A closer look at the 30 mergers and acquisitions of 2016
September, 29th 2016
This year is shaping up to be a big one for acquisitions, if not for the money (many are for undisclosed amounts) but for sheer volume. We’ve seen 30 so far, and with a little over three months to go, 2016 may well end up eclipsing 2015’s total of 37 deals. Rather than just list the companies, we've broken them down into different categories based on who the acquirer is, to try to outline some trends. We also spoke with some investors for their take on the digital health M&A landscape. You can check out their insight here.
We saw several companies not traditionally associated with health getting in on the growing digital health market via acquisitions, ranging from high profile tech companies to pet food makers.
Of such acquisitions, the most high-profile was likely Apple’s acquisition of PHR company Gliimpse. The company helps people collect the “bread crumbs” of their health data in one centralized repository. Ever since Apple launched its HealthKit framework in mid-2014, the company has seen enabling health data sharing as its entry point into healthcare, and Gliimpse fits right into those plans. Apple also has a history of working with EHRs, most notably Epic, to integrate HealthKit data. Gliimpse's code could help Apple products to more easily interact with hospital systems, or it could bolster safety and security for the company, as those are also major selling points of Gliimpse. This is a small deal for Apple, which one investor we talked to described as likely an acqui-hire.
Nokia Technologies acquired French connected health device maker Withings for $191 million (170 million euros). Withings, which makes smartphone-connected weight scales, blood pressure cuffs, activity trackers, and, recently, thermometers, has raised $34 million to date, with the latest being a $30 million round in 2013. Nokia had been searching for a new focus area since it sold its mobile phone business to Microsoft. In March, Nokia Technology President Ramzi Haidamus suggested that future could lie with digital health. "We’re also looking at another area where we have not launched any products -- digital health," he told Fortune in March. "Digital health is something that comes very natural to Nokia... A lot of research is happening right now in the field of digital health.”
Japanese apparel company Asics took steps into the health industry with its acquisition of app maker FitnessKeeper, which makes Runkeeper, for $85 million. The shoemaker acquired Runkeeper both for its potential as a one-to-one marketing channel and for the platform itself, which they intend to keep intact. "From the end-user standpoint, not much will change," FitnessKeeper CEO Jason Jacobs wrote in a blog post. "Not only will the Runkeeper product carry on, but we will be able to move even faster. We will be able to pursue the vision we’ve set out to pursue all along, with a partner that can bring many resources to bear that we couldn’t fathom having access to on our own." Runkeeper had raised about $11.5 million over the years.
Pet food maker Mars Petcare (which makes brands like Iams, Pedigree and Whiskas) got into the pet fitness with its acquisition of San Francisco-based pet fitness tracking company Whistle. The deal was close to $117 million, according to some reports. Mars Petcare is a subsidiary of Mars, a candy maker that sells 29 brands of candy including M&Ms, Dove, Snickers, and Twix. The company developed a smart collar that people can use to track their dog’s location, activity and sleep patterns that connects to an app.
Earlier this year, Mattel, a toy manufacturing giant based in Segundo, California, acquired San Francisco-based Sproutling, which has developed a health sensing wearable device for babies. Sproutling had raised at least $6.5 million. The company will still sell its offering under the Sproutling brand, but the team at Sproutling will also work with Mattel to design and develop new products under Mattel’s brand.
San Francisco-based Mapbox, an open-source mapping platform, acquired fitness-tracking app Human, which allows users to track activity all day and aggregates the data anonymously to create information about cities. Human is a passive app with a simple goal: move every day for 30 minutes or more, dubbed the “Daily 30.” Instead of complex workout-setting and data entry every time you use it, Human allows users to just set the app up and it gets to work, automatically tracking biking, walking, running or anything else that burns calories. It will send an optional notification if the user meets the Daily 30. The app is available on iOS and Android, and integrates with HealthKit.
