2018 Q1 HIT Sector Report Excerpt

Executive Summary

  • Global M&A dollar value of closed deals for 1Q 2018 totaled $311B, ↓ 13% compared to 4Q 2017. Deal count dropped 25% for the same time frame. Compared to 1Q 2017, Global M&A $ volume & deal count were also down on a YoY basis. Similarly, U.S. M&A dollar volume and deal count were down on a QoQ and YoY basis. The median deal size in the U.S. is twice as large as the Global M&A deal size.
  • Global Private Placements totaled $143B in Q1 2018, ↓18% from Q4 and ↓44% YoY. North American Private Placements for all sectors totaled $70B, ↓17% QoQ and ↓10% YoY while deal count was ↓10% QoQ and ↓YoY by ↓36%
  • In North America, the Digital Health M&A deal count on a QoQ basis was relatively flat with 55 deals (↓4% from Q4 2017) announced in Q1 2018. The two largest deals in Q1 2018 were Roche’s acquisition of Flatiron and Platinum Equity’s acquisition of J&J’s Lifescan business. Both had an enterprise value of $2.1 billion.
    • The most popular sub-sectors for M&A Digital Health targets in Q1 2018 were Provider Centric and Spending and Revenue Analytics. The deal count for Spending and Revenue Analytics was ↑45% QoQ whereas one of the more popular M&A targets of 2017, Provider Centric, experienced a decrease in deal count by 47%.

      Example Chart excerpt from Q1 HIT Report
  • Private placement transactions in the North American Digital Health sector were up ↑16% in Q1 2018 vs. Q4 2017 and ↑43% YoY. In addition to the large increase in deal count, Digital Health private placement investments were ↑60% in dollar volume QoQ to ~$1.9 billion.
    • Patient Engagement/Monitoring continued to be a popular target for funding with twice as many private placements as the second most attractive sector, Clinical Data / Pop Analytics.
  • After a year with no digital health IPOs, Q1 of 2018 produced one digital health public offering. Huami, a Chinese fitness device company with the largest biometric & activity database in the smart wearable market, raised $110 million on the NYSE.
  • As of LTM Q1 2018, Novahill’s Digital Health Public Comparable Index performed slightly better than the S&P 500 Index gaining 12.7% compared to 11.5% for the S&P 500. Digital Health companies continue to trade at premiums twice as high as the S&P 500 in regards to EV to EBITDA or Revenues.