A new report by technology M&A tracker CB Insights on technology exits seems to dovetail with some digital health trends. Internet and mobile companies accounted for 80 percent of venture-backed exits. Although digital health continues to be more a funding story than an exit story, consolidation will continue to increase and mean more dealflow in 2015, especially as companies in the sector mature.
Mergers and acquisitions along with initial public offerings rose 58 percent in 2014 over the previous year, according to the report. A majority of investor-backed exits were early stage startups and were carried out after they had raised seed and series A funding. That coincides with reports like StartUp Health, which noted that of the 40 digital health M&A deals last year, companies raised a median amount of $4.2 million before they were acquired.
In a phone interview with MedCity News, Matthew Wong of CB Insights pointed out the exits of early stage companies for talent or product were not necessarily such great news for their venture capital backers as they tended to be smaller acquisitions. “These were not home runs for VCs.”
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Plenty of digital health M&A deals last year revolved around the Internet and mobile subsectors. Physicians Interactive acquired MedHelp, a Web-based business that wants to improve patient and doctor interactions. Population health and medication adherence were also couple other areas that were especially active on the M&A front. An EMR provider for rehabilitation therapists, WebPT, acquired WebOutcomes — another business designed to help the transition from fee for service to outcomes-based care through an online tracking tool for physical and occupational therapists to objectively demonstrate their clinical performance to insurance carriers.
Intel and Google are avid acquirers of technology and their investor arms were top of the charts for corporate venture technology exits. Google is a particularly active investor in digital health so there’s reason to expect more activity in digital health this year.
But CB Insights also notes that the majority of technology companies targeted for acquisition last year — 73 percent — hadn’t raised any institutional money.
Large healthcare technology companies were the biggest acquirers of healthcare companies last year. 3D Systems illustrates that trend. It snapped up Symbionix for $120 million. The simulator software is used by hospitals for medical education and to prepare for complex procedures. It also acquired Medical Modeling — a company that developed an approach to surgical planning for reconstructive surgery.
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