The Largest Digital Health Acquisitions I Could Find
The entire purpose of venture capital is to make money from backing startups that exit. Let’s see how digital health is doing.
The raison d'être for VC lies in the ability to discern, oftentimes through an amalgam of intuition and cold analysis, the startups that possess the potential to redefine entire industries. They look for founders who can execute on a vision, inspire a team, sell to customers, build a moat… And ultimately package and sell that vision (by now with a whole lot of enterprise value) to a buyer.
Investing is a game of anticipation and orchestration, where the stakes are not merely financial but bound with the very threads of innovation and progress. The venture capitalist's wager, then, is a faith not only in figures and forecasts but in a founder’s inexhaustible capacity to envision and shape a world yet to be.
But how exactly do they make money? An investor’s return on investment (ROI) is achieved primarily via one of two liquidity events.
First are Initial Public Offerings (IPOs). When a company goes public, it’s raising money from new investors. This not only offers liquidity to investors, founders, and employees, but going public also imposes transparency and a new set of governance rules. Read more in 50 Publicly Traded Digital Health Companies.
But according to the National Venture Capital Association NVCA, IPOs of VC-backed companies are rare. The more common way to exit is via mergers and acquisitions (M&As), which have made up 92% of annual venture-backed exits from 2004 to 2021.
When an acquisition happens, the acquiring firm pays either in cash, stock, or a combination of both. VCs earn their returns based on the value of the acquisition (for instance, when WhatsApp was acquired by Meta for $19 billion, Sequoia Capital reportedly made over $3 billion, having invested $60 million initially).
VCs have poured $76B into digital health in the five years spanning 2018-2022. But will they see a substantial return on this investment? As the digital health space continues to grow and evolve, that's the multi-billion-dollar question on everyone's mind.
In this article, I’ll share a few of the most impressive acquisitions in digital health.
But first I need to acknowledge that creating a list like this is a challenging task. Why?
Not all companies disclose the acquisition amount upon acquisition
Many deals often involve a mix of upfront payments and milestone-based compensation, making the exact number hard to decipher
There's often the question of deal structure - was the company acquired for cash or equity? It’s not always clear
The lack of transparency in these aspects can cloud our understanding of the true magnitude of these acquisitions. So keep in mind that this list is by no means comprehensive.
Also note: This list includes companies acquired for $400M+ that were privately-held US-based digital-health companies at the time of acquisition, with a public source stating the acquisition amount. It does not include mergers of equals (e.g. Doctor On Demand and Grand Rounds) or acquisitions of public companies (e.g. Livongo).
So without further adieu, here are some of the most impressive digital health acquisitions (from highest exit):
One Medical
Deal: Acquired by Amazon for $3.9B cash in 2022
Previous funding: $532.1M from Benchmark, GV, Maverick, JP Morgan, Carlyle Group, and others
Years to acquisition: 12
About: This tech-enabled, membership-based primary care platform gave Amazon more than 200 brick-and-mortar physicians’ offices, a subscription-based telehealth service, a proprietary electronic health record system, contracts with more than 9,000 employers, and over 800,000 members.
Truven Health Analytics
Deal: Acquired by IBM for $2.6B cash in 2016
Previous funding: $1.4M from InvestMichigan
Years to acquisition: ~40
About: This cloud-based healthcare analytics company helped IBM add 8,500 clients to the Watson Health portfolio, including U.S. federal and state government agencies, employers, health plans, hospitals, clinicians and life sciences companies. IBM ended up selling their Watson Health business, and the products are now sold under the stand-alone brand Merative.
Iora Health
Deal: Acquired by One Medical for $2.1B all-stock deal in 2021 (before One Medical was acquired by Amazon)
Previous funding: $349.3M from .406 Ventures, Flare Capital Partners, Polaris Partners, Khosla Ventures, and others
Years to acquisition: 10
About: Iora Health set out to rebuild primary care from scratch by integrating tech-based offerings to the 65-and-older population, giving One Medical expansion into the Medicare space. With $318M in revenue and 39,000 patients at the time of the deal, One Medical aimed to better position itself across every stage of life.
