2018 Q3 HIT Sector Report Excerpt
Executive Summary
- Global M&A dollar value of closed deals for Q3 2018 totaled $319B, ↓32% compared to Q2 2018. Deal count dropped 2% for the same time frame. Compared to Q3 2017, Global M&A $ volume & deal count were also down on a YoY basis. U.S. M&A deal count ↑on a QoQ and ↓ YoY basis; $ volume ↓ for both QoQ and YoY basis.
- Global Private Placements totaled $190B in Q3 2018, ↑6% from Q2 2018 and ↓32% YoY. North American Private Placements for all sectors totaled $122B, ↑88% QoQ and ↓13% YoY while deal count was ↑12% QoQ and ↓34% YoY.
- N. American Digital Health M&A deal count was virtually the same QoQ with 74 deals announced or closed in Q3 2018. The three largest transactions of the quarter were Genstar’s acquisition of CRF Health, Best Buy’s announcement to acquire GreatCall and Global Payment’s purchase of AdvancedMD. The three deals ranged between $700M and $1B.
- The most popular sub-sector for Digital Health M&A targets in Q3 2018 was the Clinical Data/Pop Analytics-Genomics Sector, which represented 24% of total activity and up by ↑200% basis on a QoQ. Patient Engagement and HIM/Workflow Management both accounted for 14% each of the Q3 activity.
- The most popular sub-sector for Digital Health M&A targets in Q3 2018 was the Clinical Data/Pop Analytics-Genomics Sector, which represented 24% of total activity and up by ↑200% basis on a QoQ. Patient Engagement and HIM/Workflow Management both accounted for 14% each of the Q3 activity.
- Q3 Private Placement transactions in the N. American Digital Health sector increased 41% QoQ to a record 262 transactions
and ↑106% YoY. Total $ amount of disclosed sector investments increased 135% QoQ to ~$3.6B from Q2 2018’s total of $1.6B.- 6 PP deals were over $100M, ranging from $110M to $375M; Each transaction was in a different sector – Spending Analytics, Educational, Closed loop network, Analytics and Imaging.
- Patient Engagement/Monitoring continued to be the most active sub-sector in Q3 with twice as many deals as the second most active sub-sector, HIE/Cloud Network.
- With record breaking PP activity over the past 2 years and a restricted IPO market, we expect M&A activity to continue the trend of ↑ number of deals well in 2020 but valuation multiples may succumb to a backlog of VCs wanting to liquidate.
- Only one announced (not closed) U.S. IPO in the U.S. market in Q3 2018. MaxQ AI announced an $8M IPO in August 9, 2018. If MaxQ AI closes, it will be only the second IPO for YTD 2018. There were no IPOs in 2017.
- For LTM Q3 2018, Novahill’s Digital Health Public Comparable Index outperformed the S&P 500 Index, gaining 40% vs 15% for the S&P 500. Digital Health companies rose to a new high of 2.5x the EV to EBITDA or Revenues multiples of the S&P.
