In May, as the U.S. cautiously started to reopen amid intense controversy, HGP polled hundreds of private equity funds across all stages of investment to find out how COVID-19 has impacted deal flow. Eighty respondents provided their perspective on topics ranging from an appetite for new investments to access to debt to the impact on portfolio companies.
Respondent Demographics
Effect of COVID-19 on Valuations
When asked how they expect overall and Health IT valuations to behave in both the short-term and the long-term, investors were largely neutral on average, with only a very slightly bearish perspective in the short-term. Over the long-term, investors indicated a much more neutral impact of COVID-19 on valuations, with a slightly more bullish perspective on health IT as a sector compared to the overall market.
Health IT Interests by Subsector and Customer Segment
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Our survey included a series of questions designed to identify how COVID-19 may have altered investor appetite across the subsectors and end-markets of Health IT. As hypothesized, we saw a rise in interest in telemedicine and remote care delivery, as well as direct-to-patient healthcare solutions. At the other end of the spectrum, solutions such as EMR/clinical documentation and revenue cycle management saw a drop in interest, and 12.5% fewer of our respondents were interested in investing in companies serving the hospital and health system end-market after COVID-19 compared to before. These results lead us to conclude that investors are tracking the decline in hospital revenue due to COVID-19 and accordingly expect that sales of new technologies to hospitals will be challenged.
Source: HIT Consultant
