- Lloyd Price
What are strategic HealthTech acquirers looking for in today's market?
Exec Summary:
In today's market, there is a growing emphasis on value-based care, which means paying for healthcare based on the quality of care rather than the quantity of services provided.
This is driving demand for HealthTech solutions that can help to improve patient outcomes and reduce costs. As a result, strategic HealthTech acquirers are increasingly looking for companies that can help them meet these challenges.
Here are some specific areas of focus for strategic HealthTech acquirers in today's market:
Digital health: This includes software for managing patient records, scheduling appointments, and providing remote care.
Telehealth: This refers to the delivery of healthcare services remotely, such as through video conferencing.
Wearable devices: These devices can be used to track patients' health data, such as heart rate, blood pressure, and blood sugar levels.
AI and machine learning: These technologies can be used to analyze large amounts of data to identify patterns and trends that can help improve patient care.
Genomics: This field studies the genetic makeup of individuals and can be used to develop personalized treatments for diseases.
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What are strategic HealthTech acquirers looking for in today's market?:
Strategic HealthTech acquirers are looking for a variety of things in today's market, top of the list are:
Technology with the potential to disrupt the status quo. Acquirers are looking for technologies that have the potential to fundamentally change the way healthcare is delivered or received. This could include technologies that improve patient outcomes, reduce costs, or make healthcare more convenient.
Companies with strong intellectual property (IP). IP is essential for protecting a company's innovations and ensuring its long-term success. Acquirers are looking for companies with strong IP portfolios that they can use to expand their own offerings or defend themselves against competition.
A team of talented and experienced professionals. The success of any acquisition depends on the people involved. Acquirers are looking for companies with teams of talented and experienced professionals who can help them integrate the acquired company and achieve their strategic goals.
A strong market opportunity. The healthcare industry is large and growing, and there are many opportunities for innovation. Acquirers are looking for companies that are well-positioned to capitalize on these opportunities.
A good fit with the acquirer's culture and values. An acquisition is a big change for both companies involved. It is important that the acquirer and the acquired company have a good fit in terms of culture and values. This will help to ensure a smooth integration and a successful outcome for both parties.
In addition to these factors, strategic healthtech acquirers are also looking for companies that have a strong growth potential, a clear competitive advantage, and a good reputation.
Key trends driving strategic healthtech acquisitions:
Here are some of the specific trends that are driving strategic healthtech acquisitions in today's market:
The increasing demand for digital health solutions: The aging population and the growing prevalence of chronic diseases are driving the demand for digital health solutions. This is creating opportunities for healthtech companies that offer products and services that can improve the quality of care and reduce costs.
The rise of artificial intelligence and machine learning: Artificial intelligence and machine learning are rapidly transforming the healthcare industry. These technologies are being used to develop new diagnostic tools, improve the efficiency of clinical workflows, and personalize treatment plans.
The growing focus on preventive care: The healthcare industry is shifting its focus from reactive care to preventive care. This is creating opportunities for healthtech companies that offer products and services that can help people stay healthy.
The increasing regulatory scrutiny: The healthcare industry is heavily regulated. This can make it difficult for healthtech companies to bring new products and services to market. However, it also creates opportunities for companies that can help healthcare organizations comply with regulations.
Overall, the strategic healthtech acquisition market is very active.
There are a number of factors driving this activity, including the increasing demand for digital health solutions, the rise of artificial intelligence and machine learning, the growing focus on preventive care, and the increasing regulatory scrutiny.
Key priorities for strategic healthtech acquirers:
The key priorities for strategic healthtech acquirers are:
Growth: Strategic acquirers are looking for companies that can help them grow their businesses. This could mean acquiring companies that operate in new markets, offer new products or services, or have a strong customer base.
Innovation: Strategic acquirers are also looking for companies that are innovative and can help them stay ahead of the competition. This could mean acquiring companies that are developing new technologies or have a strong track record of innovation.
Market share: Strategic acquirers may also be looking to acquire companies that will give them a larger market share. This could be in a specific market or in the overall healthtech market.
Competitive advantage: Strategic acquirers may also be looking to acquire companies that will give them a competitive advantage. This could be through access to new technologies, markets, or customers.
Revenue: Strategic acquirers may also be looking to acquire companies that will generate additional revenue. This could be through the sale of products or services, or through the expansion of the acquirer's existing business.