We saw one electronics company acquiring a health device-maker with Logitech’s $50 million acquisition of wireless earbud company Jaybird, which also makes an activity tracker called Reign. The tracker was not the focus of the acquisition, but the acquisition nonetheless brings Jaybird to the growing list of activity tracking device companies that have been acquired over the years, including the 2014 deals of Jawbone’s acquisition of BodyMedia and Intel’s acquisition of Basis Science, and 2015’s Adidas acquisition of Runtastic, and Fossil Group’s purchase of Misfit.
Nashville, Tennessee-based Hospital Corporation of America (HCA), which operates 169 hospitals and 116 freestanding surgery centers in 20 states and the United Kingdom, announced it will purchase clinical workflow and team communication app maker Mobile Heartbeat. Terms of the agreement are not being disclosed. The acquisition follows a pilot study HCA ran with Mobile Heartbeat using CURE for its iMobile Project, an initiative to implement smartphone-based critical care team communication. HCA rolled out the initiative last year, and staff quickly adopted the technology.
Congierge doctor service One Medical Group acquired nutrition coaching app maker Rise for a reported $20 million. Rise, founded in 2013, has been something of a rising star in the nutrition coaching app space, with $3.3 million in funding and a star-studded advisor panel including Harvard’s Dr. Russ Phillips, CNN Chief Medical Correspondent Dr. Sanjay Gupta (who is also Rise Labs cofounder Suneel Gupta's brother), P90X founder Tony Horton, OkCupid founder Sam Yagan, and Facebook growth lead Alex Schultz. The startup offers a nutrition coaching system to help users lose weight and make positive lifestyle choices. Users are prompted to take a picture of their food so the coach, a nutrition expert, can see what they are eating and provide assistance based on this information. The coach also provides daily feedback and tips to stay healthy.
Medicast, the company that helped launch the recent mobile-enabled physician house call trend, was acquired by Providence St. Joseph Health, a Washington state-based health system formed from the recently merged Providence Health & Services and St. Joseph Health System. According to the Medium post, Medicast started out with a direct-to-consumer mindset, but later started working with providers -- including its eventual acquirer Providence St. Joseph, which has been a customer of Medicast for about 18 months.
Health IT and Digital Health Companies
Many of the acquisitions in the space were consolidations, with one health startup acquiring another, or smaller health IT firms buying up digital health startups.
The largest of these was health IT company athenahealth’s purchase of Filament Labs, makers of Patient IO, which allows patients to access their care plans through a series of actionable daily tasks on a mobile or web-based application. Patient IO will form the basis for athenahealth’s new patient-facing application, athenawell. Patients can use Patient IO to play more engaged, ongoing role in their own care, including medication management to recording self-reported data or learning more about their health.
Amsterdam-based Royal Philips acquired the Atlanta, Georgia-based Wellcentive for an undisclosed amount. Wellcentive and its employees will become part of Philips’ Population Health Management business group. Under that sector, Philips currently offers enterprise telehealth, home monitoring, personal emergency response systems, and personal health services that address multiple groups in the population from prevention to ambulatory care to high-risk patients.
Brecksville, Ohio-based healthcare services company MedData (not to be confused with Medidata) acquired Columbus, Ohio-based patient engagement company Duet Health. MedData offers providers patient communication tools, revenue cycle management software, as well as consulting and analytics services for billing and coding. The company serves more than 5,000 physicians and has seven offices across the US. Duet Health, which was founded in 2009, offered a white-label patient engagement suite for its clients that allows providers to send secure video, text, and image messages, store images, and view on-call schedules. Some of the company’s clients included OhioHealth, Cardinal Health, Brigham and Women’s Hospital, Autism Speaks, and the CDC.
Health tech company HealthTap, quietly acquired Docphin, a startup that makes it easier for physicians to find and read medical research, for an undisclosed sum. Docphin was a member of Rock Health's second accelerator class back in 2012 as well as StartUp Health's second class of startups later that same year. The company, which was founded in 2010, never publicly announced a round of funding but it appears to have raised about $1.6 million mostly in its early years.
