GHP Q1 2018

20 GHP / Q1 2018 , ‘Perfect Storm’ Driving $10bn Of Deals In Healthtech, Reveals Hampleton Partners’ Latest M&A Report Wearables, connected systems, mission-critical healthcare software and new entrants into the sector are driving the future of HealthtechM&A. The latest Healthtech M&A Report from international technology mergers and acquisitions advisors, Hampleton Partners, reveals how the ‘perfect storm’ of rapidly converging digital technologies and societal changes, coupled with the entrance of tech giants, such as Amazon into the healthcare and medical systems market, is driving intense innovation and M&A activity in the Healthtech sector. A wave of deals delivered disclosed amounts of nearly $9.5bn, up fourfold from 1H2017 and up 140 per cent year-over- year. Express Scripts’ $3.6bn acquisition of eviCore healthcare, the health benefit and claims management market serving 100 million people, topped the table as the Healthtech sector’s largest deal in 2H 2017. The next largest deal was KKR-backed Internet Brands’ purchase of WebMD for $2.8bn. This brought a string of popular online health websites, including Medscape.com; DentalPlans. com and AllAboutCounseling.com under one umbrella company. KKR also closed a $1.45 Billion health care strategic growth fund during the same period. North America led the way in Healthtech M&A, with 77 out of the 100 announced deals driven out of the U.S., to help meet the huge domestic demand and ability to thrive in the competitive private healthcare market. Jonathan Simnett, director, Hampleton Partners, commented on the report and the insights it revealed. “Advanced healthcare systems around the world are struggling to deal with the perfect storm of spiraling costs allied to rising patient expectations, more expensive treatments, and the consequences of dealing with ageing populations and chronic lifestyle diseases. Additionally, Indian investors ramped up spending when the country’s government introduced a new National Health Policy aimed at raising public health spending. Indian investors quickly contributed to two of top ten highest valued deals in the Health IT services and BPO space, including Tech Mahindra, the Indian IT Services, outsourcing & IT consulting group, paid $89.5 million upfront for an 84.7 per cent stake in CJS Solutions Group LLC, a US-based healthcare information technology consulting company. The remaining 15.3 per cent stake is to be acquired of a period of three years at an enterprise value of $110 million. As for the coming year, Hampleton expects a raft of new players into the healthcare M&Amarket, driven by the likes of Amazon, Apple and Google, which have access to consumers, devices, data and vast resources to drive change even in a highly-regulated market. “This vast healthcare sector where patient care systems have remained largely unchanged for decades is experiencing a seismic shift in funding and technology innovation. The customer care and logistics expertise that comes with Amazon’s market-moving plan to offer healthcare services is an indication of just how big this shift is going to be,” continued Simnett. Other key points from the Hampleton Healthtech M&A Market Report include the fact that Bertelsmann’s Relias Learning and Royal Philips led the buyer table, with seven acquisitions each over 30 months. Of the five announced deals in the Medical Hardware category, three involved a private equity buyer. The largest disclosed deal was the acquisition of Servelec Group, a UK-based automation systems & healthcare software firm, by pan-European buyout fund, Montagu, for just under $300 million and 3.6x revenue.