Source: Hampleton Partners
- Amazon, Apple, Google, and IBM healthtech investments are forcing incumbents to make defensive M&A deals
- Record private equity investment in healthtech
London, UK – 21 September 2018 The latest Healthtech M&A Market Report from international technology mergers and acquisitions advisors, Hampleton Partners, reveals how Big Data is fast becoming the common currency that lies at the heart of high-value business models in the healthtech sector.
In addition to booming strategic investment in the sector, the first half of 2018 saw record private equity investment and five multi-billion-dollar deals, pushing the total disclosed transaction value to $13.4 billion with a 30-month trailing disclosed EV\EBITDA ratio in excess of 16x.
Download the full Hampleton Partners Healthtech M&A Market Report: https://hampletonpartners.com/healthtech-report-2018
The data revolution in healthtech
Billions of individual electronic health records (EHR) are replacing paper files and the data from decades of medical research and clinical trials need to be stored. Data management and analytics platforms and medical collaboration software are in demand to take advantage of the huge potential the data revolution offers to advance medicine.
Jonathan Simnett, director and healthtech sector principal, Hampleton Partners, said:
“The data revolution is helping transform healthcare and is offering individuals, as well as clinicians, the opportunity to track, manage and improve health states in real-time by using healthtech wearables and personalized apps.
“These trillions of health and well-being data points all need monitoring and analyzing to provide the effective diagnostics that practitioners need to improve outcomes. Hampleton expects companies expert in big data analytics, and those using new technologies such as blockchain and artificial intelligence, which increase the effectiveness of healthcare services, are going to be in demand going forward.”
Tech giants’ healthtech ambitions
But the healthcare market is not just going through a technology inflection point. There are profound disruptive influences at play, as companies from outside of the traditional healthcare space bring new expertise and business models to the sector, competing with already highly acquisitive incumbents such as Philips, IMSHealth, Allscripts, Ability, Roper and Harris.
Amazon’s purchase of online pharmacy PillPack, for a reported value of just under $1.0 billion, underscores the company’s ambitions in healthcare after its joint venture announcement for employee healthcare services provision with Berkshire Hathaway and JPMorgan. The potential for Amazon to combine its eCommerce, video platform, massive outsourced web services expertise and customer reach into a one-stop shop for consumer verticals like healthcare, could trigger further defensive acquisitions in the months and years to come.
Private equity invests billions in healthtech
The sector’s largest deal in the first half year was the $4.9 billion cash acquisition of Cotiviti Holdings, a healthcare analytics and payments business, by Verscend Technologies, a portfolio company of Veritas Capital. The acquisition, valued at 19.7x EBITDA and at a 136 percent premium to Cotiviti’s IPO common stock price, demonstrated the heightened willingness of private equity investors to chase big-ticket deals in healthcare.
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