Profitability: Strategic acquirers may also be looking to acquire companies that are profitable. This could mean acquiring companies that have a strong track record of profitability or that have the potential to become profitable in the future.
Exit strategy: Strategic acquirers may also have an exit strategy in mind, such as taking the acquired company public or selling it to another company. This will affect the type of company they are looking to acquire and the price they are willing to pay.
Case Studies: strategic healthtech acquirers achieving their key priorities
Here are some specific examples of how strategic healthtech acquirers have achieved their key priorities:
Growth: In 2022, UnitedHealth Group acquired Change Healthcare for $13 billion. This acquisition will help UnitedHealth Group expand its reach into the healthcare IT market.
Innovation: In 2021, Johnson & Johnson acquired Verb Surgical for $3.4 billion. This acquisition will give Johnson & Johnson access to Verb Surgical's robotic surgery technology.
Market share: In 2020, CVS Health acquired Aetna for $69 billion. This acquisition gave CVS Health a larger market share in the healthcare insurance market.
Economies of scale: In 2019, Abbott Laboratories acquired Alere for $5.3 billion. This acquisition helped Abbott Laboratories achieve economies of scale in the point-of-care diagnostics market.
Diversification: In 2018, Medtronic acquired Covidien for $49.9 billion. This acquisition diversified Medtronic's business into the medical devices market.
Talent: In 2017, Illumina acquired Verinata Health for $800 million. This acquisition gave Illumina access to Verinata Health's talent in the prenatal genetic testing market.
Regulatory compliance: In 2016, Cerner acquired Athenahealth for $10.5 billion. This acquisition helped Cerner comply with the Health Insurance Portability and Accountability Act (HIPAA).
Final Thoughts:
Strategic healthtech acquirers are funding new deals in a variety of ways, including:
Cash on hand. Many strategic acquirers have significant cash reserves that they can use to fund acquisitions. This is often the most common way for strategic acquirers to fund deals, as it is the most straightforward and efficient.
Debt financing. Strategic acquirers can also use debt financing to fund acquisitions. This involves borrowing money from a bank or other lender. Debt financing can be a more expensive way to fund deals, but it can also be more flexible, as it allows acquirers to borrow more money than they have on hand.
Stock financing. Strategic acquirers can also use stock financing to fund acquisitions. This involves issuing new shares of stock to the target company's shareholders. Stock financing can be a more dilutive way to fund deals, but it can also be more attractive to target companies, as it gives them an ownership stake in the acquirer.
Hybrid financing. Strategic acquirers can also use a combination of cash, debt, and stock financing to fund acquisitions. This is often the case when acquirers are looking to maximize their flexibility and minimize their costs.
Venture capital. Venture capital firms invest in early-stage companies with the potential for high growth. This can be a good way for strategic acquirers to acquire companies with cutting-edge technologies or innovative business models.
Private equity. Private equity firms invest in established companies that they believe can be improved through restructuring or other changes. This can be a good way for strategic acquirers to acquire companies with strong market positions or valuable assets.
The specific way that a strategic healthtech acquirer funds a new deal will depend on a variety of factors, including the size of the deal, the acquirer's financial situation, and the target company's preferences.
In recent years, there has been a growing trend of strategic healthtech acquirers using alternative financing methods, such as venture capital and private equity. This is due to the increasing cost of acquisitions and the difficulty of raising debt financing in a challenging economic environment.
Overall, the way that strategic healthtech acquirers fund new deals is becoming more diverse and creative. This is due to the increasing complexity and competition of the healthtech industry.
Strategic acquirers are looking for ways to fund deals that are both efficient and flexible, and they are increasingly willing to explore alternative financing methods.
Engage with the HealthTech Community
HealthTech M&A Newsletter from Nelson Advisors - Market Insights & Analysis for Founders & Investors. Subscribe today! https://lnkd.in/e5hTp_xb
HealthTech M&A Advisory by Founders for Founders, Owners & Investors. Buy Side, Sell Side, Growth and Strategy mandates - Email lloyd@nelsonadvisors.co.uk
HealthTech Thought Leadership from Nelson Advisors - Industry Insights & Analysis for Founders, Owners & Investors. Visit https://www.healthcare.digital
