January 2021 M&A activity highlighted continued momentum on several compelling themes:
- Physicians Advocate for Better Electronic Health Record Systems: Historically, reformation of the Electronic Health Records (EHR) space was driven by executive orders and government incentive programs, which resulted in rapid adoption of these platforms. As a result, greater than 85% of all physicians utilized EHR systems by 2019. However, widespread adoption of EHR platforms does not mean it has been the perfect solution. In fact, 90% of physicians polled said they would like to change one or more features of their EHR. This low approval rating is largely driven by the rapid expansion seen in the industry and the fact that many EHR systems were not designed for this purpose; many started out as billing platforms, which were gradually transformed into a medical records system. With such a widespread adoption of EHR platforms and high disapproval rate, it is unsurprising that acquisitions in the EHR space are gaining traction. There is great potential for consolidation as EHR leaders position themselves to capitalize on a clear market opportunity.
- Proactive Care Management Takes Center Stage: An aging population with rising numbers of chronic diseases, coupled with 2020’s explosion in virtual care, have forced the overlap of two of the medical field’s most important markets: digital health platforms and care management. The result is the digital interjection into patient care management, a service that only benefits from accessibility, precision, and an evidence-based solution unique to each patient. 2020 provided the clear foothold to show that digital care management is a legitimate solution to the rising number of Americans that will need healthcare. Specifically, care coordination software is on track to grow at over 15% each year through 2022, according to Frost & Sullivan. However, providers also reap the benefits. Adoption of these digital capabilities can result in up to a 20% reduction in administrative costs to achieve the same level of outreach. Recent transactions highlight the importance of quality care management and the variety of other tailwinds seen in this space.
- Converging Factors Create Incendiary Environment for Home Health and Home Care M&A: Several factors, such as a changing regulatory environment, market consolidation, and shifting consumer preferences have made the home health and home care segments ripe areas for M&A activity in the coming year. January 1st, 2020 marked the adoption of the Patient-Driven Groupings Model (PDGM) by the Centers for Medicare & Medicaid Services (CMS), which was meant to reduce costs and is expected to result in increased consolidation. Furthermore, the home health and home care segments have remained comparatively fragmented, resulting in an appealing opportunity to roll-up assets. These factors have already made their mark in the new year and are expected to contribute to robust M&A activity in 2021.
Several acquisitions in January aligned with these themes:
- Amalgam Rx, a Digital Therapeutics and Patient Support company, acquired Avhana Health, a clinical decision support company with deep integrations with the leading electronic health records. Avhana’s SaaS tool has been implemented in more than 150 provider groups and has identified over $120M a year in cost savings.
- Boston Scientific has acquired Preventice Solutions, a provider of wearable cardiologic devices that transmit data to providers, and gathers and interprets the data in real-time to provide insights and alerts to providers and patients. The acquisition comes as a part of Boston Scientific’s push into the cardiac diagnostics and services space.
- CareXM, a provider of virtual care and patient engagement solutions for healthcare providers, has acquired TouchPointCare, a provider of patient-centric telehealth engagement and monitoring solutions for healthcare providers. The acquisition marks CareXM’s third in the past year.
- Caring People, a provider of home health & home care services, acquired Always Here Home Care and Kosher Caregivers, regional home care providers in Massachusetts and Florida, respectively. The acquisitions will bolster Caring People’s reach in the northeast, as well as grow their client base in Florida. In light of the acquisition, Caring People announced that they will be looking to make another two to three acquisitions by Q2 2021.
- Grant Avenue Capital, a private equity firm, acquired Valeo Home Health & Hospice, a provider of home health and hospice services to patients and their families in Utah. The acquisition comes in conjunction with a broader ‘buy-and-build’ initiative by Grant Avenue to complete targeted acquisitions and strategic partnerships in the home-based care sector. TripleTree advised Grant Avenue Capital on this transaction.
- Philips acquired Capsule Technologies, a leading medical device integration and data technologies platform. The transaction will greatly enrich the scale of Philips patient care management solutions for both remote and on-site patient care and fits with Philips’ strategy to transform the delivery of care along the health continuum with integrated solutions.
- Symplr, a compliance and credentialing SaaS platform provider, acquired Phynd Technologies, a developer of a data management platform. The acquisition will allow symplr to streamline enterprise provider data management for use in electronic health records and marketing and claims systems.
TripleTree and TT Capital Partners continuously monitor the market to identify the forces and themes impacting the healthcare industry. Thanks for reading and let us know what you think!