Healthcare Technology & Tech-Enabled Services – Annual Review

January 31, 2021

With a year like no other now in the rearview mirror, we’re pleased to provide you with our review of a year filled with unfathomable sacrifice, courage and resolve, as well as historic transformation across our healthcare industry, where 10-years of advancements were made in 10 short months! As the world watched, our industry embraced innovation like never before in history to provide mission-critical technology and tech-enabled infrastructure and services to meet the demands of our nation’s consumer health – in the home, in the community, through virtual networks and increased mobility and, of course, through the cloud.

During the second half of this uncertain and unexpected year, the Healthcare Technology & Tech-enabled Services market exploded with activity – 11 IPOs / SPAC mergers, 454 financings and 336 M&A transactions. Look no further than the industry-defining merger between Teladoc and Livongo for $18 billion as an exclamation point on a rapidly maturing sector with continued momentum. Movement has been diverse, with strategic and financial sponsors alike investing and acquiring Healthcare Tech companies across an array of industry subsectors.

In the financing market, 2020 saw a major uptick in both the number of transactions and total capital raised. The year’s financing activity totaled ~$19.2 billion of proceeds, as we saw larger and larger financings and growth equity rounds being announced compared to ~$8.0 billion of proceeds in 2019. This was a continuation and acceleration of several trends: the growth in virtual care, direct-to-consumer wellness, real-world evidence (“RWE”), advocacy & navigation in the employer market, and the broad-based adoption of AI / ML to further automate / redefine workflows. The IPO market opened as public investors steered capital away from COVID-impacted sectors and into high-growth technology sectors (like healthcare) with 7 IPOs, including One Medical, Accolade, GoHealth, Oak Street Health, American Well, GoodRx and Oscar. Additionally, a renaissance of Special Purpose Acquisition Companies (“SPACs”) led to an additional 5 combinations. Combining SPACs and IPOs, newly public companies raised $6.2 billion in gross proceeds in 2020.

Turning to the capital markets, 2020 was characterized by volatility, where despite a 34% decline between Feb. 19 and March 23, the sector finished the year near all-time highs led by bellwether names including Livongo, One Medical, Oak Street, Teladoc and Accolade up 458%, 212%, 191%, 139% and 98% respectively. In reviewing M&A activity, Solomon Partners saw 336 announced M&A transactions, including 24 with greater than $1 billion of announced deal values, bringing the total value of announced M&A activity for the year to $92 billion. A few specific transactions to note include: