2019 Q2 HIT Sector Report

  •  Global M&A dollar value of closed deals for Q2 2019 totaled $842B, ↑ 94% compared to Q1 2019 and ↑ 79% YoY. Similarly, North America M&A ↑ 35% QoQ and 64% YoY. Increased frequency of Mega deals > $25 bil helped account for Q2’s growth.
  • Global Private Placements totaled $125B in Q2 2019, ↑ 116% from Q1, however it was ↓30% YoY. North American Private Placements for all sectors totaled $52B, ↑ 18% QoQ while deal count was ↑25% QoQ.
  • In N. America, the Digital Health M&A deal count decreased on a QoQ basis 7% and YoY basis ↓24% . Of note, Q2 dollar volume increased 562% compared to Q1 2019. However, if the Medidata, deal is excluded, Q2 $ volume was ↓ 37%. YoY dollar volume was up 38%. The largest announced deal in Q2 2019 was Dassault Systemes Americas’ $6 B acquisition of Medidata Solutions.
    • For Q2 2019, Productivity Solutions was the most active in terms of deal count, representing 35% of M&A deals. The Spending & Revenue Analytics as well as the Patient Centric Subsectors each accounted for approximately 20% of M&A deals for Q2 2019.
  • Private placement transactions in the North American Digital Health sector decreased in Q2 2019 both QoQ and YoY, ↓16% and 19%, respectively. Despite a decrease in transactions, disclosed dollar investments in North American based HIT firms increased 14% YoY and 15% QoQ.
    • Patient Centric was the most active subsector in Q2 2019 with 39% of the deals classified in the Patient Centric category (with patient engagement digital health companies accounting for 2/3 of this subsector’s activity).
  • There was one Digital Health IPO in Q2 2019. Change Healthcare went public at the end of June and will be included in our HIT Index going forward in the Spending and Revenue Analytics Sector. Change Healthcare marks the first IPO of several announced deals with Livongo, Health Catalyst and Phreesia having all recently filed for their respective S-1 registrations.
  • On an LTM basis, Novahill’s Digital Health Public Comparable Index underperformed the S&P 500 Index in Q2 2019, remaining flat compared to an 8% gain for the S&P 500. However, Digital Health companies continue to trade at 2x multiples of EV to EBITDA and EV to Revenue compared to the S&P 500 multiples.