The eHealth sector has witnessed a flurry of high-stakes M&A activity in 2024, with billion-dollar deals dominating the headlines. While the overall eHealth deal volume has dipped by 18% compared to the same period last year (155 deals versus 187 announced between January 1, 2023, and August 26, 2023), the sector has still attracted an substantial current healthcare investment market, with announced spending reaching more than $17 billion year to date.
The recent decline in deal volume follows a peak in 2021 (366 deals), and significant deal activity in 2022 (325 deals) and 2023 (274 deals), reflecting a shift from the rapid expansion during the early pandemic years to a more stabilized and strategically focused market.
This year’s M&A landscape reflects a maturing eHealth market. Private equity firms continue to be significant players, with companies such as TowerBrook Capital Partners, Clayton, Dubilier & Rice and Vista Equity Partners pouring billions of dollars into the sector.
Major Acquirers and Notable Transactions:
- TowerBrook Capital Partners and Clayton, Dubilier & Rice executed the largest eHealth deal of the year by purchase price. The companies acquired R1 RCM, a leading provider of revenue cycle management (RCM) solutions, for $8.9 billion. This also marks the third-largest deal across all healthcare specialties in terms of purchase price.
- Health Catalyst expanded its healthcare data platform by acquiring Carevive Systems (remote patient monitoring), Quarvis Health (patient engagement) and Lumeon Limited (care coordination). Health Catalyst has acquired five companies since February 2022, all in the eHealth space, and across five different specialties.
- iCoreConnect focused on dental practice management and RCM, with the acquisitions of FeatherPay (RCM), Teamworx Dental (patient engagement) and Verifi Dental (medical practice management software) solidifying its market presence.
- HHAeXchange expanded its home health and hospice software offerings by acquiring Cashé Software (RCM) and Generations Homecare System (medical practice management software).
- Fabric strengthened its telehealth and patient engagement capabilities through the acquisitions of GYANT (patient engagement) and MeMD (telehealth).
- Vista Equity Partners made a notable move with its $1.25 billion acquisition of Model N (RCM), a leader in revenue optimization and compliance for pharmaceutical and medtech innovators.
- Legrand acquired Enovation (medical practice management software) for $533 million, emphasizing the growing importance of healthcare integration technologies.
Other active acquirers in the space include Med-Metrix, N. Harris Computer Corporation, Valsoft Corporation and Aquiline Capital Partners, each pursuing strategic deals to enhance their offerings in various eHealth specialties.
Key Trends in 2024 eHealth M&A Market
The M&A activity in 2024 has highlighted several key trends in the eHealth market:
1. Broadening of Offerings through Acquisitions
Acquirers expanded their offerings within the eHealth sector to provide more comprehensive solutions. For instance, Health Catalyst has demonstrated a targeted growth strategy through its acquisitions in the remote patient monitoring, patient engagement and care coordination specialties. iCoreConnect also made three acquisitions across three different eHealth specialties: RCM, patient engagement and medical practice management software (MPMS). Both companies have positioned themselves as leading providers of comprehensive eHealth solutions. In fact, of the 14 acquirers with two or more deals announced so far this year, 10 (71%) made acquisitions across two or more specialties.
2. High Demand for RCM
RCM has emerged as a critical area of focus, with multiple companies, including Med-Metrix, N. Harris Computer Corporation and iCoreConnect, making strategic acquisitions to strengthen their RCM capabilities. The increasing complexity of healthcare billing and regulatory requirements has heightened the need for efficient RCM solutions that can streamline processes, reduce errors and improve financial performance. By streamlining billing processes and enhancing revenue cycle management, healthcare providers can allocate more resources to patient care. According to data captured in the LevinPro HC database, RCM deals have made up about 14% of all eHealth deals announced since January 1, 2024.
3. Integration of Telehealth Solutions
The importance of telehealth continues to grow, as evidenced by Fabric’s acquisitions of GYANT and MeMD. Integrating telehealth into broader patient engagement strategies has become a key focus for many acquirers. Telehealth solutions are not only enhancing patient access to care but also driving innovative models of care delivery. They are increasingly seen as essential components in comprehensive care management, particularly in remote and underserved areas, potentially leading to better health outcomes and reduced overall healthcare costs. So far in 2024, 18% of all eHealth deals announced have been in the telehealth specialty. As telehealth becomes more integrated into standard care practices, it is expected to drive further growth and innovation in the eHealth space.
4. Continued Consolidation in Core eHealth Areas
Established players are consolidating their positions in core segments like MPMS and healthcare analytics, which have made up 25% and 12% of all eHealth deals year to date, respectively. This reflects a strategic shift towards enhancing operational efficiency and data-driven insights. Notable acquisitions include Valsoft Corporation’s expansion into MPMS with its acquisitions of TDO Software and Progitek. Meanwhile, Linus Health has made significant strides in healthcare analytics, acquiring Aural Analytics to strengthen its capabilities in real-time data analysis and predictive insights. The growing emphasis on analytics is driven by the need for more precise, actionable data to support decision-making and improve patient outcomes.
5. Regulatory Scrutiny in eHealth M&A: The Case of Optum and Change Healthcare
The proposed $13 billion acquisition of Change Healthcare by Optum, a subsidiary of UnitedHealth Group, faced significant regulatory scrutiny from the U.S. Department of Justice (DOJ). The DOJ raised concerns that the merger could stifle competition, particularly by giving Optum undue control over vast amounts of healthcare data and critical processes. In response, the DOJ filed a lawsuit to block the deal, highlighting the growing regulatory focus on large eHealth transactions and signaling increased oversight for future mergers in the sector.
Future Outlook for the eHealth Sector
Despite a decline in deal volume, the trends and activities in 2024 suggest that the eHealth sector remains active. As the eHealth industry continues to mature, further M&A activity is expected, driven by the need for innovation, scalability and improved patient outcomes. However, dealmakers must be wary of the increased regulatory scrutiny, as future transactions will likely face closer examination to ensure they do not hinder competition or inflate healthcare costs.
