Healthtech M&A activity saw an increase in the first half of 2019 with a healthy 100 deals inked (11 per cent more than in 2H 2018) and around USD8.3 billion in disclosed transaction value throughout the period, according to Hampleton Partners’ atest global Healthtech M&A Market Report.
Trailing 30-month median valuation multiples reached the highest levels in years, with EV/EBITDA climbing to 17.7x after the low of 13.7x in 2H 2018, and EV/S reaching 3.4x – a new record for healthtech.
Jonathan Simnett, director and healthtech specialist, Hampleton Partners, says: “M&A activity in the healthtech sector underlines a pressing imperative: to deliver better healthcare, cheaper, against the backdrop of an ageing population, data protection and the pressures of cost-efficiency. As a result, many acquisitions have targeted companies focused on preventative medicine software and technology which can help detect anomalies early and avoid later-stage, costly emergency treatments; and software aiding efficient personnel, equipment and facilities allocation and accurate payment processing.”
In H1 2019, 38 per cent of acquisitions were made by financial buyers – a proportion consistent with the share seen in previous reporting periods, which have swayed between 29 and 42 per cent.
Several of these financial buyers made acquisitions with a preference for medical records and healthcare data management software; clinical management and analysis SaaS; and online health services.
This is best illustrated by the four acquisitions carried out by West Coast- and UK-based Francisco Partners and its portfolio companies, as it targeted Qualcomm’s medical data networking systems; Bernoulli Health’s clinical surveillance software; and SRS Health Software’s medical records software.
The healthtech sector saw a record number of fundraises and value raised in H1 2019.1 The amount invested in healthcare companies globally reached USD26.9 billion, compared to USD26.5 billion in H1 2018. Deal count also increased to 2,258, compared to 2,223 in H1 2018.
2019 is set to reach the highest deal count on record, with more than 4,500 fundraises projected to occur by the end of the year, compared to 4,395 in 2018.
Meanwhile, there are currently 38 VC-backed digital health unicorns worldwide, worth a combined total of USD90.7 billion. The cohort’s total valuation in 2019 continues to grow as a result of continued mega-rounds to existing unicorns such as Tempus, which completed a USD200 million Series F round, and Doctolib, which raised USD165 million in a Series E round led by growth equity firm General Atlantic.
Simnett says: “We expect healthtech to remain a strong sector with continued M&A activity in the near future, as financial and strategic buyers invest and acquire in order to enter the healthtech space, expand their own product range or simply to seize the opportunity of innovative healthtech solutions which are likely to appeal to a wide range of healthcare systems and providers.”
