Year of Mega-Deals: Major Healthcare Acquisitions Defy the Capital Winter

Although the financial terms of many mergers and acquisitions (M&A) were not disclosed, this year is clearly a peak period for acquisitions, both in terms of transaction value and volume. To date, we have witnessed 30 M&A deals. With just over three months remaining in the year, the total number of transactions in 2016 is likely to surpass the 37 deals recorded in 2015. In addition to listing these companies, we have categorized the M&A activities by acquirer to identify current trends. We also interviewed several investors to gain their insights on M&A activity among digital health companies. VCBeat (WeChat ID: vcbeat) has compiled this information, hoping to uncover emerging trends in this article.

We have observed that several companies with no prior connection to digital health have entered the rapidly growing digital health market through a series of acquisitions, including high-profile technology firms and pet food manufacturers.

1.Apple Acquires Gliimpse from PHR

Among these mergers and acquisitions, the most notable is undoubtedly Apple’s acquisition of the personal health record (PHR) company Gliimpse. This company helps individuals collect the “breadcrumbs” scattered across various health data repositories into a centralized storage hub. After launching the HealthKit framework in mid-2014, Apple positioned health data sharing as its entry point into the healthcare sector, and Gliimpse fit perfectly into this strategy. Additionally, Apple has previously leveraged electronic health records (EHRs)—most notably those from Epic—to integrate HealthKit data. The code provided by Gliimpse can streamline the interaction between Apple products and hospital systems or enhance Apple’s data security, both of which are key selling points of Gliimpse. One investor stated in an interview that this deal was merely a small transaction for Apple, akin to an acqui-hire.

2. Nokia Technologies Acquires Device Manufacturer Withings

Nokia Technologies acquired Withings, a French manufacturer of connected health devices, for $191 million (€170 million). Withings specializes in producing smartphone-connected scales, blood pressure cuffs, activity trackers, and thermometers. The company has secured $34 million in investment to date, with its latest valuation in 2013 standing at $30 million. Since selling its mobile phone business to Microsoft, Nokia has been seeking new business avenues. In March this year, Ramzi Haidamus, President of Nokia Technologies, suggested that the company focus on digital health.

“We are also keeping an eye on another area that Nokia has yet to venture into—digital health,” he told Fortune. “For Nokia, entering the digital health space is a natural move, as extensive research is currently being conducted in this field.”

3. Japanese Apparel Company Asics Acquires App Developer FitnessKeeper

Japanese apparel company Asics has also acquired FitnessKeeper, the developer of the Runkeeper app, for $85 million, marking its entry into the healthcare industry. The purpose of acquiring Runkeeper is to use it as a one-on-one marketing channel while maintaining the platform’s current state. “From the end user’s perspective, not much will change for Runkeeper,” wrote Jason Jacobs, CEO of FitnessKeeper, in a blog post. “Runkeeper will not only continue forward but will do so at a faster pace. This will enable the company to implement long-planned initiatives, while our partners provide substantial resources that would be difficult for us to secure on our own. Over the years, Runkeeper has raised approximately $11.5 million in investment.”

4. Pet food manufacturer Mars Petcare acquires pet health tracking company Whistle

Following its acquisition of Whistle, a San Francisco-based pet health tracking company, Mars Petcare has entered the veterinary healthcare sector. Relevant reports indicate that the transaction was valued at $117 million. Mars Petcare is a subsidiary of Mars, Incorporated, the confectionery manufacturer behind brands such as M&M’s, Dove, Snickers, and Twix; its own portfolio includes Iams, Pedigree, and Whiskas. The company has developed a smart pet collar that enables owners to monitor their pets’ location, activity levels, and sleep patterns via a mobile application.

5. Toy Manufacturing Giant Mattel Acquires Wearable Device Developer Sproutling

Earlier this year, Mattel, the toy manufacturing giant based in El Segundo, California, acquired Sproutling, a San Francisco-based developer of remote health-monitoring wearables for infants. Prior to the acquisition, Sproutling had secured at least $6.5 million in investment. The company will continue to launch products under the Sproutling brand, while the Sproutling team will also collaborate with Mattel to design and develop new products under the Mattel brand.

6. Mapping Platform Mapbox Acquires Fitness Tracking App Human

San Francisco-based open-source mapping platform Mapbox has acquired the fitness tracking app Human. Users can utilize the app to track their daily activities and leverage the collected data to anonymously generate urban insights. As a passive application, Human has a straightforward goal: users earn a “Daily 30” badge by moving for more than 30 minutes each day. Unlike complex workout setups or manual data entry, Human automatically tracks any calorie-burning activities—including cycling, walking, and running—once the initial setup is complete. Users can also choose whether to receive notifications upon completing their “Daily 30.” Furthermore, the app is compatible with both iOS and Android systems and integrates with HealthKit.

