In our 2019 Health Care Services Acquisition Report, Twenty-Fifth Edition, we reported how private equity firms have reshaped healthcare M&A on the services side. However, PE firms and their portfolio companies are also molding the tech sector, particularly in eHealth.

In 2017, private equity firms and their portfolio companies accounted for roughly 29% of the 164 digital health deals. In 2018, they accounted for 67 deals, or nearly 33% of the 204 deals reported. Their activity is increasing in both number and volume. In terms of spending volume, private equity firms and portfolio companies accounted for 40% of announced prices for 2017 at roughly $3.69 billion. In 2018, it was nearly 58% of the $20.6 billion spent in digital health.

The 2018 dollar volume can be largely attributed to Veritas Capital’s acquisition of athenahealth, Inc. for $5.7 billion. That deal actually turned out to be the second largest deal in the eHealth sector in the years 2000-2018. The target offers medical record, revenue cycle, patient engagement, care coordination, and population health services. It partners with hospital and ambulatory customers to drive clinical and financial results.

However, eHealth is an eclectic mix of different specialties and company types, and 2018 gave rise to companies focused on A.I. and blockchain management. But PE firms are still sticking to traditional eHealth companies, such as those dealing with electronic health record management and revenue cycle management. They accounted for nearly 17% of the PE firm transactions in the eHealth sector.