Software overload could boost digital health M&A

▤ Summary

Employers, insurers and providers are awash in digital health products that purport to streamline operations and patient care, from navigation tools to virtual therapy and fertility support. But investment has since declined from its post-pandemic peak, which could leave some digital health startups, including point solutions, strapped for cash and more amenable to dealmaking. But there are opportunities for point solution companies to compete without caving to consolidation — if they can fix a significant healthcare challenge for purchasers and prove return on investment. “But I think trends in the marketplace towards one-stop shop vendors would suggest opportunities for successful acquisition stories.” Healthcare is a risk-averse industry, and purchasers like providers, employers and health plans may be more likely to add an additional tool from a company they’re already working with that offers multiple products. Health systems faced slim margins during the pandemic, and — though the situation has improved — many hospitals are still underperforming due to pressure from ongoing stressors like high expenses and inflation, according to consultancy Kaufman Hall.

▦ Linked Companies

IQVIA

$1B+