston Software Systems (October 2023, Undisclosed) – LGI Healthcare Solutions, a leading developer of healthcare IT solutions in Canada, acquired Boston Software Systems in October 2023. Terms of the transaction were undisclosed. Boston Software Systems provides workflow automation and system integration software solutions for hospital environments, allowing healthcare organizations to streamline and automate various complex business processes such as RCM, claims management, automated data entry, report generation, and payment posting. The transaction is anticipated to enhance LGI’s software portfolio, enabling healthcare IT teams to integrate automation throughout their operations and yield significant cost reductions. “Boston Software Systems has 30 years’ experience in the realization of healthcare automation, with hundreds of hospitals, pharmacies, labs, and health systems using our solutions in the execution of hundreds of thousands of workflows every day to address resource limitations, facilitate data access, and optimize clinical outcomes, quality, and reimbursement. We look forward to working with the LGI team to further reinforce our core capabilities and help drive our next phase of growth. Our combined teams now have greater resources and capabilities to drive efficiencies across diverse healthcare ecosystems,” said Matthew A. Hawkins, Executive Vice President of Healthcare Strategy at Boston Software Systems, in a press release.4
  • Thoma Bravo Acquires NextGen Healthcare (September 2023, $1.8 Billion) – In September 2023, private equity firm Thoma Bravo acquired NextGen Healthcare for an enterprise value of $1.8 billion, equivalent to 2.6x EV/Revenue and 30.3x EV/EBITDA. NextGen offers clinical care software solutions including RCM, electronic health records (EHR), telehealth, and analytics and reporting. Leading up to the acquisition, RCM had become an increasingly significant recurring revenue contributor for NextGen. Of note, NextGen’s Surround Solutions division, which includes its RCM practice, generated $549 million of recurring revenue in fiscal year (FY) 2023, marking a respective increase of 10% and 18.1% compared to FY 2022 and FY 2021, according to the company’s May 2023 investor presentation.5 Thoma Bravo plans to execute a buy-and-build strategy, pursuing multiple add-on acquisitions to scale NextGen’s market share. “We are excited to support NextGen Healthcare's long-term growth by leveraging Thoma Bravo's operational and software expertise. We look forward to adding new products and capabilities, both organically and inorganically, to continue enabling NextGen Healthcare's customers to deliver exceptional patient outcomes," said Peter Hernandez, a Vice President at Thoma Bravo, in a press release.6

To discuss the widespread impacts revenue cycle management, provide an update on your business, or learn about Capstone's wide range of advisory services and Healthcare IT M&A knowledge, please contact us.

Max Morrissey, Manager, was the lead Market Intelligence contributor to this article.


  1. McKinsey & Company, “Administration Simplification: How to Save a Quarter-Trillion Dollars in U.S. Healthcare,”, accessed November 20, 2023.
  2. CWH Advisors, “2022 PatientPay Study,”, accessed November 20, 2023.
  3. Yahoo Finance, “CPSI Acquires Viewgol and Accelerates Global Workforce Presence,”, accessed November 17, 2023.
  4. Boston Software Systems, “LGI Healthcare Solutions Acquires Boston Software Systems,”, accessed November 17, 2023.
  5. NextGen Healthcare, “May 2023 Investor Presentation,”, accessed November 17, 2023
  6. Thoma Bravo, “Thoma Bravo Completes Acquisition of NextGen Healthcare,”, accessed November 17, 2023.

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