MDLive
Deal: Acquired by Evernorth (Cigna) for $2.03B in 2021
Previous funding: $174M from Sixth Street, Cigna Ventures, Health Care Service Corporation, Health Velocity Capital, Novo Holdings, Sutter Health, and others
Years to acquisition: 12
About: Evernorth (a subsidiary of Cigna) acquired MDLive to expand the health-care giant’s virtual care offerings.
Flatiron Health
Deal: Acquired by Roche for $1.9B cash in 2018
Previous funding: $324.9M from GV, First Round Capital, Allen & Company, Great Oaks Capital, and others
Years to acquisition: 6
About: Flatiron Health, an oncology-focused EHR company, was acquired by Roche to continue developing innovative cancer research tools and strengthen Roche's personalized healthcare strategy.
CoverMyMeds
Deal: Acquired by McKesson for $1.1B cash in 2017, including “a maximum $0.3 billion of consideration contingent upon CoverMyMeds' financial performance through the fiscal year ending in 2019”
Previous funding: $7.3M from JumpStart Ventures, Francisco Partners, and others
Years to acquisition: 11
About: This developer of electronic prior authorization technology strengthen McKesson's technology products to pharmaceutical manufacturers, clinicians and payers. It continues to operate as an independent business unit.
PillPack
Deal: Acquired by Amazon for around $753M cash in 2018
Years to acquisition: 5
Previous funding: $118M from from Atlas Ventures, Founder Collective, CRV, Accel, and others
About: PillPack has since been integrated into Amazon Pharmacy, offering an even more comprehensive medication delivery service.
MatrixCare
Deal: Acquired by ResMed for $750M in 2018
Years to acquisition: 36
Previous funding: Unclear
About: MatrixCare provides long-term post-acute care software across skilled nursing, life plan communities, and senior living. With a “by ResMed” addition to the logo, the team seems to operate independently.
Collective Medical
Deal: Purchased by PointClickCare Technologies for “nearly $650M” in 2020 (cash/equity mix was not disclosed)
Previous funding: $47.5M from Kleiner Perkins, Bessemer Venture Partners, Maverick Ventures, Kaiser Permanente Ventures, Providence Ventures, Peterson Ventures, and Epic Ventures
Years to acquisition: 15
About: PointClickCare Technologies, a post-acute electronic health record (EHR) company, acquired Collective Medical to expand its reach into care coordination across the acute, ambulatory and post-acute markets.
Patient Ping
Deal: Acquired by Appriss Health for a reported $500M in 2021
Previous funding: $18M from Kleiner Perkins and Accel
Years to acquisition: 8
About: Appriss Health, known for its prescription drug monitoring analytics, acquired PatientPing to bulk up its care coordination software.
MyFitnessPal
Deal: Purchased by Under Armour for $475M cash in 2015
Previous funding: $18M from Kleiner Perkins and Accel
Years to acquisition: 10
About: MyFitnessPal provided a digital health along with its 80M users at the time of acquisition, giving them access to more casual and entry-level fitness users. But Under Armour ended up selling MyFitnessPal five years later for $345 to simplify and focus its brand.
Lemonaid Health
Deal: Acquired by 23andMe for $400M, “subject to downward adjustments” with 75% in stock in 2021
Previous funding: $55.8M from Olive Tree Ventures Artis Ventures, Correlation Ventures, Hikma Ventures, Sierra Ventures, and others
Years to acquisition: 8
About: This telemedicine and prescription drug delivery service gave 23andMe a chance to extend care beyond genetic testing and into disease management and treatment.
If I missed a company, please let me know. Just a reminder that this list only includes formerly private companies. The following companies were excluded because they were public at the time of acquisition:
Signify Health
Fitbit
Livongo
Change Healthcare
Oak Street Health
Medidata
Merge Healthcare
Trizetto
Support my work and download the List of Digital Health Companies.