7. Electronics Company Logitech Acquires Wireless Earbud Company Jaybird

Meanwhile, electronics company Logitech acquired wireless earbud maker Jaybird for $50 million; Jaybird had also developed a health tracker called Reign. Although the tracker was not the focal point of the acquisition, Jaybird remains one of the activity-tracking device companies acquired in recent years, similar to Jawbone’s acquisition of BodyMedia in 2014, Adidas’ acquisition of Runtastic in 2015, and Fossil Group’s acquisition of Misfit.

1.HCA Acquires App Developer Mobile Heartbeat

HCA Healthcare, headquartered in Nashville, Tennessee, and operating 169 hospitals and 116 independent surgery centers across the United Kingdom and 20 U.S. states, has announced its plan to acquire Mobile Heartbeat, a developer of clinical workflow and team communication applications. The company did not disclose the terms of the agreement. Previously, HCA had collaborated with Mobile Heartbeat, conducting a pilot study using the CURE software for its iMobile initiative. This project aimed to facilitate smartphone-based communication among intensive care teams. HCA launched this initiative last year, and its staff rapidly adopted the technology.

2. One Medical Group Acquires Rise, a Developer of Nutrition Coaching Apps

One Medical Group, dedicated to providing concierge physician services, has acquired Rise, a developer of nutrition coaching applications, for $20 million. Founded in 2013, Rise is an emerging player in the field of nutrition coaching apps. The company has raised $3.3 million in funding and boasts an all-star advisory team, including Dr. Russ Phillips of Harvard University, Dr. Sanjay Gupta, CNN’s chief medical correspondent (and brother of Rise Labs founder Suneel Gupta), P90X creator Tony Horton, OkCupid co-founder Sam Yagan, and Facebook executive Alex Schultz. Rise’s nutrition coaching system helps users lose weight and adopt healthier lifestyles. The system prompts users to take photos of their meals, allowing a certified nutritionist coach to review their food intake and provide personalized guidance. Additionally, coaches offer daily health feedback and tips.

3. St. Joseph Health System Acquires Medicast

Medicast sparked a surge in phone-booked, at-home medical services. Recently, the company was acquired by Providence St. Joseph Health, a health system formed through the merger of Providence Health & Services and St. Joseph Health System, and headquartered in Washington. According to media reports, Medicast initially adopted a direct-to-consumer approach but later began collaborating with healthcare providers, including its eventual acquirer, Providence St. Joseph, which had become a Medicast client 18 months prior.

The outcome of most acquisitions is corporate mergers, such as one healthcare startup acquiring another, or a small-scale health IT company acquiring a digital health startup.

1.Health IT Firm Athenahealth Acquires Filament Labs

The largest acquisition was health IT company Athenahealth’s purchase of Filament Labs. Through Patient IO, a system developed by Filament Labs, patients can access their care plans by completing a series of actionable daily tasks via smartphone or web applications. Patient IO will serve as the foundation for Athenahealth’s new patient-facing application, athenawell. This platform enables patients to play a more engaged and sustained role in their own care plans, ranging from medication management and self-reported data logging to gaining deeper insights into their health status.

2. Philips Acquires Wellcentive

Amsterdam-based Philips has acquired Atlanta, Georgia-based Wellcentive for an undisclosed amount. Wellcentive and its employees will become part of Philips’ Population Health Management business group. Currently, this division offers enterprise telehealth, home monitoring, and personal emergency response systems, and is dedicated to providing personal health services focused on disease prevention, outpatient care, and the treatment of high-risk conditions across diverse populations.

3. Healthcare Services Company MedData Acquires Patient Engagement Company Duet Health

MedData, a healthcare services company based in Brecksville, Ohio (not to be confused with Medidata), has acquired Duet Health, a patient engagement company headquartered in Columbus, Ohio. MedData specializes in providing physician-patient communication tools, revenue cycle management software, and consulting and analytics services related to billing and coding. The company serves over 5,000 physicians and operates seven offices across the United States. Founded in 2009, Duet Health offers a white-label patient engagement suite that enables healthcare providers to send secure video, text, and image messages, store images, and access emergency care plans. Its clients include OhioHealth, Cardinal Health, Brigham and Women’s Hospital, Autism Speaks, and the Centers for Disease Control and Prevention (CDC).

4. HealthTech Company HealthTap Acquires Docphin

Health tech company HealthTap has also secretly acquired Docphin, a company dedicated to simplifying the process for physicians to search and read medical literature, for an undisclosed amount. In 2012, Docphin was a member of Rock Health’s second accelerator cohort and later that year became one of StartUp Health’s second-cohort startups. Founded in 2010, the company never publicly announced any financing activities, but it appears to have raised approximately $1.6 million at its inception.

