Merger and acquisition activity in the eHealth sector decreased in the third quarter, down 5% compared with the previous quarter, to 42 deals. However, the quarter’s results were 45% higher than the same period a year earlier. The third quarter’s total represents a 26% share of the 164 deals announced in the previous 12 months.

Information technology underpins every aspect of the healthcare industry, as it does in virtually every other market. The repeal-and-replace effort has had little impact on investor interest in this sector, as technology stocks continue to dominate the equity markets.

Source: HealthCareMandA.com, October 2017

Of the 42 deals announced in Q3:17, only seven disclosed a price, for a total of approximately $4.6 billion. This quarter’s spending represents a 79% increase compared with the previous quarter, and a 324% increase from the same quarter a year earlier. The dollar volume represents 49% of the $9.4 billion spent in this category in the last four quarters.

Dollars Spent on eHealth Mergers & Acquisitions, by Quarter

Q3:16 Q4:16 Q1:17 Q2:17 Q3:17
$1,080,300,000 $312,645,000 $1,988,500,000 $2,555,500,000 $4,584,065,346

 

The out-sized total is largely the result of a single transaction. KKR & Co. portfolio company, Internet Brands, acquired the publicly traded WebMD Health Corp. for approximately $3.6 billion. WebMD is best known for providing health information services through its public and private online portals, mobile platforms and health-focused publications. KKR will fold WebMD’s websites, including WebMD.com and Medscape.com, into its Internet Brands unit, which houses sites such as DentalPlans.com and AllAboutCounseling.com. Medscape is a medical news and education website, which accounted for about 60% of the company’s advertising revenue in 2016.

PRA Health Sciences, a contract research organization, made the second largest acquisition of the quarter, paying $530 million for Symphony Health Solutions Corporation. The privately held company provides data, analytics and technology solutions for biopharmaceutical manufacturers, healthcare providers, and payers. It helps clients understand disease incidence, prevalence, progression, treatment and influences by connecting and integrating a broad set of primary and secondary data, and providing health research, analytics and consulting expertise.

FNFV Group, the investment division of Fidelity National Financial, acquired T-System, Inc. for $300 million. T-System specializes in emergency room documentation and has expanded its focus to include solutions for episode-based care. About 40% of the nation’s hospital-based emergency departments, freestanding ERs and urgent care centers use T-System to improve the clinical encounter.