• Insight Bite


In healthcare tech, buyers are lining up to compete for quality

As technology change has never been faster, the healthcare sector has remained a relatively slow-moving beast – but that is now changing. We at Acuity believe the time for major change in the healthcare sector is upon us. Healthcare buyers are now lining up to pay top prices for quality technology companies. It’s no longer a case of whether things will change, but just who will be the agents keeping up with that change.

Big picture changes ahead for healthcare technology

Because healthcare has been so slow-moving for so long, we’re now seeing something of a jolt – as technologies have proven themselves elsewhere, this industry is getting ready to deal and there’s some catching up to do. “Buyers are looking for acquisitions that can evolve and respond to the rapidly changing landscape. Big health insurers are joining forces with distributors to create new, vertically integrated structures. Private equity firms are consolidating fragmented sub-sectors and investing in technology that can reduce costs and change how care is delivered,” concluded a recent research report from West Monroe. “The race for assets is likely to heat up further as strategic buyers and private equity firms look to put capital to work.”

Amazon’s recent announcement that it is acquiring PillPack (as we reported in a recent Acuity Insight Bite) provides a snapshot of the current situation. PillPack represents the future: this is an online pharmacy where customers can order medicines using digital tools and it also takes care of refills and reminders, all done digitally instead of making people queue at counters. It’s a simple business model with obvious appeal to an increasingly digitally minded public, which is why the big US pharmacy brands lost $11 billion in combined market value on the morning of the announcement.

Who the buyer was in the PillPack deal is also a lesson in the state of the healthcare industry. Amazon is no longer a startup, but it’s a forward-looking company that’s not only fearless when it comes to disruption – it’s built on embracing it. The competitor in the bid for PillPack was Walmart, a legacy retailer with an established foothold in pharmaceuticals, but it hesitated on moving ahead on the deal due to regulatory concerns and Amazon emerged victorious. This scenario is likely to continue repeating itself as healthcare technology advances in leaps and bounds.

“In a traditional market like healthcare you tend to see disparity between buyers – those who get it, and those who don’t,” says Richard Baker, Managing Partner at Acuity. Established companies will reveal which camp they belong to by either sitting on sidelines or jumping in. “This is disruption, but it’s a slow-moving industry,” adds Baker. “Given the disparity between traditional and new attitudes, we believe a change of mindsets needs to take place before the healthcare sector can fully catch up to take advantage of the opportunities and advantages afforded by technology advancements.”

Grabbing opportunities in the mid-market

Right now, Acuity is advising companies operating within healthcare software, medical products, and IoT. While it’s a little too soon to share those details, one thing is certain: there is a flurry of deals taking place in the healthcare sector. Medical software companies have found themselves popular of late: PE outfit Clearlake Capital recently bought ProVation Medical, whose software documents medical procedures and manages electronic health records; Cognizant made a move for Bolder Healthcare Solutions, a specialist in revenue cycle management software to hospitals and doctors, shortly after Inovalon bought Ability Network for its software tools designed to simplify the administrative and clinical complexities of healthcare.

Players are all keen to explore, if not embrace, technology across the board, be it software that drives efficiencies, IoT-connected devices, or robotic medical products. Right now, buyers are lining up for deals which contain advantages within mobile technology, wearables or sensors, telehealth, robotics, and artificial intelligence. Here in Britain, Halma recently acquired CenTrak, a designer and manufacturer of sensors and proprietary communication technology that covers real-time monitoring of patients, staff, and medical equipment. Also remarkable was NEC’s acquisition of healthcare specialist Northgate Public Services at the beginning of the year, providing an exit for Cinven that came earlier than anticipated as NEC eyed the opportunity to expand into new markets.

Bidding wars for quality sellers

In conclusion, we are seeing that buyers are keen to acquire, motivated by a desire to grab market share by providing the innovative technologies that will save time and money for healthcare customers. The top challenge for buyers, however, in seeking healthcare deals is a shortage of targets of the right calibre; the research report from West Monroe found that 25% of survey respondents complained that targets often didn’t have the right technology to sustain growth, or that they weren’t the right strategic fit. But 36% said that the fast pace of tech development is the key challenge to healthcare companies right now, which is driving increased M&A interest in companies with solid IP and up-to-date IT systems.

This also means that target companies who have innovative propositions, and who also have their affairs in orders in terms of IT security and regulatory compliance, may find themselves able to command a premium. In fact, high valuations were cited as a concern in the West Monroe survey, alongside excessive competition for good targets. All good news of course, if you’re a company looking to be bought out.

“The companies that are successfully disrupting are the ones proving to be the most attractive targets. These are the ones most likely to be successfully acquired,” concludes Richard.

About Us


It’s our people who make the difference. We began as a partnership between experienced industry enthusiasts with a vision: a personal approach to the challenges of business growth and exit. Acuity Advisors has since grown into a leading name in tech advisory.

Read More


  • Enter the letters and/or numbers shown