- The digital-health sector in 2020 and 2021 was the hottest part of healthcare.
- We spoke with top bankers and dealmakers to understand what comes next as the market cools.
- They expect acquisitions to dominate as companies look to survive and turn profitable.
The pace of digital-health deals has generally slowed since the highs of 2021.
Founders can thank rising interest rates, a punishing stock market for digital-health companies, and a minor banking crisis to name just a few reasons for that.
The tech-like valuations that led to huge payoffs for digital-health investors in 2020 and 2021 have sunk, leading to tough negotiations for mergers-and-acquisitions, multiple investment bankers told Insider. It’s hard to get a deal done when one party wants billions and the other offers millions.
But the tide may be turning. Pending any major economic events, many bankers Insider spoke to believe M&A will recover toward the back half of this year, while the IPO market will likely remain closed, as trends like large tech companies pushing into the digital-health industry persist. Plus, some startups won’t have any choice but to combine with others in order to survive.
We spoke with some of the industry’s top bankers at Morgan Stanley, JPMorgan, Lazard, Barclays, William Blair, and five other leading firms to get a sense of what’s in store for digital health in 2023 and beyond.
We identified the bankers based on nominations from industry insiders and which firms advised the largest deals since January 2021, such as Amazon’s 2023 acquisition of One Medical, with data compiled by advisory and venture firm Rock Health. Several banks, such as Goldman Sachs, declined to participate.
Here are the healthcare industry’s go-to investment bankers, in alphabetical order, and their predictions for which trends may push digital-health deals forward after a funding slump.
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