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Healthtech M&A and IPO activity resilient in the face of global economic slowdown

The latest Healthtech M&A Market Report from international technology mergers and acquisitions adviser, Hampleton Partners, has revealed a final count of almost 100 deals in the healthtech sector in the second half of 2018.

Transaction volume remained steady compared to H1 2018, inching down by a mere six per cent and thus remaining in line with a remarkably stable trend since 2013. The trailing 30-month revenue multiple rose again to 2.8x EV/S, prolonging a trend visible over the last 18 months since the increase to 2.8x in H2 2017 from a lower 2.1x EV/S in H1 2017.
In 2018, 186 healthcare companies went public, bringing aggregate gross IPO proceeds for the year to USD24 billion, up from only USD15 billion in 2017.
The largest disclosed deals in the second half of 2018 included Veritas Capital and Evergreen Coast Capital’s joint private equity acquisition of athenahealth for USD5.7 billion, at an attractive 17.3x EV/EBITDA. Athenahealth provides electronic healthcare record management SaaS for hospitals and healthcare practices in the US.
Second, at USD1 billion, came the acquisition of M*Modal by 3M. M*Modal provides clinical documentation, transcription and EHR SaaS for the medical sector.
Dutch tech and health giant Philips remains the sector’s most consistently active acquirer, with a total of seven acquisitions over the past 30 months, including Blue Willow Systems and its tracking and alert-based systems for senior living facilities.
Jonathan Simnett, director and healthtech specialist at Hampleton Partners, says: “The rise of lifestyle diseases, an ageing population and higher patient expectations are compelling both public and private healthcare systems to incorporate technology to improve productivity, cost-efficiency and patient satisfaction.”
M&A activity is now featuring in the medical marijuana sector, following regulatory changes in 10 US states and Washington DC. In November, cannabis network marketing website Leafbuyer Technologies Inc acquired Greenlight Technologies, a cannabis ordering and rewards mobile application. The app includes features such as loyalty programmes and real-time customer data analytics. It enables consumers to pre-order cannabis products and collect the orders at their local store. Such acquisitions are likely to become more frequent across the US as regulations continue to evolve.
Simnett says: “The M&A landscape in healthtech remains promising. Big tech companies are entering the healthcare sector and healthcare professionals are keen to adopt technology that makes everything from transcribing patient notes, to diagnosis and treatment more effective and cost-efficient. New markets are being created by millions of consumers now monitoring their own health via apps and online programmes at home and on-the-go and by medical marijuana deregulation.”
“Patient-oriented self-service healthtech billing and payment management, SaaS, EHR patient data and medical records systems will remain in particularly high demand by buyers, along with emerging blockchain applications which can improve the security and traceability of patient data, pharmaceuticals and surgical equipment.”

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