HealthTech M&A Opportunities
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Healthcare software and SaaS companies continue to be in high demand as regulatory, technological and social influences drive significant change. From electronic health records to point-of-care solutions and now to m-health solutions, companies in this sector continue to receive significant interest from buyers. This Market Spotlight webcast, designed for owners, executives and investors in healthcare technology, will address attributes driving interest and valuations with perspectives from analysts, bankers, investors, and CEOs who have recently sold.
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HealthTech M&A Opportunities
- 1. HealthTech Opportunities & M&A
- 2. World Financial Symposiums WFS is an international organization dedicated to educating technology leaders through monthly, Market Spotlight webcasts and day-long Growth and Exit Strategies for Software and IT Companies conferences. Upcoming Events: Growth and Exit Strategies for Software and IT Companies - Toronto - 18 June, 2015 8:00 – 17:00 www.wfs.com
- 3. Nat Burgess - Moderator Nat joined Corum in 1996 and brings a diverse background in technology M&A and law. While with the Enforcement Division of the U.S. Securities and Exchange Commission, Nat helped identify and build cases against securities fraud schemes. With the Strategic Development Division of Morgan Stanley's M&A group, Nat worked on cross-border acquisitions of U.S. and European companies by Japanese firms, and on financings by large Japanese public companies. Nat moved to Morgan Stanley's Tokyo office, where he reported directly to the President of Morgan Stanley, Japan Ltd. and focused exclusively on cross-border M&A. After Morgan Stanley, Nat co-founded Postcard Software, a creator of advertiser-driven bilingual (English and Japanese) Internet content. At Activision, Nat led the company's on-line business development. Nat earned an undergraduate degree in Japanese literature from Yale College and a law degree from UCLA. While in law school, Nat wrote articles for the International Forum at Yale, Tokyo Journal.
- 4. • Societal and Technological Changes • Market Update • Notable Transactions • Funding Environment (StartupHealth) • From the Trenches – Patrick Hall on the e-MDs Acquisition • M&A Success in the Current Market • Q&A Agenda
- 6. • Compliance in the cloud • Interoperability • Analytics (ACO) • Reimbursement Compliance • Healthcare Exchanges • New tools for diagnosis and treatment • Genetic Screening • Mobile Engagement • Telemedicine • Personal Data Clouds Technological Changes
- 7. • Demographics: aging population taking a greater interest in health • Dr. Google: easier access to information allows patient to take control of their own health • More chronic illnesses, less affordable care • Hospital consolidation • Consolidation of primary care into hospital • Disappearance of primary care providers for millennials Societal Changes
- 9. “Unicorns” • April 2015: Oscar Health Insurance raised $145M at a $1.5B valuation • February 2015: NantHealth raised $45M bringing total raised to $525M ($4 billion IPO aspirations) • June 2014: Proteus Digital Health raised $172M at a $1.1B valuation • September 2013: Practice Fusion raised $70M at a $700M valuation
- 10. Yasmin joined Corum Group in 2015 as a research analyst. Previously she worked as a finance and operations coordinator at a financial technology startup and provided consultation services to an institutional investing advisory firm. Yasmin graduated from the Foster School of Business at the University of Washington, specializing in Finance and International Business. Yasmin Khodamoradi Research Analyst – Corum Group
- 11. Healthcare Technology Companies Peer Group
- 14. Sold to Target: Fastrack Healthcare Systems Acquirer: Mediware Information Systems Date Announced: June 2013 Transaction Value: undisclosed -Software for home medical equipment (HME) providers -Doubled customer base in the HME, home infusion, and home health markets
- 17. Big Data/ Analytics Growth in Exits by Segment (2013-2014) Mobile EHR Practice Management Payor/ Insurance Diagnostics Genomics
- 18. Sold to Target: RazorInsights Acquirer: athenahealth Date Announced: January 2015 Transaction Value: $40 million -Web-based EHR and revenue management software for rural, critical access and community hospitals -Will expand presence in new segment
