January 9, 2024

2023: A Year of Strategic Consolidation and Diversification

In 2023, the Healthcare IT sector witnessed a significant transformation marked by strategic mergers and acquisitions (M&A). Despite a somewhat cautious start to the year due to challenging economic conditions and valuation discrepancies between buyers and sellers, the sector saw a robust recovery in the latter half. Key factors influencing M&A activity included regulatory changes, technological advancements, and a growing focus on digital health solutions. The sector’s dynamism was highlighted by several notable transactions, particularly in acute care, home health, long-term care, and non-acute care sectors.

2024 Outlook: Emerging Trends and Predictions

1. Expansion of Remote Monitoring: The expansion of Medicare’s remote monitoring reimbursement to include new healthcare centers is likely to spur acquisitions of digital health companies specializing in remote monitoring solutions.
2. Focus on Mental Health: An increased emphasis on mental health is driving interest in digital health companies offering teletherapy platforms, mental health apps, and management tools.
3. AI Revolution: Artificial intelligence (AI) is becoming a pivotal component in healthcare, leading to a surge in M&A activities for companies at the forefront of AI integration in health tech.
4. Non-Traditional Players’ Entry: Tech giants and private equity firms are increasingly investing in the healthcare software and IT sector, potentially leading to a surge in M&A activities.
5. Startup-Centric Deals: Startups are becoming prime targets due to their innovative technologies and market potential, leading to more deals involving startups in the healthcare tech space.
6. Virtual Care M&A Increase: The rising popularity of virtual care is expected to drive an increase in M&A activities, highlighting its role in the evolving health tech landscape.

The M&A environment within the healthcare software and healthcare IT sector in 2023 and 2024 demonstrates a dynamic and evolving landscape. Driven by technological advancements, regulatory changes, and a focus on digital health solutions, the sector is poised for continued transformation and growth. Key trends to watch include the expansion of remote monitoring, increased focus on mental health and AI, the entry of non-traditional players, startup-centric deals, and the growing importance of virtual care. As the sector navigates these changes, strategic M&A activities are likely to play a crucial role in shaping the future of healthcare technology.

Healthcare IT M&A transactions announced in 2023

Several healthcare IT M&A transactions were announced in 2023, reflecting the sector’s continued dynamism and focus on innovation and digital health. Some notable transactions include:

1. Computer Programs and Systems Acquires Viewgol (October 2023, $67.5 Million): Computer Programs and Systems (CPSI) acquired Viewgol, a company specializing in revenue cycle management (RCM), business intelligence solutions, and data analytics solutions for the healthcare industry, particularly in the Ambulatory sector.
2. LGI Healthcare Solutions Acquires Boston Software Systems (October 2023): LGI Healthcare Solutions, a leading developer of healthcare IT solutions in Canada, acquired Boston Software Systems. Boston Software Systems provides workflow automation and system integration software solutions for hospital environments, streamlining various complex business processes such as RCM, claims management, and payment posting.
3. Thoma Bravo Acquires NextGen Healthcare (September 2023, $1.8 Billion): Private equity firm Thoma Bravo acquired NextGen Healthcare for an enterprise value of $1.8 billion. NextGen offers clinical care software solutions including RCM, electronic health records (EHR), telehealth, and analytics and reporting.
4. Access Healthcare Acquires Envera Health: Access Healthcare, a global leader in revenue cycle management and healthcare services, announced the acquisition of Envera Health, a market leader in patient engagement services.
5. Eclat Health Solutions Acquires Excite Health Partners’ Health Information Management Division: Eclat Health Solutions announced the acquisition of the health information management division of Excite Health Partners.
6. Evernorth Health Services Acquires Bright.MD: Evernorth Health Services, the pharmacy, care, and benefits solution division of The Cigna Group, announced the acquisition of Bright.MD, a provider of asynchronous care, triage, and healthcare navigation services.
7. Wellsky Acquires Corridor: Wellsky, a health and community care technology company, announced that it has acquired Corridor, an end-to-end tech-enabled services platform designed for the post-acute care industry’s toughest challenges.
8. IKS Health Acquires AQuity Solutions (for $200M): IKS Health, a healthcare IT-services company, acquired AQuity Solutions, a clinical documentation, medical coding, and mid-revenue cycle software firm.

These transactions underscore the growing importance of technology in healthcare, with a particular focus on improving efficiency, revenue cycle management, patient engagement, and overall care delivery.

Solganick & Co. expects 2024 to show an increase in M&A transactions with strategic buyers to add complementary and new technology offerings, including artificial intelligence, for the Healthcare IT sector.

For more information on the Healthcare IT sector or to inquire about an M&A transaction, please contact us.