Digital Health M&A Surge in Q2 2017: Major Players Expand Through Strategic Acquisitions

With the completion of Roche’s acquisition of mySugr on June 30, MobiHealthNews reported that there were 12 digital health M&A deals in Q2 2017, bringing the total number of transactions in the first half of the year to 24 when combined with Q1.

Among them are some of the industry’s most renowned companies, such as telehealth leader Teladoc, early digital health players Voxiva and GreatCall, and consumer tech giant Apple. VCBeat (WeChat: vcbeat) has compiled a detailed overview of 12 acquisitions in the second quarter.

This is the only acquisition case in which the transaction agreement was disclosed among the 12 deals closed this quarter. At the end of the quarter, Teladoc acquired Best Doctors, a virtual medical consulting company, with the aim of building an integrated healthcare platform to improve benefits for complex medical cases.

Under the terms of the transaction agreement, Teladoc will pay $375 million in cash and $65 million worth of Teladoc common stock. It is understood that Teladoc has secured $360 million in financing from Jefferies Finance LLC and Jefferies Group LLC.

This acquisition has enabled Teladoc to expand beyond primary care, general dermatology services, and behavioral health delivered through contextual care, entering a broader, more critical, and higher-cost segment of the healthcare market.

Peter McClennen, CEO of Best Doctors, will continue to lead the company. In a statement, he said, “Now that we are integrated into a larger organization under Teladoc, we will wield greater influence. We will set a new benchmark for industry transformation, delivering an exceptional patient experience, unprecedented efficacy, and greater cost savings.”

In April 2017, health communication software company Sense Health merged with Voxiva to relaunch Wellpass, a platform connecting users, providers, and patients. Through this collaborative effort, the two companies not only integrated their substantial customer bases but also shared extensive experience in working with the organizational structures of complex medical assistance programs. The specific terms of the merger were not disclosed.

Wellpass is an integrated messaging and patient engagement platform that enables healthcare projects and vendors to send text messages and secure communications to individuals or specific groups. This allows institutions to design programs under specific conditions, recruit members from existing programs, and bridge the gap between appointment reminders and eligibility verification.

This emerging enterprise was founded on a solid consumer base and extensive project experience. To date, Sense Health and Voxiva have collectively impacted over 3 million individuals. With this acquisition, Wellpass also brings to the market an existing customer base comprising more than 30 medical supply organizations and over 70 national health programs.

Stan Berkow, Co-founder and CEO of Sense Health, will serve as Executive Vice President of Product at Wellpass. He stated, “Over the past five years, we have been dedicated to helping healthcare providers more effectively engage in and support patient care. Sense Health will form the foundation of Wellpass’s information and engagement platform, which is set to support millions of users in the coming months. The joint establishment of Wellpass with Voxiva enables us to deploy these service resources at a greater scale within the healthcare market.”

At the start of the second quarter, Intermedix acquired WPC Healthcare, a data analytics company that collaborates with hospitals and users to improve adherence, treatment efficacy, data management, and patient management. The terms of the acquisition were confidential.

Intermedix, a cloud-based software-as-a-service (SaaS) provider for healthcare suppliers, government agencies, and enterprises, has been building data analytics services for its healthcare platform since 2015, dedicated to improving supplier performance and healthcare quality.

The acquisition of WPC Healthcare marks Intermedix’s entry into the provision of clinical analytics services. Leveraging WPC’s machine learning capabilities, Intermedix aims to simultaneously enhance financial returns and healthcare outcomes for hospitals, health systems, and patients.

“Data science and machine learning are the future of healthcare,” said the CEO of Intermedix. “The addition of WPC demonstrates our company’s increased investment in healthcare data analytics to help consumers manage their care and optimize revenue cycles.”

The CEO of WPC believes that, by joining Intermedix, WPC has found the right partner to bring its proprietary technology to market and share solutions across a broader range of fields.

This quarter also witnessed the acquisition of Health 2.0, a conference organizer focused on healthcare technology innovation, by HIMSS, the parent company of MobiHealthNews. H. Stephen Lieber, CEO of HIMSS, believes that although HIMSS has traditionally focused on mainstream technologies developed by hospitals, organizational networks, and physician groups, this acquisition will enable HIMSS to exert greater influence at the forefront of healthcare technology.

Lieber also stated, “We will be able to provide HIMSS opportunities for early-stage developers, helping them more rapidly identify pressing issues and gain access to the mainstream market. Health 2.0 will continue to operate independently under the HIMSS umbrella while retaining its own name; it serves as an adjunct to our existing product portfolio.”

Health 2.0 CEO Indu Subayia will serve as Executive Vice President of HIMSS, while Co-Chair Matthew Holt will take on an advisory role. Meanwhile, the two will jointly preside over Health 2.0’s Annual Fall and Wintertech conferences, as well as various international affairs.

In late April, Medidata, a New York-based company providing cloud storage and data analytics services for clinical trials, announced its plan to acquire Mytrus, a clinical trial technology firm specializing in patient-centric electronic informed consent and remote trial solutions. The terms of the acquisition were not disclosed.

“The informed consent process is not only the most critical component of ethically sound and effective research operations, but also a key element in patient enrollment and follow-up within initiatives aimed at enhancing medical outcomes,” said Glen de Vries, President of Medidata. “Integrating electronic informed consent services into the Medidata platform reinforces our commitment to improving patient engagement by providing patients and researchers with better tools, more data, and higher-quality insights.”

Medidata will integrate Mytrus’ flagship product, Enroll, into its existing patient-facing service, Patient Cloud. This integration will introduce several new features: enabling trial sites to use multimedia and interactive content to educate patients about the clinical trial experience; helping site investigators better understand patient concerns and engage in meaningful dialogue; and improving patient retention and compliance by enhancing remote consent tracking, document management, and version control.

“Patients are the cornerstone of clinical trials, and they have the right to simple and convenient access to information,” said Anthony Costello, CEO of Mytrus. “Mytrus has always aimed to bring patients closer to research. By joining Medidata, we will accelerate this mission and extend our products to more patients, more studies, and more countries.”

DocuTAP, based in Sioux Falls, South Dakota, is a company that develops tablet-based electronic health record (EHR) systems and management software. In April, the company acquired Clockwise.MD, an Atlanta-based manufacturer of mobile appointment scheduling software. The terms of the acquisition were not disclosed.

“DocuTAP shares our corporate approach and vision for delivering a better experience to patients and providers, and we are honored to join forces in integrating our products to serve more patients in the healthcare market,” said Mike Burke, Founder and CEO of Clockwise.MD.

In a brief announcement, DocuTAP CEO Eric McDonald stated that this is the company’s first acquisition, aimed at supporting DocuTAP’s patient engagement capabilities.

“Because Clockwise.MD has already established its own patient engagement space, and its products and services are unmatched, combining the strengths of these two vibrant companies is highly significant,” McDonald wrote. “The result of this acquisition is a new, more powerful DocuTAP. We have more ambitious product plans, including Clockwise.MD’s patient engagement features, Queue and Survey.”

In May this year, Apple acquired Beddit, a consumer-facing sleep tracking company, at an undisclosed price. This acquisition has left many puzzled, as Apple had long avoided the sleep-tracking market even after it became commoditized in other wearable tracking sectors.

According to Beddit’s website, the company’s products and consumer experience will remain unchanged, at least for the time being. Beddit is now compatible with iPhone and syncs with the Health app, while the latest version, the Beddit 3 Sleep Tracker, is already available in Apple retail stores. Beddit added an Apple Watch app in 2014 and re-released a version for watchOS 2 in 2015.

It is highly likely that Apple’s latest acquisition, much like its previous ones, is primarily aimed at acquiring the team, technology, and patents. This could signal that the company is reevaluating the sleep-tracking features on the Apple Watch. Coupled with the departure of sleep expert Raymann, Apple may be poised to take a significant new step in the field of sleep tracking.

The Wellness Network, a television and digital media network based in Pewaukee, Wisconsin, acquired Milner-Fenwick, a publisher of patient education videos, in May. The financial terms of the acquisition were not disclosed.

The combined customer base of the two companies accounts for half of all hospitals in the United States. Through the acquisitions of Hunt Valley-based Milner-Fenwick, a Maryland company, The Wellness Network’s user base instantly surged to 3,200, and it gained access to 690 health education videos approved by peer review committees. Milner-Fenwick, which had operated as a small family-owned business for more than 40 years, will continue producing video content as a subsidiary of The Wellness Network.

David Milner, Chairman of Milner-Fenwick and son of one of the company’s founders, stated that the acquisition would generate greater multi-platform demand for the company at a time when the market is undergoing consolidation and consumers are expecting more solutions. Milner and his brother Richard, the company’s Chief Executive Officer, will both remain in their positions.

UK-based integrated services company Medvivo, which provides telemedicine and basic medical care outside regular office hours, has acquired clinical decision support firm Expert 24. The acquisition was led by investment firm Eight Roads, though the specific transaction amount was not disclosed. Expert 24 plans to hire more UK-based developers, and this acquisition will help the company build its own products and expand into the UK, Europe, and the US.

“Medvivo aims to become the UK’s leading provider of digital health products and services,” said Andrew Gardner, CEO of Medvivo. “Efficient, patient-centered healthcare relies on innovations that help users by unlocking efficiency constraints and addressing technological gaps. Successful enterprises like Expert 24 will complement our efforts, deepening our product offerings, expanding our international reach, and strengthening our confidence in enhancing the accessibility, quality, and cost-effectiveness of healthcare services.”

GreatCall, a San Diego-based company that started out in 2016 by manufacturing smartphones for seniors, now offers a suite of safety products. The company was acquired this June by GTCR, a Chicago-based private equity firm. The transaction amount was not disclosed.

According to Lawrence Fey, Managing Director at GTCR, the firm plans to retain GreatCall’s team members and allow them to continue operating the company in its established manner. The most significant change is that GTCR, which already has safety alert-related services in its product portfolio, believes it can enhance GreatCall’s Five-Star call center.

Dutch investment firm Main Capital Partners has acquired a majority stake in Verklizan, a telemedicine infrastructure company. Verklizan currently provides services in the Netherlands, Germany, the United Kingdom, France, and Spain, with this acquisition partly aimed at supporting its future international expansion. Verklizan “offers a cloud-based, innovative integrated healthcare platform for public alert systems and telemedicine.” The company currently serves 300 vendor clients with its UMO platform, reaching a total of over one million patients.

Pieter van Bodegraven, a partner at Main Capital, stated: “Verklizan continues to provide healthcare providers with efficient and innovative solutions while controlling costs, thereby addressing the growing demands in healthcare. In addition to its independent internationalization strategy over the coming years, we also value the opportunity to expand the platform through strategic acquisitions.”

This acquisition came just two weeks after GTCR’s acquisition of GreatCall. With the aging global population and technological advancements, investors appear to be showing growing interest in the aging-in-place market.

On the morning of the last day of this quarter, Roche announced that it would become the sole shareholder of mySugr, a diabetes management app company. Under the agreement, mySugr will continue to operate as an independent legal entity but will serve as the focal point for Roche Diabetes Care’s patient-centric digital health services.

In return, Roche’s global reach will pave the way for mySugr’s international expansion, but this will not impose any restrictions on other projects or partners that the digital health company seeks to engage.

As a result, mySugr can maintain its independent operations while benefiting from Roche’s strong financial backing. mySugr will expand its teams in Vienna and San Diego, allocating more resources to research projects, development, integrated devices, and insurer acquisitions.

“Our partnership with mySugr has entered a new phase, as they will become an integral part of our new, open digital health ecosystem built around the needs of people with diabetes,” said Marcel Gmuender, Global Head of Roche Diabetes Care. “We are striving to redefine the model of diabetes care, so that patients can not only seamlessly connect with their care teams but also derive greater joy from their daily lives.”

References:

http://www.mobihealthnews.com/content/q2-adds-12-more-digital-health-acquisitions-bringing-midyear-total-24