More IPOs from technology-driven healthcare to hit Wall St
The global market is poised to witness more initial public offerings (IPOs) from healthcare sector particularly from technology-driven healthcare solutions providers.
The $3-billion healthcare industry is gaining momentum as advanced technology applications are adding value to this. The market analysts are optimistic as recent healthcare IPOs are turned out to be successful for investors.
However, the healthcare sector is yet catch up with advanced technology applications taking place in the information technology (IT) industry. With affordable healthcare solutions coming in, the industry is expected to be over 20% of the US GDP in the next decade.
The recent IPOs from fitness wearables firm Fitbit, telemedicine provider TeleDoc, hospital analytics Evolent Health, patient surveys provider Press Ganey Holdings were listed above their offer prices. This has further boosted the US market sentiment. The healthcare sector supported with advanced technology applications is expected to perform a much better role in the days to come.
Venture capitalists and experts from underwriting banks are upbeat on the future prospects of the healthcare sector. Some analysts opine that there's been an unfavorable comparison of the healthcare industry with other sectors in terms of IT (information technology) industry. The healthcare industry is still using outdated computers and other equipment, opine industry analysts.
"The computer systems used in the $3B health care industry is probably the worst in the twenty-first century and may be second only to education. My partners in other industries almost laugh at the green screen computer systems used in healthcare and it's literally stuck in the 1980s," opines Stephen Kraus from Bessemer Venture Partners.
However, the latest reforms in the healthcare industry and several health reimbursement packages are changing the business dynamics of the industry. Healthcare providers are using analytics and latest technology applications to provide better and affordable solutions to people.
Considering this positive development, investors are upbeat on IPO prospects and investment returns from the healthcare industry.
Bob Kocher, a partner at Venrock, which invests in digital healthcare companies, said: "I think interest is driven by widespread recognition that the incentives changes and information liberation catalyzed by the Affordable Care Act are working and going to persist for the foreseeable future."
The recent Supreme Court's judgment that removed the major hurdle in implementing Affordable Care Act (ACA) has also infused a fresh breath of life into digital healthcare segment.
The Obama government's major success with the Supreme Court's judgment in King V Burwell case further holds importance as Obamacare is here to stay. "Considering this, investors prefer to support start-ups in the digital healthcare industry. The technology-led healthcare sector will account for 22% of GDP in the next decade," forecasts Kocher.