The COVID-19 pandemic has accelerated the shift to digital health and the need for tech-enabled health services. And that's driving robust mergers and acquisitions activity in the technology space.
The accelerated implementation and adoption of healthcare apps, telemedicine, and web-based resources is driving both M&A volumes and values across health technology in 2020, according to Hampleton Partners, a technology mergers and acquisitions advisor.
Health tech transaction volume is on the rise, with 131 transactions recorded in the first half of 2020, Hampleton Partners reported. This upward trend, after a significant dip in 2016 and 2017, takes the sector back to the peak levels observed five years ago.
eHealth merger and acquisition activity increased significantly in the third quarter of 2020, according to new acquisition data from HealthCareMandA.com. There were 58 transactions reported in the third quarter, a 17% increase compared with the previous quarter’s 51 deals.
Twenty-seven deals disclosed a price in the third quarter, totaling $20.8 billion, which eclipses the $606 million in announced spending for the second quarter.
“The third quarter is usually a quiet time in the healthcare deal-making cycle, but with the coronavirus pandemic, it was difficult to anticipate results,” said Lisa Phillips, editor of HealthCareMandA.com. “Seeing deal volume pick up again in sectors such as home health and hospice, eHealth and other services shows there’s still strong interest in the market."
Healthcare and digital health firms also are cashing in the rapid rise in shell companies investing billions to acquire companies and then take them public. These deals with blank-check companies have become a popular vehicle to go public amid the uncertainty of the COVID-19 pandemic in 2020. The investment bank Jefferies reports there have been 16 SPAC transactions focused on the healthcare industry so far in 2020.
Among the M&A activity we've seen this year, there have been blockbuster deals—Teladoc's $18.5 billion acquisition of Livongo, for example—along with a bankruptcy sale that marked the end of a one-time digital health unicorn.
Take a look at the 10 most interesting healthcare tech M&A deals of 2020: