Investors and founders in digital health continue to favor acquisitions as their primary exit route, though deal volume keeps slipping from its 2016 high point.
During the first six months of 2020, 83 digital health companies changed hands, down from 91 in the same stretch a year earlier and well below the 110 recorded at the 2016 peak. The figures come from Mercom Capital’s 1H 2020 Digital Health Funding and M&A Report. Should the current pace hold, total acquisitions this year would fall roughly 10% short of 2019’s tally.
The U.S. dominated activity with 59 of the 83 transactions. Canada followed with eight deals, while the U.K. contributed four.
By sector, mobile health app makers attracted the most interest, closing ten acquisitions. Data analytics firms and practice management solution providers tied at nine deals each. Telemedicine companies logged eight transactions, wearable sensor and wellness businesses posted five apiece, and medical billing platforms reached four.
Second quarter deal count landed at 42, barely moving from the 41 completed in the first quarter. Year over year, however, the figure represented a decline from 46 acquisitions in Q2 2019.
Several sizable deals shaped the first half. Invitae, a genetic testing firm, spent $1.4 billion to buy genomics analysis specialist ArcherDX. Teladoc Health moved to acquire InTouch Health, a telehealth provider for hospitals, in a $600 million agreement. Athletic apparel maker lululemon purchased MIRROR and its connected fitness hardware for $500 million. Walmart paid $200 million for medication management app CareZone’s intellectual property. Meanwhile, R1 RCM struck a deal worth about $190 million to acquire SCI Solutions, a patient scheduling and engagement platform.
Mercom’s database now tracks close to 2,000 digital health M&A transactions since 2010. The persistent gap between current volumes and the 2016 peak suggests buyers have grown more selective, even as digital health adoption accelerates.