5. CRF Health Secretly Acquires Digital Health Company Entra Health

CRF Health, based in Pennsylvania, is a company dedicated to providing electronic Clinical Outcome Assessment (eCOA) solutions for clinical trials. The company has secretly acquired the digital health firm Entra Health. This acquisition will expand the product portfolio of CRF’s mobile and wireless medical device division, helping the multinational corporation build solutions to collect, manage, and analyze biological and clinical trial data. Representatives of CRF confirmed the acquisition of San Diego, California-based Entra Health in a statement, formally announcing the existing relationship between the two parties. In early 2010, Entra partnered with Nokia, using applications from the Nokia App Store to connect early smartphones with Bluetooth-enabled blood glucose meters developed by Entra.

6. Canary Health Acquires App Company bLife

Canary Health, a Los Angeles-based startup that leverages digital health tools to help individuals prevent and manage chronic diseases, has acquired bLife, a stress management app company, for an undisclosed sum. Canary Health focuses on selling its disease management programs to hospitals and health systems, while bLife specializes in developing direct-to-consumer stress management applications and creating apps for clients such as the Oprah Winfrey Network, Deepak Chopra, and The Huffington Post.

7. Virgin Pulse Acquires Two Employee Wellness Companies

Virgin Pulse, an employee health and engagement company headquartered in Framingham, Massachusetts, has acquired two employee health firms: ShapeUp, based in Providence, Rhode Island, and the Global Corporate Challenge (GCC), an Australian company. ShapeUp develops social wellness programs for enterprises that help maintain employees’ physical fitness through team-based training challenges. Operating for approximately a decade, ShapeUp has raised more than $15.5 million in funding. Additionally, its platform enables tracking of team progress, encourages healthy lifestyle habits, provides wellness coaching on nutrition and exercise, and extracts data from various fitness devices.

8. Healthways Sells Population Health Business to Atlanta-Based Sharecare

Healthways, an employee health company based in Nashville, has agreed to sell its population health business to Sharecare, an Atlanta-based company. In an interview with MobiHealthNews, Sharecare CEO Jeff Arnold described the deal as “the largest acquisition in the company’s history to date.” Arnold stated that Sharecare will exchange $30 million worth of common stock for Healthways’ population health business. The acquisition will bring 1,700 employees and approximately $259 million in annual revenue to Sharecare. Additionally, Sharecare will make a $25 million advance payment to Healthways to help cover anticipated negative cash flow. If losses exceed $25 million, Sharecare may reduce the equity payment to $10 million.

9. Scrypt Acquires Physician Communication Platform DocbookMD

Document management company Scrypt has acquired the physician communication platform DocbookMD. Both companies are based in Austin, Texas. DocbookMD secured $2.2 million in seed funding as early as early 2012. The platform was founded by a married couple of practicing physicians: plastic surgeon Tim Gueramy and family practitioner Trace Haas. Previously, the company’s unified communications product, available via app and web interface, had gained traction among more than 30,000 healthcare professionals across 42 states. Physicians can use the system to exchange text messages, photos, charts, X-rays, and similar information.

10. The Merger of DocPlanner with Its Competitor Doctoralia

Polish online doctor appointment platform DocPlanner has announced the completion of its merger with Spanish competitor Doctoralia, based in Barcelona. Prior to the merger, DocPlanner reported 8 million monthly unique users, with 90% of its customers located in Europe. While its strongest presence remains in Europe, the company had expanded into 25 countries as of last year, including several in Asia and South America. Meanwhile, Doctoralia boasted over 9 million monthly unique users, with the majority of its traffic coming from Spain, Brazil, and Mexico, and operated in 20 countries worldwide. As a result, the combined entity is expected to serve 17 million unique and paying users across 20 markets, maintain the world’s largest database covering 5 million doctors, and have 3 million registered users on its unified platform.

11. Fitbit Acquired Coin’s Wearable Payment Platform

Device manufacturers are also engaging in technology acquisitions, with two deals worth noting. Fitbit acquired the wearable payment platform of smart payment company Coin, including related intellectual property rights. Fitbit also hired key personnel from Coin’s wearable payment platform team. Through this acquisition, Fitbit can integrate near-field communication (NFC) payment functionality into future devices, although the company stated that it does not currently plan to add these features to any products launched in 2016.

12. Connected Device Company iHealth Labs Acquires eDevice

iHealth Labs, the connected device subsidiary of Andon Health with offices in Paris and Mountain View, California, has acquired Bordeaux-based eDevice for $106 million (€98.33 million). eDevice is a long-standing European provider whose backend infrastructure helps hospitals and healthcare service providers connect remote monitoring devices.

13. HMS Holdings Acquires Care Management Platform Essette

A large number of subsidiaries under HMS Holdings are dedicated to providing software tools to paying users. The company recently acquired Essette, a web-based care management platform that helps paying users and healthcare providers improve population health management and patient engagement. The acquisition was structured as an all-cash transaction valued at $20 million.

