HealthTech Semi Annual Market Review by HGP 2018 Jan

Global and U.S. Health IT investment are up 849% and 583% since 2011,
respectively. The S&P 500 gained nearly 20%, marking the 9th year of a bull market.
About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
Health Healthcare Growth Partners Healthcare Partners Capital company
Global and U.S. Health IT investment are up 849% and 583% since 2011,
respectively. The S&P 500 gained nearly 20%, marking the 9th year of a bull market.
About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
Health Healthcare Growth Partners Healthcare Partners Capital company
<p>Health IT & Health 
Information Services
Semi-Annual Market Review
January 2018
www.hgp.com
Copyright 2018 Healthcare Growth Partners
Health IT & Health Information Services: 
Market Review  January 2018
Table of Contents
Health IT Executive Summary
3
Health IT Market Trends
6
HGP 2017 Corporate M&A Survey
9
HIT M&A (Including Buyout)
16
Health IT Capital Raises (Non-Buyout) 
21
Healthcare Capital Markets
22
Macroeconomics
26
Health IT Headlines
28
About Healthcare Growth Partners
35
HGP Transaction Experience
36
Appendix
39
1
2
3
4
5
6
7
8
9
10
11
Health IT Executive Summary
Market Disorientation
2017 was a blockbuster year for Health IT. Despite uncertainty surrounding a failed effort to repeal
the ACA and the resignation of HHS Secretary Tom Price, the HGP Health IT index gained 25%,
Health IT Investment activity shattered prior records, and Health IT M&A activity and valuations
hover at all-time highs. Global and U.S. Health IT investment are up 849% and 583% since 2011,
respectively. The S&P 500 gained nearly 20%, marking the 9th year of a bull market.
The U.S.
unemployment rate is at a 17 year low at 4.1%, and interest rates, while trending up, remain near all-
time lows, providing easy access to capital. All of this occurred even before lower corporate and
individual tax rates kicked in on January 1. The Health IT stats are staggeringly good. But are they
scary good? In this HGP HIT Market Review, we uncover the findings from our bi-annual Health IT
M&A Survey. Our 13 question survey covers a range of topics, including whether the Health IT
market is in a bubble, to which survey respondents reported the following in comparison to the
same question in 2015:
There is certainly an abundance of growth capital flooding into the Health IT Market  we've seen
nearly $34 billion globally and $26.2 billion in the U.S. since 2013. Compared to the prior 5-years,
this represents a 608% and 387% increase in capital. With such a swing, one can speculate that the
market is either correcting for historical underfunding or significantly overfunded. To determine
which, we took a look at the numbers.
Copyright 2018 Healthcare Growth Partners
3
1
Valuation
Annual Revenue
($ mm)
U.S. Health IT 
Investment
Pre-
Money
Post-
Money
Exit
(2x return)
Starting
Exit
Net New
2013
2,849
4,274 
6,268 
12,536 
1,068 
3,134 
2,066 
2014
4,554
6,832 
10,020 
20,041 
1,708 
5,010 
3,302 
2015
6,173
9,260 
13,582 
27,163 
2,315 
6,791 
4,476 
2016
5,564
8,347 
12,243 
24,485 
2,087 
6,121 
4,034 
2017
7,102
10,653 
15,625 
31,250 
2,663 
7,812 
5,149 
5 Year 
Average
5,249 
7,873 
11,548 
23,095 
1,968 
5,774 
3,805 
Post-money value is calculated by assuming 
investors are acquiring 40% ownership on 
average and that approximately 70% of all 
invested capital is primary capital, while 30% 
is used to cash out existing shareholders 
(secondary capital). 
We assume investors are 
targeting a 2.0x return on 
their investments, valuing 
the enterprise using a 4.0x 
Enterprise Value / 
Revenue multiple
Based on our 
assumptions, 
revenue must 
grow 2.9x for 
investors to realize a 
target 2.0x return.
Is Health IT in a bubble?
Survey Year
Yes
No
Maybe
2017
36%
18%
46%
2015
29%
31%
40%
U.S. Health IT investment amounts are drawn from private equity growth investment transactions seen by 
HGP.  These numbers do not include buyout transactions or public offerings which both typically operate 
under different returns models.  Nor does this analysis attempt to solve for any missing data from 
unreported investments.  The analysis is dependent on certain assumptions for which there is no available 
data.
