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RVB's Market Musings

What began here as an avenue to interact and learn has far exceeded those goals.

If you are a prospective employer, please consider this site a place where you can see my passion for investing...

Thursday, March 01, 2007

Healthcare IT Survey just released by AHA

The American Hospital Assocation just released an absolute GEM of a report on Healthcare IT usage by U.S. hospitals. It really sheds light on how much growth is left for vendors of these systems. It also clearly points out that bigger hospitals have adopted quicker (which is not a surprise) and that the small hospitals face more financial constraints due to their size. This, by the way, is why we own CPSI which targets these small hospitals and has operating cost advantages.

If you are looking for investing in a secular growth area, HCIT is still a great place to be, and adding these stocks when short-term issues arise seems like a winning strategy to me. You just have to get in these names at valuations that are attractive. Below is a table of pure-play HCIT companies and recent transactions in the space. (note that RX is a slightly different biz than the rest)
source: My own numbers, Factset, Mergerstat
disclaimers: I personally own shares in CPSI, but no shares of other co's mentioned in this post.
UPDATE: I should have also noted that DRTE is a different biz than the rest - a CRM business to be exact. Interestingly, in today's news DRTE is being acquired Cegedim S.A. at a 22% premium. EV/Sales is rougly 1.5x


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