Digital health M&A bounces back in Q2

Mergers and acquisitions in digital health bounced back strongly in Q2 after almost grinding to a halt at the start of the year, according to figures released this week.

In its quarterly digital health funding report, Mercom Capital said corporate digital health transactions totalled $8.7 billion in the last quarter.

Most of the M&A activity came from a single deal – French industrial design software firm Dassault Systèmes signed a definitive agreement to buy Medidata Solutions in June for $5.7 billion.

But even without this large deal M&A activity was still considerably busier than in Q1 when M&A activity in the sector totalled just $326 million, possibly because of the US government shut down at the start of the year.

Other notable deals cited by Mercom included Bon Secours Mercy Health selling 51% of the equity in Ensemble Health Partners to Golden Gate Capital – a transaction worth $1.2 billion.

Mercom’s figures also included JP Morgan’s deal announced in May to buy healthcare payments firm InstaMed for $500 million.

Another deal noted by Mercom was Thomas Lee Partners’ deal to buy Nextech Systems from Francisco Partners and other stockholders for an enterprise value of $500 million.

VC funding increases

Venture capital investment in digital health also bounced back after a slow start to the year.

In Q2 2019 venture capital funding for digital health was $3.1 billion in 169 deals, an increase from the $2 billion in funding raised in Q1, and above last year’s Q2 figure of $2.4 billion.

The largest deal cited by Mercom was Tencent Trusted Doctors’ $250 million funding round at a valuation of more than $1 billion.

As its name suggests the firm is already backed by Chinese internet technology firm Tencent, with Country Garden Holdings, Tencent Holdings, and Sequoia Capital leading the latest funding round.

Collective Health, a web-based platform that helps employers manage health insurance benefits raised $205 million in a Series E funding round led by the Softbank Vision Fund, with participation from PSP Investment, DFJ Growth, G Squared, Founders Fund, GV, Maverick Ventures, Mubadala Ventures, NEA and Sun Life.

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