- Lloyd Price
Biggest trends and most likely strategic buyers expected to shape Digital Health M&A in 2024
Exec Summary:
Digital health M&A activity is expected to remain strong in the next 12 months, but valuations are likely to remain under pressure.
Here are some of the biggest trends that are expected to shape digital health M&A in 2024:
Continued focus on value-based care: Healthcare providers and payers are increasingly focused on delivering value-based care, which means providing care that is high quality, affordable, and efficient. Digital health companies that can help providers and payers achieve their value-based care goals are likely to be attractive acquisition targets.
Growing demand for remote patient monitoring: Remote patient monitoring (RPM) allows healthcare providers to monitor patients' health data remotely, using wearable devices or other sensors. RPM is becoming increasingly popular, as it can help providers to identify and address potential health problems early on, and to improve patient outcomes. Digital health companies that develop and sell RPM solutions are likely to be in high demand from buyers.
Increased focus on mental health: Mental health is a growing concern, and digital health companies that develop and sell solutions to improve mental health are likely to see increased interest from buyers. These solutions could include teletherapy platforms, mental health apps, and other tools that can help people to manage their mental health.
Rise of artificial intelligence (AI): AI is being used to develop innovative new digital health solutions, such as AI-powered diagnostic tools, AI-powered drug discovery platforms, and AI-powered virtual assistants. Digital health companies that are developing AI-powered solutions are likely to be attractive acquisition targets for buyers that want to stay ahead of the curve in the digital transformation of healthcare.
Increased investment from non-traditional players: Non-traditional players, such as technology companies and private equity firms, are increasingly investing in digital health. This is likely to lead to increased M&A activity in the digital health sector, as these investors look to acquire digital health companies with promising technologies and high-growth potential.
Overall, the digital health M&A market is expected to remain strong in 2024, driven by the trends mentioned above. Buyers are likely to be particularly interested in companies that can help them to achieve their value-based care goals, develop RPM solutions, improve mental health care, and leverage AI.
Strategic buyers are likely to be the most active buyers, as they are looking to acquire digital health companies to complement their existing businesses and expand their offerings.
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Predictions for digital health M&A in the next 12 months
Here are some specific predictions for digital health M&A in the next 12 months:
Increased consolidation among digital health companies: As the digital health sector matures, we expect to see increased consolidation among digital health companies. This is because larger companies will have the resources to invest in new technologies and expand into new markets.
More strategic acquisitions by healthcare providers: Healthcare providers are increasingly interested in acquiring digital health companies in order to improve efficiency and reduce costs. We expect to see more strategic acquisitions by healthcare providers in the next 12 months.
More acquisitions by technology companies: Technology companies are also interested in acquiring digital health companies in order to expand their offerings and gain access to new markets. We expect to see more acquisitions by technology companies in the next 12 months.
More acquisitions by private equity firms: Private equity firms are also interested in acquiring digital health companies in order to generate attractive returns for their investors. We expect to see more acquisitions by private equity firms in the next 12 months.
Overall, the digital health M&A market is expected to remain active in the next 12 months, with strategic buyers being the most active buyers. Valuations are likely to remain under pressure, but there are a number of factors that are expected to support M&A activity.
Strategic buyers of digital health companies in the next 12 months
The following are the most likely strategic buyers of digital health companies in the next 12 months:
1) Healthcare providers: Healthcare providers are increasingly interested in acquiring digital health companies in order to improve efficiency, reduce costs, and expand their offerings.
Some examples of healthcare providers that have acquired digital health companies in recent years include:
UnitedHealth Group
CVS Health
Walgreens Boots Alliance
Humana
Kaiser Permanente
2) Technology companies: Technology companies are also interested in acquiring digital health companies in order to expand their offerings and gain access to new markets.
Some examples of technology companies that have acquired digital health companies in recent years include:
Amazon
Apple
Google
Microsoft
IBM
3) Private equity firms: Private equity firms are also interested in acquiring digital health companies in order to generate attractive returns for their investors.
Some examples of private equity firms that have acquired digital health companies in recent years include:
Blackstone
KKR
Carlyle Group
Vista Equity Partners
Thoma Bravo
In addition to these three categories of strategic buyers, we may also see more acquisitions of digital health companies by:
Pharmaceutical companies: Pharmaceutical companies are increasingly interested in acquiring digital health companies in order to develop new drugs and therapies, and to improve the delivery of healthcare services.
Medical device companies: Medical device companies are also interested in acquiring digital health companies in order to develop new and innovative medical devices.
Insurance companies: Insurance companies are interested in acquiring digital health companies in order to develop new insurance products and services, and to improve the way they manage claims.
Overall, the strategic buyers of digital health companies in the next 12 months are expected to be a diverse group, including healthcare providers, technology companies, private equity firms, pharmaceutical companies, medical device companies, and insurance companies.
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
