Lloyd Price
- Nov 14, 2023

Key Priorities for Strategic HealthTech Acquirers heading into 2024

Executive Summary:

Strategic HealthTech acquirers are companies that are looking to buy other companies in the healthcare technology (HealthTech) industry. These acquirers are looking to expand their product offerings, enter new markets, gain access to new technologies, increase their customer base and achieve cost savings.

Expanding their product offerings: HealthTech companies are constantly developing new and innovative products and services. Strategic acquirers can expand their product offerings by acquiring companies with complementary products or services.
Entering new markets: HealthTech is a global industry, and strategic acquirers can enter new markets by acquiring companies with a strong presence in those markets.
Gaining access to new technologies: HealthTech companies are at the forefront of innovation, and strategic acquirers can gain access to new technologies by acquiring these companies.
Increasing their customer base: HealthTech companies often have large and loyal customer bases, and strategic acquirers can increase their customer base by acquiring these companies.
Achieving cost savings: HealthTech companies can achieve cost savings by consolidating operations or eliminating redundancies. Strategic acquirers can benefit from these cost savings.

In addition to these key priorities, strategic HealthTech acquirers are also looking for companies with the following characteristics:

A strong track record of growth: Strategic acquirers want to acquire companies that are growing rapidly and are well-positioned for future growth.
A strong management team: Strategic acquirers want to acquire companies with a strong management team that can execute on the company's business plan.
A proprietary technology: Strategic acquirers are willing to pay a premium for companies with proprietary technology that gives them a competitive advantage.
A strong intellectual property portfolio: Strategic acquirers want to acquire companies with a strong intellectual property portfolio that can protect their investment.

The specific criteria that strategic HealthTech acquirers use will vary depending on their individual goals and strategies. However, the general trends outlined above are likely to continue in the years to come.

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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:

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.

Predictions for Digital Health M&A in 2024

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.

Final Thoughts:

Digital Health M&A activity is expected to remain strong in 2024, 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.