Q2 2018 Digital Health M&A Review: Amazon Enters Prescription Drug Market, Nokia Exits Digital Health

Recently, Amazon’s $1 billion acquisition of the small online pharmacy PillPack has once again stirred up the healthcare market. Over the past six months, Amazon has made frequent appearances in the healthcare sector. In January, it partnered with JPMorgan Chase and Berkshire Hathaway to establish a company aimed at reducing healthcare costs for U.S. employees. In February, reports emerged that it had launched 60 private-label over-the-counter drug products. It has also expanded the application of its Alexa voice assistant in healthcare and other areas. Each of these moves has sent shivers down the spines of some companies.

However, in addition to Amazon’s unconventional M&A activities, there are 15 digital health mergers and acquisitions that also deserve attention.

The most active area in digital health mergers and acquisitions this quarter was telemedicine. U.S. telemedicine unicorn Teladoc has not slowed its acquisition spree. Both Teladoc and American Well acquired smaller telehealth companies to bolster portions of their product offerings. In the enterprise telemedicine sector, there was also one notable merger: the transaction between InTouch Health and Reach Health.

Another notable trend is consolidation within niche market segments. In the field of sleep monitoring, SleepScore Labs acquired Sleep.ai; the maternal and infant market space has also become more concentrated, with U.S.-based digital health care platform Babyscripts acquiring iBirth.

One of the most intriguing deals this quarter is the reversal of one of the largest transactions in 2016. In early May, Nokia announced plans to sell its struggling digital health business to Eric Carreel, co-founder of the French startup Withings. Two years prior, Nokia had acquired Withings for $191 million, aiming to enter the consumer health products market. This serves as a timely reminder that not all acquisitions succeed.

VCBeat (WeChat ID: vcbeat) has compiled and translated information on 15 M&A deals.

Rumors circulated several months ago that PillPack was in acquisition talks with Walmart, but ultimately, the online retail giant Amazon acquired the company for less than $1 billion (the terms of the deal were not publicly disclosed, but the $1 billion figure has been widely reported). This move underscores Amazon’s ambition to incorporate prescription drugs into its service offerings. Although in January, Amazon announced that its healthcare joint venture with Berkshire Hathaway and JPMorgan Chase was still in its early stages.

Teladoc has not slowed its acquisition spree. After spending $375 million to acquire Best Doctors last year, Teladoc purchased Advance Medical for $352 million this year. Teladoc is committed to enabling users to consult with physicians anytime (24/7) and anywhere via mobile devices, the internet, video, and telephone. The acquisition of Advance Medical is expected to help Teladoc expand its presence in the Latin American and Asia-Pacific markets and allow the company to provide care services in 20 languages through its platform. Jason Gorevic, the company’s CEO, stated that the service will target multinational corporations—many of which are headquartered in the United States but have approximately one-third of their employees located in other countries—as well as international health insurers seeking to enhance their medical service offerings.

Medidata, a New York-based company that provides cloud storage and data analytics services for clinical trials. The deal valued Shyft at $195 million, including the 6% stake in Shyft Analytics previously held by Medidata, and was paid in cash.

These two companies have joined forces to co-create a joint product called the “Intelligent Platform for Life Sciences.” Notably, integrating clinical data and commercial insights into a more comprehensive platform can optimize the entire process from drug development to commercialization.

EHR vendor Allscripts acquired patient communication app maker HealthGrid for $60 million in cash, with contractual terms requiring HealthGrid to meet certain revenue targets over the next three years, triggering an additional $50 million payment from Allscripts.

“Allscripts President Richard J. Poulton stated during the first-quarter earnings conference call announcing the acquisition, ‘The growing prevalence of value-based care, combined with the widespread adoption of patient platforms across the industry, makes it essential to adopt a new approach to designing patient engagement solutions.’ ‘We aim to tightly integrate HealthGrid’s capabilities into our follow-up health platform, enhancing functionality to empower our clients to achieve 100% patient visibility based on existing information, rather than requiring patients to register for portals.’”

SCI Solutions, a patient engagement and care coordination company, announced in April that it had acquired DatStat, a company specializing in digital health tools and patient engagement, for an undisclosed amount. SCI Solutions is a platform providing solutions for patient scheduling, referral management, and revenue cycle management. Currently, SCI Solutions is used by more than 1,000 hospitals and medical imaging centers, as well as over 13,000 physicians.

The company plans to integrate with the digital self-service platform provided by DatStat, which includes tools for patients to prepare for doctor visits, a secure messaging system, visit summaries, and health plans.

SleepScore Labs Acquires Sleep.aiNon-contact sleep tracker manufacturer SleepScore Labs has acquired the Dutch company Sleep.ai. The financial terms of the acquisition were not disclosed. Founded in 2014, Sleep.ai specializes in developing wearable devices and applications that help users determine whether they snore. One of its products is a wearable wristband worn on the user’s arm; it vibrates when the user rolls onto their back and begins to snore. The wristband also connects to the user’s smartphone.