Pennsylvania-based CRF Health, provider of electronic clinical outcome assessment solutions (eCOA) for clinical trials, acquired pioneering digital health company Entra Health for an undisclosed amount. The acquisition will expand CRF’s offerings into the mobile and wireless medical device sector, helping to establish the global company’s network of solutions to collect, manage and analyze biometric and clinical trial data. The acquisition of San Diego, California-based Entra Health formalizes an existing relationship, representatives for CRFs said in a statement. Entra is perhaps best known for inking a deal with Nokia in early 2010 that put an app in Nokia's appstore that connected early smartphones to Entra's Bluetooth-connected glucose meter.
Los Angeles-based Canary Health, a startup that uses digital health tools to help populations prevent and manage chronic diseases, acquired stress management app company bLife for an undisclosed amount. Canary Health sells its disease-management programs to hospitals and health systems, whereas bLife was a direct-to-consumer app company that created direct-to-consumer stress management apps as well as apps for clients including the Oprah Winfrey Network, Deepak Chopra, and the Huffington Post.
Framingham, Massachusetts-based employee wellness and engagement company Virgin Pulse acquired two employee wellness companies: Providence, Rhode Island-based ShapeUp and Australia-based Global Corporate Challenge (GCC). ShapeUp developed a social wellness program for companies and engages employees through team workout challenges. ShapeUp has been in operation for about 10 years, raised at least $15.5 million. The program also tracks team progress to encourage better habits, offers health coaching in nutrition and exercise, and pulls in data from various consumer fitness devices.
Nashville-based employee wellness company Healthways agreed to sell its population health business to Atlanta-based Sharecare. In an interview with MobiHealthNews, Sharecare CEO Jeff Arnold called it "by far our biggest acquisition." Sharecare will give Healthways $30 million in common stock in exchange for the population health business, which includes 1,700 employees and, according to Arnold, does about $259 million annually in revenue. Healthways will also pay Sharecare $25 million upfront to fund an expected negative cash flow. If losses exceed $25 million, Sharecare can also reduce the stock payment to as little as $10 million.
Scrypt, a document management company, which acquired physician communication platform DocbookMD. Both companies are based in Austin, Texas. DocbookMD raised a seed round of $2.2 million back in early 2012. DocbookMD was founded by husband and wife practicing physicians: Dr. Tim Gueramy, an orthopedic surgeon, and Dr. Trace Haas, a family physician. The company’s unified comms offering, available via app or web, was used by more than 30,000 medical professionals across 42 states at the time of the acquisition. Physicians can use the system to exchange texts, photos, charts, x-rays and similar information.
Poland-based online doctor appointment booking startup DocPlanner announced that it had merged with its Barcelona, Spain-based competitor Doctoralia. DocPlanner says prior to the merger it attracted 8 million unique users each month, with 90 percent coming from Europe. While Europe is clearly its strongest market, the company said it was in 25 countries last year, including some in Asia and South America. Doctoralia, meanwhile, had more than 9 million unique users every month, with traffic mostly coming from Spain, Brazil and Mexico. It's active in 20 countries though.As a result the combined company expects to have 17 million unique users, paying customers in 20 markets and the biggest global database of physicians -- 5 million -- with 3 million registered patient users on the combined platform.
Device makers have also been acquiring more technology, with two deals of note. Fitbit acquired the assets of smart payment company Coin’s wearable payments platform, including related intellectual property. Fitbit also hired key personnel from the Coin wearable payments platform team. The acquisition will allow Fitbit to integrate a near-field communications (NFC) payment feature into future Fitbit devices, though the company said there are no plans to add these features into any products launched in 2016.
iHealth Labs, the connected device subsidiary of Andon Health with offices in Paris and Mountain View, California, acquired Bordeaux, France-based eDevice for $106 million (98.33 million euros). eDevice is a longtime European provider of back-end infrastructure that connects remote monitoring devices to hospitals and healthcare providers.
?HMS Holdings, which owns a number of subsidiaries providing software tools for payers, acquired Essette, a web-based care management platform which helps payers and providers with population health management and patient engagement. The acquisition was a cash deal and the purchase price was $20 million.
Private equity firms
Equity firms are eager to get a jump on the technologies powering the solutions we’re expecting to see in healthcare. These deals are quite a bit bigger than anything strategic happening in digital health.