Health IT Executive Summary
Market Disorientation, cont'd
On average, $5.2 billion was invested in the U.S. Health IT market in each of the last 5 years. We
assume that those investors are targeting a 2x return, which is consistent with median private equity
returns of about 14% over a typical hold period of 5.5 years. The target 2x return means they need
to create about $11.5 billion in incremental value over and above the new capital invested.
Assuming a relatively conservative 4x revenue multiple, this amount of investment implies that
approximately $3.8 billion of new revenue needs to be generated annually to support the target
value creation. That new revenue needs to come from one of two places, either from shifting cost
that is captured elsewhere in the system, or directly through additional expense for the end-
consumer (i.e., the American population). We optimistically assume this revenue is the result of
efficiencies created from new technology investment that will ultimately benefit the healthcare
system on the whole.
Translated to healthcare costs, the $3.8 billion in new annual revenue
represents an increased cost of $11.68 per person every year ($0.97 pmpm) across the U.S.
population. The companies that received this investment need to save customers at least this much
in order to justify their contribution to the healthcare economy.
Over the last decade, electronic medical record (EMR) adoption and its byproducts have significantly
expanded the addressable market for Health IT. We estimate the U.S. Health IT market is about a
$115 billion annual revenue market. Based on our returns assumptions involving investment over
the past 5 years, the market would need to achieve an annual growth of 3.3% to support the 5-year
rate of investment and an annual growth rate of 4.5% to support 2017 investment. However, these
growth rates do not also account for companies who are financing growth from their balance sheets,
public companies, or buyout transactions. Taken together, we estimate that the companies that
receive institutional funding in our database represent between 25-50% of the overall Health IT
market. This would imply that the overall market needs to grow 2  4x the rate of growth implied by
our database analysis. Our analysis concludes that the overall Health IT market would need to grow
at an annual rate of 6.6% to 13.2% based on the 5-year average or 9.0% to 18.0% based on 2017 to
support the current rate of investment, as outlined in the following table.
While the growth rate suggested by the
level of investment in 2017 is high, our
supply-side analysis is not inconsistent with
market
studies
using
a bottoms-up
demand analysis. We believe that the
Health IT market can ultimately sustain this
level of investment as market participants
begin to capitalize on the critical mass of
EMR adoption that we have finally reached,
as well as a number of other favorable
market forces, including value-based care,
precision medicine, and telehealth.
Copyright 2018 Healthcare Growth Partners
4
1
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013 2014 2015
EHR Adoption
Physicians
(Any EHR)
Hospitals
(Basic EHR)
Implied Expected Growth Rates
Investment 
Period
U.S. 
Investment 
($mm)
Implied Revenue 
Growth to 
Support 2x 
Return
Implied Revenue 
Growth as % of 
Health IT Market
Investment
Share of total 
Health IT Market
Implied Health IT 
Market Growth to 
Support Investment
5-yr Average
$5,249
$3,805
3.3%
25-50%
6.6% - 13.2%
2017
$7,102 
$5,149 
4.5%
25-50%
9.0% - 18.0%
Health IT Executive Summary
Market Disorientation, cont'd
While the numbers say one thing, the words tell another story. The Health IT industry is ripe with
buzzwords, both from a technology and market perspective. Like it or not, buzzwords are as much
reality as perception among the investment community, yet buzzwords have a rapidly depleting
value - today's buzzword becomes tomorrow's standard and is no longer a differentiator, and the
cycle repeats itself. However, intrinsic and economic value is created by turning that buzzword into
a marketable product that generates revenue by delivering a strong customer value proposition.
The selling point is not the technology itself, but the value that it delivers to customers.
The overuse of buzzwords on its own is not necessarily an indicator of bubble activity, however the
buzzwords of the day are indicative of changing attitudes in the market.
The market gets
disoriented and bubbles form when companies focus too much on messaging to investors to the
neglect of customers. There is no better example of this than the dot com era, when companies got
carried away by investors' appetite for buzzwords at the expense of creating true value.
