Digital Health Roars out of the Gate

The eHealth sector had a record 2019, with 222 deals now on the books, a roughly 9% increase over 2018’s volume, and $18.3 billion in spending. That momentum has carried over to the first month of 2020, with 19 eHealth deals in January and $1.8 billion in announced spending, according to our Deal Search Online database.

January was capped off by Clarivate Analytics plc’s (NYSE: CCC) acquisition of Decision Resources Group (DRG) from Piramal Enterprises Limited (NSE: PEL) The purchase cost Clarivate Analytics $900 million in cash and $50 million in shares.

DRG provides analytics and insights, driven by artificial intelligence (AI), to the pharmaceutical, biotechnology and life sciences industries. This acquisition is expected to boost Clarivate Analytics’ revenues and EBITDA by $20 million each for 2020, and will significantly expand the company’s solution pool for the life science industry.

Analytic firms were popular targets last month in the eHealth sector, recording five deals in that sub-segment. Patient engagement and practice management targets also made up a bulk of the deals, with five deals each.

Another popular segment is telehealth. JPMorgan research reported that 40% of U.S. hospitals surveyed said they planned to increase their budgets for telemedicine solutions.

That means telehealth deals have been on the rise in recent years, too. Only one was reported in January, but it was a big one. Teladoc Health, Inc. (NYSE: TDOC) acquired InTouch Health for $600 million, or 7.5x estimated 2019 revenue.

InTouch offers telehealth services for a broad array of healthcare environments. Its cloud-based network and virtual care solutions are designed to ensure connectivity for health systems, providers and patients at all times. It supports more than 3,600 care locations around the world, including many of the top 20 U.S. health systems.

The acquisition gives Teladoc a comprehensive virtual care platform that can service a wide range of conditions, from critical to chronic to non-emergency. This deal is expected to close in the second quarter of 2020.

Another large deal last month was for SCI Solutions, Inc., a patient engagement firm that operates the industry’s largest EHR-agnostic care coordination and patient scheduling marketplace.

SCI’s platform streamlines the patient and provider experience and supports more than 94,000 providers and 1,200 sites of care that comprise $225 billion of potential net patient revenue across the country.

R1 RCM Inc. (NASDAQ: RCM) purchased SCI for $190 million and can now offer its clients a patient engagement platform and digital tools that support both the front and back of healthcare operations. The transaction is expected to close in Q1 2020.

 

 

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