Coronavirus shockwave boosts M&A activity in healthtech

9th October 2020

Alex Lynn

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The first Healthtech M&A market report to be published by Hampleton Partners since the outbreak of COVID-19 stresses the serious impact of coronavirus on healthcare systems around the world. The health emergency and the need for social distancing have accelerated the shift to digital, speeding up the implementation and adoption of healthcare apps, telemedicine and web-based resources.

This has continued to drive both M&A volumes and values across healthtech, according to the international technology mergers and acquisitions advisor.

Healthtech transaction volume is on the rise, with 131 transactions recorded in the first half of 2020. This upward trend, after a significant dip in 2016 and 2017, has taken us back to the peak levels observed five years ago.

Healthtech valuations have been high for the best part of the past five years. In the first half of 2020, the trailing 30-month median EV/S multiple dipped slightly to 3x following a 4x peak in 2H2019. Despite previous volatility, EBITDA multiples are still very high, coming in at 17.7x in the first half of 2020.

This growth has been driven particularly by high valuations in the Healthcare Vertical Software segment which saw 88 deals closed in the first half of the year – a 20% increase on the last reporting period.

Respiratory illness front of mind

Given the concern over respiratory illnesses as a result of COVID-19, the June acquisition by Airehealth of BreathResearch, a healthcare firm that detects fluctuations in respiratory health, was no surprise.

Its VitalBreath virtual care software helps patients, caregivers and clinicians to be more informed, respond faster, leading to fewer emergencies and hospitalisations. Through the deal, AireHealth adds to its capabilities all of BreathResearch’s assets including employees, intellectual property, research and patents related to respiratory drug delivery, medication and analysis of breathing sounds using machine learning and artificial intelligence.

Jonathan Simnett, director, Hampleton Partners, said: “Over the past six months the pressure on health systems has reached unprecedented levels as the COVID-19 pandemic has extended its grip globally.

“Forced to ration services and cancel treatments, and with a vaccine still some way off, healthcare providers are having to turn to new technologies in their efforts to maintain, let alone enhance, future healthcare services for patients adjusting to their new, digitally-enabled lifestyles.”

Largest disclosed healthtech deals of 1H2020:

Veritas Capital acquisition of health and human services assets of DX Technology - $5 billion
Teladoc Health acquisition of InTouch Health - $600 million
Align Technology’s acquisition of Global Holdings GmbH - $417 million