Examples of recent buzzwords in the Health IT segment, according to an annual vote managed by
HIStalk, include Cloud, mHealth, Meaningful Use, Big Data, and Population Health. Over the past
year, however, companies have quickly pivoted to two new buzzwords - Blockchain and Artificial
Intelligence (AI). One risk of the significant increase in Health IT investment is that it may reorient
the market away from customers and toward investors, and history shows that this is indicative of
bubble behavior.
There is no doubt that blockchain and AI are transformational innovations that will likely be
standards of the future, but healthcare is an industry that is less enamored by technology than the
value that technology can deliver. Customers don't buy blockchain or AI, they buy products that
utilize blockchain or AI, and the use of these technologies only matters to the customer if the
product has a better value proposition (increases revenue or reduces cost) than alternatives.
We believe long-term value creation is a byproduct of serving customers, while investor-centric
buzzwords push companies to operate at the leading edge of innovation.
So long as market
participants keep this balance in mind, the market should be able to sustain the level of growth
implied by recent investment activity.
Copyright 2018 Healthcare Growth Partners
5
1
Most 
Overused 
Buzzword
2013
2014
2015
2016
2017
Customer-
Centric
vs.
Investor-
Centric
ACO
Pop. Health 
Management
Patient 
Engagement
Pop. Health
Value-based 
Care
Interoperability
Meaningful 
Use
Patient-
Centered
Patient 
Engagement
Pop. Health
Meaningful 
Use
Big Data
Analytics/ Big 
Data
Interoperability
Interoperability
Big Data
Cloud
Optimization
Big Data
Patient 
Engagement
Cloud
Cloud
Big Data
Health IT Market Trends
HGP Analysis of HIT Sector Valuations
HGP keeps close tabs on M&A valuations to see how the market evolves over time. While we can
only draw data from deals we observe with disclosed multiples, we can still get a good sense for
how the market values companies within the different subsectors of Health IT. The following table
and accompanying box-and-whisker plot show the distributions of revenue multiples in 13
subsectors of Health IT. The sectors were sorted according to median revenue multiple from largest
to smallest.
We believe it's important to keep dispersion in mind when assessing valuation data, which is why we
include the 25th percentile, 75th percentile, and standard deviation in our summary statistics. While
measures of central tendency like the median and mean are certainly indicative of how buyers are
valuing assets, the dispersion shows that with higher multiples, we also see higher risk.
This
becomes especially apparent when we chart the data using a box-and-whisker plot. While
telemedicine sees the highest median revenue multiples, it also sees a large amount of variability
and positive skew. While 25% of the observed telemedicine oriented companies received 9.3x
revenue or more in sale transactions, another 25% received less than 2.8x revenue at exit.
Companies in these hot spaces cannot forget that they still need to show strong operating metrics in
order to recognize premium valuation multiples from buyers.
The box-and-whisker plot on page 7 graphically displays the Median, 25th Percentile, 75th Percentile,
Minimum, and Maximum; where points beyond 1.75 times the Inter-Quartile Range are shown as
outliers. The Inter-Quartile Range (blue columns) is the 75th Percentile minus the 25th Percentile and
serves to describe the variation in the range of outcomes. Note that point estimates such as the
mean or median can often be misleading on their own, as they do not convey the level of variability
which can be very high such as in Population Health or Benefits Management.
Copyright 2018 Healthcare Growth Partners
6
2
Reported
2010  2017
Deals with  
Disclosed 
Revenue 
Multiples
Deals with 
Disclosed 
EBITDA 
Multiples
Revenue Multiple
EBITDA 
Multiple
25th 
%-tile
Median
75th
%-tile
Mean
Std. 
Deviation
Median
Telemed
8
4
2.8x
4.8x
9.3x
6.0x
4.0x
12.0x
Benefits Mgmt
15
4
2.3x
4.0x
6.8x
5.9x
5.9x
15.0x
Analytics
22
10
2.6x
3.9x
4.4x
4.3x
3.4x
13.9x
Population Health
39
12
3.0x
3.9x
6.9x
6.3x
6.2x
11.5x
Content
26
9
2.0x
3.8x
6.0x
4.4x
2.9x
12.2x
RCM Tech
35
24
2.2x
3.0x
4.1x
3.6x
2.2x
15.5x
Infrastructure Tech
46
27
1.7x
2.7x
3.6x
2.8x
1.6x
10.0x
PM/EMR
68
42
1.4x
2.3x
4.1x
2.8x
2.0x
13.0x
Utilization Mgmt
9
5
0.8x
1.9x
2.9x
2.4x
2.4x
10.0x
Clinical Trial Mgmt
9
5
1.5x
1.9x
2.6x
1.9x
0.7x
10.0x
RCM Services
18
13
1.0x
1.7x
2.7x
1.9x
1.1x
10.0x
Consulting
18
12
1.2x
1.6x
2.0x
1.8x
1.0x
10.4x
Outsourced Services
23
15
1.2x
1.4x
2.2x
1.9x
1.6x
9.0x
Health IT Market Trends
HGP Analysis of HIT Sector Valuations
The sectors were sorted according to decreasing median revenue multiple, and show a trend of
decreasing IQR as median revenue multiple decreases. Thus, while companies that fall within sectors
further to the right on the graph can expect a lower revenue multiple in a transaction, the
transaction is also much more predictable. A company that falls within a sector on the left, however,
cannot have as strong a confidence in their expected outcome.
These observations follow a
common theme in investment theory: that with greater potential upside, there is also greater risk
and volatility.
The table on page 8 provides additional context on the valuation trends within each sector as well as
a sample of recent transactions within each. While the metrics presented here may be used as a
guidepost for expected outcomes, the end result often depends on buyer circumstances as much as
on seller or market fundamentals, and buyer circumstances tend to be extremely unpredictable. It is
not uncommon for the clearing price of a transaction to be significantly higher than the cover bids.
This usually occurs when a buyer has unique circumstances that justify a higher price than the rest of
the buyer universe. Identifying those buyers and appropriately positioning in relation to them is part
of the art of running a successful transaction process.
Copyright 2018 Healthcare Growth Partners
7
2
Health IT Market Trends
HGP Analysis of HIT Sector Valuations
Copyright 2018 Healthcare Growth Partners
8
2
Sector
Description
Representative Deals
Telemed (8 deals)
Median: 4.8X
Std. Dev.: 4.0X
Contains a mix of pure telemedicine 
services and connected device 
transactions.
Best Doctors (Teladoc), Healthiest 
You (Teladoc), Cardiocom
(Medtronic)
Benefits Management (15 deals)
Median: 4.0X
Std. Dev.: 5.9X
Includes benefits management and 
admin software companies serving 
payers and employers.
HealthX (JMI), Benaissance (WEX), 
bswift (Aetna), Health Advocate 
(West), Extend (Towers Watson)
Analytics (22 deals)
Median: 3.9X
Std. Dev.: 3.4X
Primarily represents a mix of life 
sciences and provider analytics, and 
to a lesser extent, payer analytics.
IMS (Quintiles), Truven (IBM), 
MedeAnalytics (Thoma Bravo), DRG 
(Piramal), Humedica (Optum)
Population Health (39 deals)
Median: 3.9X
Std. Dev.: 6.2X
Comprised of patient engagement, 
provider connectivity, and care 
management technologies.
Emmi (Wolters Kluwer), Press Ganey 
(EQT), Wellcentive (Philips), MedHOK
(Hearst), Phytel (IBM)
Content (26 deals)
Median: 3.8X
Std. Dev.: 2.9X
Transactions are a mix of online 
consumer content and provider-
oriented clinical content.
Everyday Health (j2 Global), Milliman 
(Hearst), Health Language (Wolters 
Kluwer), Healthgrades (Vestar)
RCM Tech (35 deals)
Median: 3.0X
Std. Dev.: 2.2X
Includes tech-oriented RCM vendors 
serving hospitals and physicians, and 
to a lesser extent, payers.
Zirmed (Navicure), Brightree
(ResMed), Passport (Experian), 
MedAssets (Pamplona), TriZetto
(Cognizant)
Infrastructure Tech (46 deals)
Median: 2.7X
Std. Dev.: 1.6X
Compliance and resource 
management software generally 
serving provider organizations.
Morrisey (HealthStream), CenTrak
(Halma), VendorMate (GHX), 
Concerro (API), Lawson (Infor)
PM/EMR (68 deals)
Median: 2.3X
Std. Dev.: 2.0X
Includes ambulatory, acute, post-
acute, alternate site, and 
departmental EMR/PM systems.
Mediware (TPG), