Stephanie Liu, Strategy Fellow, Rock Health
What does it mean for companies looking to get acquired?
With M&A heating up in the digital health space, it’s no wonder non-healthcare companies also want to get a piece of the action. In Q1 2015, we saw consumer athletic wear company Under Armour make a $475M acquisition of MyFitnessPal and $85M acquisition of Endomondo. Last year we also saw the largest disclosed acquisition by a non-healthcare acquirer: Outsourcing services company Cognizant bought payer administration company TriZetto for $2.7B. Several non-healthcare companies have gone on to acquire a number of Rock Health portfolio companies—MyFitnessPal acquired Sessions, Weight Watchers bought Wello, and Google purchased Lift Labs—just to name a few.
Why so much activity from non-traditional players?
The trend of non-traditional players investing in digital health indicates that healthcare is no longer a silo as these players identify value of incorporating healthcare into their business model. The growth of consumers willing to pay out of pocket for healthcare-related expenses, whether that’s medical or wellness-oriented, is creating an attractive market for B2C models. Since Rock Health began tracking M&A deals in digital health in 2013, non-healthcare company acquisitions in digital health account for close to 20% of all M&A deals (compared to 23% by traditional healthcare companies) with a total of 33 deals and $5.2B in disclosed digital health acquisitions. Non-traditional players also invested more heavily in the consumer health space such as personal health tools and tracking.