- 19. Sold to Target: Caretech AB [Sweden] Acquirer: Doro AB [Sweden] Date Announced: December 2014 Transaction Value: $31.76 million -Senior citizen mobile telehealth and remote medical monitoring, wearables, alert systems and software -Will focus on entering the telecare sector and synergies with current senior mobile device business
- 20. Sold to Target: TheraDoc Inc. Acquirer: Premier Inc. Date Announced: August 2014 Transaction Value: $117 million -Medical clinical infection surveillance software, medical EDI, analytics software and infections databases -Positions Premier at the top of the clinical surveillance market, create next-gen predictive safety solutions
- 21. Sold to Target: Bina Technologies Acquirer: Roche AG [Switzerland] Date Announced: December 2014 Transaction Value: Undisclosed -Big data genomic analytics software and hardware for cancer and inherited disease research -Will expand genomic analysis solutions portfolio
- 22. Sold to Target: Simbionix Acquirer: 3D Systems Date Announced: July 2014 Transaction Value: $120 million -Computer-assisted 3D surgical training and simulation hardware and software -Extends first mover advantage in 3D printing enabled personalized medicine
- 23. Sold to Target: Orthoview Acquirer: Materialise Date Announced: October 2014 Transaction Value: $14.25 million -Digital pre-operative planning and templating solutions for orthopedic surgeons -Expands solutions offered to surgeons
- 24. Sold to Target: Capario Acquirer: Emdeon Date Announced: June 2014 Transaction Value: $115 million -Web-based insurance claim processing and revenue management SaaS -Expands Intelligent Healthcare Network and enhances revenue management platform
- 25. Sold to Target: ProtoGeo (maker of Moves App) Acquirer: Facebook Date Announced: April 2014 Transaction Value: Undisclosed -Health and fitness tracking mobile application -Possible telemedicine angle
- 26. Sold to Target: MedXT Acquirer: Box Date Announced: October 2014 Transaction Value: $3.8 million -Medical image sharing and collaboration -Increased interoperability
- 27. Katya Hancock Katya is the Strategic Partnerships Director at StartUp Health. Katya is a passionate advocate for health entrepreneurs and an active member of the startup technology ecosystem in New York City. At StartUp Health, Katya focuses on building strategic partnerships that unite entrepreneurs with key industry stakeholders focused on health and wellness innovation. Prior to StartUp Health, Katya worked in the technology industry as a key team member at three financial tech start-ups, helping two of them grow to be acquired by Fortune 500 companies. Her experience includes strategic partnerships and business development, enterprise sales, channel sales partnerships, product management, marketing, and capital raising. Director of Strategic Partnerships – StartUp Health
- 40. Patrick Hall Patrick Hall has nearly two decades of expertise in the healthcare software industry. He oversees the development of business partnerships, revenue cycle and practice management product development, and revenue cycle services. He is also involved in sales, marketing, and customer support. Patrick has been involved in projects that include to HIPAA ANSI X.12 electronic data interchange formats, the NPI transition, printed claim form changes for CMS- 1500 and UB formats, and more recently ICD-10 impacts on the practice management products. He joined the company in 1997 as a result of e-MDs' EasyWare acquisition. Patrick is a graduate of The Cape Peninsula University of Technology (formerly Cape Technikon) in Cape Town, South Africa where he received the Marketer of the Year award. Executive Vice President, Business Development – e-MDs
- 47. M&A Success in Today’s Market 1.Run a smart process • Huge market, focused players • Be prepared 1.Yesterday’s skills may not win tomorrow’s battles • Dynamic market • New challenges 1.Understand your value • Recurring revenue • Customers • IP • Domain Expertise 1.Be Realistic 2.Consider Private Equity • Less disruptive, less risk of overlap and redundancies than with strategics • Building significant companies
- 48. Q&A • We welcome your questions! • Use Q&A window on right side • Submit to queue at any time • Ask “all panelists” – see “ask” option above text-entry box
Editor's Notes
- “(From 2008-2013) The greatest amount of funding, $2.9 billion, went into startups that were working on infrastructure issues, like interoperability and health analytics. Digital health startups that work on engagement offerings, which Accenture says includes wearable devices and incentive programs, received $2.6 billion. Telehealth services also raised $2.6 billion and remote patient monitoring raised $2.1 billion.”
- Unicorns in the health technology sector are admittedly rare. It is important to note that 73% of health technology companies targeted for acquisition have not raised any institutional money (CB Insights)
- EBITDA multiples for public healthcare technology companies have been holding steady around 22x going into 2015 and it seems the market is consistently valuing these companies based on EBITDA as opposed to sales. It’s also important to note that these are significantly higher than EBITDA multiples in 2012, which hovered closer to 17.5x.
- Looking at M&A activity for healthcare technology, Total Deal value for Q1 2015 is up slightly from Q1 2014 but more importantly, total Deal count for Q1 2015 is the highest it has been in the past three years.
- In that time period, the top acquirers by deal count include some familiar names and Many of them are investing in certain themes. Emdeon for example has been focused on healthcare payment solutions, IMS Health has been busy shoring up its analytics capabilities, and Mediware’s recent acquisitions suggest an interest in expanding their reach in the home healthcare market.
- And their streak really started with the acquisition of one CORUM’S clients, Fasttrack, in June of 2013- which nearly doubled their customer base in the home health market.
- So Looking at deals by transaction size, Sub $10M deals are up 76% in 2014. This was also reflected in the increased total deal count seen last year. 2014 also saw the return of deals north of a billion dollars, which is a good sign.
- Not too much has changed in the geographic breakdown of healthtech targets over the last three years, About 75% of targets are located in the United States and Canada-- but in 2014 we saw Europe’s share slightly increase.
- Looking at all healthtech deals in 2014 compared to the previous year, categories such as mobile and analytics showed the most growth. While EHR and practice management are slowing down somewhat, important deals in this category continue to be made, such as…
- …Athenahealth’s acquisition of EHR solutions provider RazorInsights for $40M earlier this year, which will expand their presence in the 50 bed and under inpatient care environment, currently accounting for one third of the US hospital market.
- In December, Swedish senior citizen mobile device manufacturer Doro acquired social alarm and personal security device maker Caretech for nearly $32M. This allows Doro to enter the growing telehealth market and leverage their existing customer base.
- In the analytics space, Premier’s acquisition of Theradoc from Hospira for $117M propelled them to the top position in the clinical infection surveillance market.
- And Bina Technologies’ acquisition by Roche for an undisclosed amount will enable Roche to expand their genomic analysis solutions portfolio.
- 3D technology is also of interest to buyers as seen in 3D Systems’ acquisition of Simbionix, the leading provider of 3D virtual reality surgical simulation, for $120M last year, expands their reach from the training room to the operating room and their complementary global sales channels and deep clinical relationships should accelerate cross-platform adoption.
- Another deal in a similar space, was Materialise’s acquisition of CORUM CLIENT Orthoview for $14.25 million, which allowed Materialise to expand its portfolio of 3D printed health solutions.
- In the insurance payment solutions space, Capario’s acquisition last year by Emdeon for $115M will accelerate their ability to provide solutions for revenue cycle management.
- We are also seeing tech companies enter the digital health market. An example of this is ProtoGeo’s acquisition by Facebook, which signifies their growing interest in mobile fitness and telemedicine.
- And Box’s acquisition of MedXT from Clariso for $3.8 million shows their interest in entering the healthcare vertical since hospitals represent the fastest growing part of the cloud storage business. MedXT’s technology improves interoperability, which is a theme that will grow in importance as healthcare providers produce more and more data.