Equity firms are racing to secure relevant technologies ahead of the curve, aiming to deliver long-anticipated solutions in the healthcare sector. The scale of these transactions surpasses that of any strategic acquisition previously seen in the digital health space.

Jason Sibley, a principal at Flare Capital, told Mobi Health News in an email, “The lower-barrier leveraged loan market has provided private equity firms with certain advantages. In some cases, private equity firms have outbid potential strategic buyers.”

1.EQT Equity Fund Acquires Press Ganey

Currently, four private equity firms have acquired healthcare companies. The largest deal among them is EQT’s $2.35 billion acquisition of Press Ganey, a company dedicated to improving the quality of healthcare services through research and analysis of patient satisfaction. This transaction marks EQT’s first direct investment in North America. Just three months prior, Press Ganey had acquired Avatar, a firm specializing in patient experience and employee engagement.

2. Veritas Capital Fund Acquires Healthcare Services Company Verisk Analytics

The second-largest acquisition was Veritas Capital Fund’s $820 million purchase of healthcare services company Verisk Analytics. The Wall Street Journal reported that Veritas has been active in the health technology sector and recently sold Truven, a cloud-based healthcare data company it had acquired in 2012, to IBM for $2.6 billion.

In a statement issued during the acquisition, Ramzi Musallam, Managing Partner at Veritas, said, “Both private and public enterprises in the healthcare sector face pressure to improve service quality and reduce costs. Verisk Health’s extensive data services, analytical expertise, and technology are playing an increasingly vital role in achieving these objectives. We look forward to collaborating with the talented team at Verisk Health, leveraging our capital and rich experience to scale the business and meet rapidly growing demand.”

3. Thoma Bravo Acquires Secure Healthcare Communications Company Imprivata

The third-largest acquisition was Thoma Bravo, a San Francisco-based private equity firm, acquiring Imprivata, a secure healthcare communications company, for $544 million. Omar Hussain, CEO of Imprivata, stated that the Lexington, Massachusetts-based developer of health IT security tools would “better seize market opportunities by innovating and expanding our products and services.” For Thoma Bravo, this acquisition represents a key step in building a clinical workflow platform.

Chip Virnig, Head of Thoma Bravo, stated in a press release: “The mission-critical technologies provided by the Imprivata security platform have long been deeply embedded in the daily workflows of the world’s largest and most prestigious hospitals and healthcare institutions.”

1. ghg - The Lathe Acquisition Case

Greyhealth Group (GHG) is a healthcare organization under WPP (the founding partner of Text4Baby and an early partner in the IBM Watson project). The company recently acquired Lathe, a health app design and development firm, for an undisclosed amount. Founded in 2003, Lathe has collaborated with numerous healthcare companies to develop applications and mobile-responsive websites. Its portfolio includes apps for chronic disease management, episodic care, medical devices, and over-the-counter medications. Currently, the company is offering on its website an app developed for patients with multiple sclerosis, an iPad app for asthma and allergy sufferers, and a responsive website co-developed with Valeant Pharmaceuticals for parents of children with eczema. One of the company’s key selling points is its deep understanding of pharmaceutical marketing regulations.

2. Mad*Pow Gamified Exercise App: HotSeat

Recently, Mad*Pow, a design agency specializing in healthcare service design, announced the acquisition of HotSeat, a gamified exercise app from Context, a communications consultancy under application developer Fran Melmed. Although the acquisition price was not disclosed, the agency had previously been one of the developers of HotSeat. The app helps office workers integrate physical activity into their daily routines and encourages others to do the same. The buyer is a company with more than 500 employees. HotSeat users can engage in simple walks or funny dances during two-minute breaks (the game Melmed demonstrated to MobiHealthNews in 2012 was “Gangnam Style”). Employees can not only choose their own activities but also challenge their colleagues. The app can also sync with users’ calendars to schedule breaks according to their agendas.

3. Huron Consulting Group Acquires Mobile Health Software Company MyRounding

Huron Consulting Group, a Chicago-headquartered global consulting firm with a strong focus on healthcare services, has acquired mobile health software company MyRounding for an undisclosed sum. HCG plans to integrate MyRounding into its healthcare practice and offer its software to hospital clients. Founded in 2012 and based in Denver, Colorado, MyRounding provides an iPad/web application designed for physicians, nurses, and other hospital professionals responsible for patient rounds. By using tablets to conduct rounds and collect patient feedback, hospitals can continuously monitor patients and respond more promptly to their needs and requests. The cloud-based platform also enables data entry into hospitals’ electronic health records (EHRs).

4. Digital Health Startup Gamgee Acquired

In addition, an undisclosed company has acquired Gamgee, a digital health startup based in San Mateo, California, that operates businesses such as 22otters. Both Gamgee and 22otters officially announced the news on their websites simultaneously, but no further details were disclosed.