eHealth

eHealth Activity Climbs in Q3

The eHealth sector came out swinging this quarter, reporting 51 deals, according to our Deal Search Online database. That’s a modest 9% uptick over Q2:19 deals, but a 38% increase over the same quarter in 2018. Year-to-date totals tell a similar story. In 2018, the first three quarters reported 146 deals, while 2019 clocks in with 151 deals so far.

Announced prices have followed suit as well. By the end of the third quarter in 2018, there were roughly $12.8 billion in disclosed prices, but in 2019 we’ve seen approximately $17.9 billion in the sector. Four deals disclosed prices north of a billion dollars in the first three quarters of 2018, including Verscend Technologies, Inc.’s acquisition of Cotiviti Holdings, Inc. (NYSE: COTV) for $4.92 billion in Q2.

However, 2019 has two deals beating that total. In June, Dassault Systemes (Paris: DSY) paid $5.8 billion for Medidata Solutions, Inc. (NASDAQ: MDSO), a software-as-a-service (SaaS) developer that assists life science companies performing clinical trials with managing vast amounts of data. Early in August, Parthenon Capital Partners merged two of its portfolio companies, RedCard Systems and Zelis Healthcare, creating a combined company with an enterprise value of roughly $5.7 billion, according to sources cited in PEHub Buyouts. The new company will operate a platform with end-to-end capability, encompassing claim cost management and payments solutions.

Much like the services sectors, the surge in eHealth deals can be attributed to private equity. In 2019, private equity firms or their sponsored companies accounted for 48 out of 151 of the deals so far, or roughly 32% of the deals.  They have also accounted for 49% of the spending power so far this year.

Although companies that focus on patient engagement platforms are on the rise, it’s the revenue cycle management companies that are still drawing the spotlight. Waystar, a portfolio company of Bain Capital, was purchased by EQT and CPPIB for $2.7 billion in late July. Waystar was formed in September 2017 through the merger of Navicure and ZirMed, two leading revenue cycle management (RCM) companies. The Waystar platform supports more than 450,000 providers, 750 health systems and hospitals, and 5,000 payers and health plans.

 

 

 

 

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