July 2019 M&A activity highlighted continued momentum on several compelling themes:
- Telehealth and Patient Engagement. Recent consolidation in telehealth is being fueled by the need for better approaches to improve access to care and monitor patient health journeys and is expected to make telehealth a $40 billion industry in 2019 according to research done by InTouch Health. Telehealth solutions enable greater access to care by allowing individuals to use digital tools to manage their health and seek care in more convenient settings – eliminating physical barriers, lowering costs, and improving patient engagement. We expect to see more telehealth consolidation as its use proliferates and vendors seek to offer more comprehensive solutions.
- Data Warehousing and Exchange. Historically, healthcare constituents have stored and managed information in silos, with little attention paid to integration or interoperability. Technology’s increasing presence in healthcare is driving change, as the unique but interrelated demands of all stakeholders are furthering the need for integrated data and technology solutions. Payers and providers require access to robust data in order to identify risk, optimize outcomes, and trigger interventions in an environment continuing to focus on improving patient outcomes. This confluence of activity necessitates solutions that enable the exchange and warehousing of data as payers and providers seek to make data more actionable, something investors having taken note of as evidenced by the significant investment and M&A activity in the sector.
- Addiction Treatment and Behavioral Health. Access to addiction treatment and behavioral healthcare is becoming a central issue in today’s healthcare environment. The United States is facing an opioid epidemic, in which 130 people die from opioid overdose each day. The Centers for Disease Control and Prevention estimates that the economic burden of opioid misuse amounts to approximately $78.5 billion a year, with a large portion coming from spending on healthcare and addiction treatment services. On top of that, mental health awareness is on the rise, as one in five adults in the U.S. lives with a mental health condition according to research by the National Institute of Mental Health. With this heightened awareness comes a greater focus on providing individuals with much needed access to care. Consolidation in this largely fragmented market will continue, as awareness of access to treatment improves.
Several transactions announced in July align with these themes:
- Carenet Health, a provider of healthcare engagement, clinical support, advocacy and 24/7 telehealth solutions, has acquired the engagement and telehealth solution subsidiary of Citra Health Solutions. Financial terms of the transaction were not disclosed.
- Global diversified manufacturer Philips has acquired Medumo, a healthcare technology startup that uses a combination of email and text messages to deliver patients instructions on behalf of hospitals. The patient engagement company will fall under Philips’ healthcare segment, which also acquired Carestream’s health IT platform earlier this year. Philips is one of the leading telehealth providers with its Lifeline group. The financial terms of the Medumo transaction were not disclosed.
- We’re also seeing strong activity in patient engagement, highlighted by Bain Capital’s investment in the combined Zelis and RedCard, along with the IPO of patient intake manager, Phreesia.
- Sandata Technologies, provider of Electronic Visit Verification (EVV) and home health technology solutions, has secured a growth equity investment from Accel-KKR. Sandata will use the investment to continue product innovation and customer support. TripleTree acted as exclusive financial advisor to Sandata for this transaction.
- Ciox, a medical information management platform developer, received $30 million of development capital from Merck, the New Mountain Capital backed provider of global healthcare solutions. The investment will be used to accelerate the development of Ciox’s health data repository, Digital Patient Clone (DPC). On May 7th, 2019 Ciox announced Pete McCabe as its new CEO.
- Furthering the theme of data warehousing and exchange, healthcare data and storage analytics firm, Health Catalyst, set its IPO terms for 6M shares at a range of $20-23 per share.
- BayMark Health Services’ opioid addiction treatment subsidiary, AppleGate Recovery, acquired KSPS Medical Consultants, an office-based opioid treatment program. AppleGate will integrate KSPS’s offerings into its existing platform, which includes laboratory services and case management. Financial terms of the deal were not disclosed.
- Five Arrows Capital Partners completed an equity recapitalization of Averhealth, a provider of technology-enabled services for substance use disorder treatment monitoring, care management and related support services. The company predominantly assists individuals on behalf of criminal justice systems and judicial treatment programs. Financial terms of the transaction were not disclosed.
- July saw several other notable transactions including the IPOs of Change Healthcare and Livongo Health, Alight Solutions’ acquisition of Hodges-Mace, Net Health’s acquisition of Optima Healthcare Solutions and others showing the continued momentum in healthcare.
TripleTree and TT Capital Partners continuously monitor the market to identify the forces and themes impacting the healthcare industry. Thanks for reading and as always, let us know what you think!