Merger and acquisition activity in the eHealth sector surged in the first quarter, as investors stuck with healthcare information technology in the face of the Republicans’ effort to upend the Affordable Care Act. Deal volume rose 57% to 47 transactions compared with the previous quarter, and was up 24% compared with the first quarter in 2016. This recent quarter accounted for 28% of the 166 deals announced in the previous 12 months.
Source: HealthCareMandA.com, April 2017
Of the 47 deals announced in Q1:17, only six disclosed a price, for a total of $1.9 billion. This quarter’s spending represents a 586% increase compared with the previous quarter, but a 57% decrease from the same quarter a year ago. The dollar volume represents 11% of the $17.7 billion spent in this category in the last four quarters.
The largest of those six deals with disclosed prices was announced by McKesson Corporation. In January, it acquired CoverMyMeds, LLC from Francisco Partners for a total of $1.4 billion. The target’s primary business is to provide electronic prior authorization solutions to pharmacies, providers, payers and pharmaceutical companies. This deal closed in April 2017, and CoverMyMeds will operate as an independent business unit under its existing leadership team.
HMS Holdings Corporation, which focuses on cost containment of healthcare insurance benefits, paid $170 million for Eliza Corporation from Parthenon Capital Partners. Eliza Corp. is a cloud-based healthcare engagement platform that uses proprietary predictive analytics, behavioral science and data-driven design methodologies to personalize payer and provider outreach.
The sale of Jiff Inc. to Castlight Health caused some comment in the trade media early in the quarter. In early January, Castlight announced its acquisition of Jiff for $135 million. Jiff provides a HIPAA-compliant social network and digital health platform, which serves as a central hub for wellbeing and other benefit programs, with a single point of access for employers and employees. Castlight’s March 2014 initial public offering, at $16.00, was dubbed “the worst tech IPO of the boom so far” by Business Insider. The price valued Castlight at $1.4 billion, when it had revenues of just $13 million. This is its first major acquisition.