When Tradoc First A $18.5 billion deal was concluded get Liongo Last year, experts predicted that this would herald an unprecedented era of digital health consolidation. So far, this prediction has been established.
In the first three quarters of 2021, Track rock health There were 216 digital health M&A transactions, surpassing the total number of 146 transactions last year. In contrast, according to Rock Health data, there were 113 M&A transactions in 2019.
Alyssa Jaffee, a partner at 7wireVentures, said in a telephone interview: “We are blowing our statistics into a mess, and I have high hopes that this situation will continue.”
The headline news in 2022 is that more mergers and consolidations are expected, especially in areas with multiple major players, such as nursing navigation or virtual physical therapy.
Flare Capital’s general partner Michael Greeley (Michael Greeley) said that the company currently has many good options.
“This year’s M&A market is quite strong,” he said. “People are giving real value to these companies, their customers are real, and they have a lot of business books and technical appeal.”
Although some of these markets are still in their infancy, the company has begun to become a leader in the category. Companies that have recently raised a lot of money but have not gained the same appeal may become targets for mergers with another private company.
Point solution integration
Like the collaboration between Livongo and Teladoc, experts interviewed by MedCity News said that they would like to see more single point solutions combined to win more markets and make managers stand out.A recent example is Merger of on-demand doctors and Big round, A health navigation company, and later with Including health, It connects LGBTQ employees with positive care.
With the proliferation of digital health startups, company welfare executives must screen more and more solutions, whether for welfare navigation, telemedicine, or management of specific conditions.It has reached the point where it is difficult to review all of these, as shown in the picture A recent Wall Street Journal article.
Joe Murad, CEO of Pharmacy Welfare Startup, said: “From all these single point solutions, this decentralized and uncoordinated care is transformed into a more comprehensive and comprehensive care…this is my I see a trend that will not die out.” I am healthy, In the Zoom interview. “Some of them must be merged because the employer also said that I only need one navigator, I don’t need four, and I would rather have a phone number on the back of the card.”
Chrissy Farr, head of Omers Ventures, is observing the patterns among competitors to see what they might acquire next.For example, Livongo and Big motor Solutions for diabetes prevention and management and mental health support have been established or obtained.Since childhood motor Acquired a remote physiotherapy company Last year, it also made sense Tradoc and Liongo She predicted that in order to get musculoskeletal care.
“I think you will start to see a lot of these companies emulating each other, and the broader goal is to have a full set of products, not just one thing,” she said in an interview with Zoom.
How these combinations will fit together remains to be determined. For example, for a maternal health startup company, Greeley stated that he hopes to make behavioral health services part of its core product rather than refer patients to another company.
In other cases, he can see different professional platforms operating as “storefronts” on a broader platform, such as Teladoc or Anwell.
Cover a wider range of acuity
Another trend of cooperation is to expand to higher acuity conditions through mergers. For example, Headspace, A famous meditation app, Recently combined with ginger health, Providing behavioral health guidance, treatment and psychiatry courses.
Although Headspace will cater to a wider user base, ginger Can provide more in-depth services and get income from health plans and insurance companies.
“These types of mergers turned out to be very profitable and attractive in the end,” Jaffe said. “This is a piece of pie you can get at the reimbursement level.”
She and other investors want to see more integration between behavioral health companies, the breadth of existing solutions, and the funds raised by these companies.
Farr also predicts that musculoskeletal care companies will integrate as they seek to enter new markets such as health plans, workers’ compensation plans, and direct-to-consumer.Several recently raised funds include Kaiya Health, Hinge health and Jiansheng, Provide virtual physical therapy and self-guided exercises.
“All these things require different teams,” Farr said. “Buying something may be faster than trying to build it yourself.”
She also hopes to see the virtual physical therapy program begin to expand more to face-to-face services and rehabilitation before and after surgery, which is an area owned by MSK startup Kaia Health Start entering through partnership.
“Many MSK players focus on virtual physical therapy,” she said. “At some point, they need to open physical clinics because not everyone wants to be seen virtually. This will be the story of 2022.”
Their prediction
MedCity News asked four experts about their M&A forecasts in the field of digital health. They said this:
- Farr predicts that as more funds begin to flow into the industry and employers assess the benefits they provide to their parents, women’s health will be more integrated. For example, Marvin Clinic After the most recent round of financing, it is now worth $1 billion and there is some money to spend.She also wants to know if Amazon will acquire another healthcare company, and Large force The acquirer can be found at Apple.
- Murad said that among various navigation companies, such as honor, Spotlights, and Including health“Some things must be given there.” He pointed out that Quantum Health may be a complement to Accolade, because Warburg Pincus recently led a round of private equity investments for the company.
- Jaffee expects that M&A activities in the areas of behavioral health and women’s health will continue. She has noticed substantial investments in fertility, pregnancy and postpartum care, as well as an increasing number of companies focusing on menopause and specific diseases such as PCOS and endometriosis.
“By 2022, we will carry out additional M&A activities in these two markets to truly serve a wider range of people, with the goal of expanding coverage and care,” she said. - Greeley did not name specific companies that he thought would be acquired, but pointed out a place to look for companies that had completed Series B or Series C financing about a year ago and are currently not actively financing. For example, these companies may not expand fast enough or raise funds at very high valuations where they have not grown.
“My prediction is that we will see many companies raising larger rounds (‘paste winner’ financing), and there are plenty of other companies exploring private-to-private combinations (or simply selling to large listings in the industry). Company)),” he said.
Photo: Dmitrii_Guzhanin, Getty Images