"The leveraged loan market remains wide open, which has allowed PE firms to bid competitively," Flare Capital Principal Jason Sibley told MobiHealthNews in an email. "And in some instances, PE firms have been able to outbid would-be strategic buyers."
We saw four equity firms buying up healthcare companies, the largest of which EQT Equity Fund’s $2.35 billion acquisition of Press Ganey, which does research and analytics to improve healthcare performance by measuring patient satisfaction. This was the global equity firm’s first direct investment in North America. Just three months earlier Press Ganey had acquired patient experience and employee engagement company Avatar.
The next biggest deal was Veritas Capital Fund’s $820 million acquisition of Verisk Analytics, a healthcare services company. According to the Wall Street Journal, Veritas has been an active investor in healthcare technology industry, and had recently sold cloud-based healthcare data company Truven (which it acquired in 2012) to IBM for $2.6 billion.
“Every private and public enterprise in healthcare is under pressure to improve performance and lower costs,” Ramzi Musallam, Managing Partner at Veritas Capital said in a statement at the time of the acquisition. “Verisk Health’s sophisticated data services, analytics, and technologies are increasingly critical tools to help achieve those goals. We look forward to partnering with the talented Verisk Health team and applying our capital and deep experience to help the business grow and meet this rapidly expanding demand.”
Next in terms of price was San Francisco-based private equity firm Thoma Bravo’s $544 million acquisition of secure healthcare communication company Imprivata With this acquisition, the Lexington, Massachusetts-based developer of health IT security tools is “now in a stronger position to pursue market opportunities through innovating and expanding the products and services we offer,” according to Imprivata CEO Omar Hussain. For Thoma Bravo, the acquisition will be a key entrée into clinical workflow platforms they expect to see in healthcare.
"The Imprivata security platform provides mission critical technologies that are deeply embedded within the daily workflows of the world’s largest and most prestigious hospitals and healthcare institutions," said Chip Virnig, a principal at Thoma Bravo, in a statement.
Design, Communications and Consulting Firms
ghg-The Lathe: Greyhealth group (ghg), a healthcare-focused agency owned by WPP that was a founding partner of Text4Baby and an early IBM Watson partner, acquired The Lathe, a health app design and development firm, for an undisclosed amount. The Lathe was founded in 2003 and has worked with a number of healthcare companies to create apps and mobile responsive websites. They build apps for chronic disease management, occasional therapies, medical devices, and over the counter products. On their website, they tout an app for multiple sclerosis patients, an iPad app for asthma and allergy sufferers, and a responsive website, built for Valeant Pharmaceuticals, for parents of children with eczema. One of the firm's selling points is an understanding of pharma marketing regulations.
Mad*Pow, a design agency with a specialization in healthcare design announced an agreement to acquire gamified exercise app HotSeat from context, the communications consulting firm owned by app creator Fran Melmed. The acquisition price was undisclosed but the agency was one of the creators of the app. The app helped office workers interject short bursts of physical activity into their days, and support each other socially in doing so. It was sold to companies with 500 or more employees. With HotSeat, employees take two-minute breaks throughout the day for a variety of physical activities from simple ones like walking to sillier ones like particular dances (in 2012, the game Melmed showed MobiHealthNews was "Gangham Style"). Employees choose their own activities, but they can also challenge coworkers. The app also syncs with users' calendars to plan the break around their schedules.
Chicago-based Huron Consulting Group, a global consulting firm with a significant healthcare business, acquired mobile health software company MyRounding for an unidsclosed amount. HCG will make MyRounding part of its healthcare group and make its software available to hospital clients. Denver, Colorado-based MyRounding was founded in 2012. The company's product is an iPad and web app that supports doctors, nurses, and other hospital professionals that do rounds. By doing rounds with a tablet, and digitally collecting their feedback on how patients are faring, hospitals can track patients more consistently and more quickly respond to their needs and requests. The cloud-based platform can also feed data into a hospital's electronic health record.
In acquisition that is still a mystery, an undisclosed company acquired San Mateo, California-based Gamgee, a digital health startup that has done business as 22otters. Both the Gamgee and 22otters website inform visitors about the acquisition but reveal no additional details.