“Michiel and his team have made incredible strides in improving sleep health, with many customers unaware that they are suffering from snoring and bruxism,” said Colin Lawlor, CEO of SleepScore Labs, in a statement. “We are thrilled to welcome Sleep.ai into the SleepScore Labs family and expand our suite of life-changing sleep products.”

In April this year, digital chronic disease management company Livongo announced the acquisition of Retrofit, a specialist in weight management and disease prevention programs, for an undisclosed sum. This acquisition will enable Livongo’s customers to access an enhanced version of the Diabetes Prevention Program. The move will also help Mountain View-based Livongo expand its service offerings by integrating more healthcare professionals into its platform, including those providing weight management and nutritional services, to “nudge” users toward positive behavioral changes.

Telehealth giant American Well acquired the U.S. company Avizia at an undisclosed price at the end of the second quarter. The deal is expected to help American Well expand its emergency care capabilities, an area in which Avizia specializes. This transaction will enable American Well to gain access to Avizia’s proprietary software workflows for emergency vehicles and customized solutions across more than just clinical specialties.

“For the past few years, we have been closely monitoring Avizia. We believe that the organization’s DNA, culture, and mission are similar,” said Dr. Ido Schoenberg, CEO of American Well.

InTouch Health Announces Acquisition of Another Telemedicine Platform, Reach Health. InTouch Health develops enterprise telemedicine technologies for hospitals and healthcare systems. Officials from InTouch Health stated that integrating Reach Health will help expand its reach and enhance its ability to assist clients in implementing telemedicine programs across the entire healthcare system, while existing Reach Health customers will benefit from stronger support, reliability, security, and synergy.

After months of turbulence in Nokia’s digital health business, Eric Carreel, co-founder of the French health technology company Withings, repurchased Nokia’s digital health division. According to a statement, Carreel plans to relaunch the Withings brand by the end of 2018.

Eric Carreel said in a statement, “I am delighted to once again work with the outstanding team that has driven the brand’s tremendous success.” “We face an exciting challenge, and we will continue to push the boundaries of connected health.”

Virgin Pulse and RedBrick Health, which focus on employee health and health engagement platforms, announced in May that they would merge under the Virgin Pulse name. Previously, Marlin Equity Partners acquired RedBrick Health and Virgin Pulse last week, with the acquisition amounts for both parties undisclosed.

The initiative aims to make the capabilities of both platforms available to their combined customer base. The two companies stated that the newly merged entity will continue to support Virgin Pulse and RedBrick Health. Virgin Pulse delivers personalized, mobile-first experiences designed to help employees improve their health outcomes. These offerings will also encompass RedBrick Health’s digital and real-time coaching, health assessments, and biometric screening services.

WebMD, an internet brand subsidiary of the U.S. private equity giant KKR, which also oversees Medscape—a mobile and web-based educational content brand for physicians—has acquired Jobson Healthcare, a medical content provider. The purchase price has not been disclosed. The primary objective of this acquisition is to comprehensively enhance Medscape’s content, particularly materials relevant to pharmacists and eye care professionals, including optometrists and ophthalmologists. Jobson will continue to operate from its existing offices and will maintain many of its current publications.

Sophia Genetics, a company under Genomics AI, has acquired Interactive Biosoftware, the manufacturer of Alamut, a clinical decision support software used for the interpretation of clinical genomic data. The terms of the transaction were not disclosed.

“We are thrilled to acquire Interactive Biosoft,” said Jurgi Camblong, CEO and Co-Founder of Sophia Genetics, in a statement. Both Sophia AI and Alamut are technologies trusted by the healthcare community, with a focus on patient-centric innovation. The addition of Alamut marks a significant step forward in our mission to help clinicians diagnose patients more effectively and equitably. With over 900 teaching hospitals now using Sophia Genetics’ technology, we are able to connect clinicians and enable them to share knowledge.”

Wildflower Health, a digital health platform that helps patients navigate benefits and connect to resources, announced it will acquire Circle Women's Health, a startup incubated by the Providence St. Joseph Health system.

The merger is expected to expand Wildflower’s supplier base and provide the team with insights into the clinical space. The Circle Women’s Health platform, created by clinicians at PSJH, is designed to offer users health information and resources. It provides various tools and trackers that can be integrated into the system’s EHR.

Babyscripts, a virtual care platform focused on obstetric management, announced in June its acquisition of the vendor-supplied pregnancy app iBirth to enhance its enterprise offerings and further drive patient engagement. As part of the agreement, the iBirth team will join Babyscripts, with the app’s CEO and co-founder, Judith Nowlin, assuming the role of Chief Growth Officer. Further terms of the acquisition were not disclosed.

The digital health care tools provided by Babyscripts strengthen the communication between doctors and pregnant women, reducing the risks associated with prenatal care. Users receive a "Mommy Kit" that includes an internet-enabled scale and a blood pressure cuff, along with a companion app that effectively monitors weight and blood pressure metrics. All collected data is securely transmitted to the corresponding clinic, enabling physicians to deliver high-quality care.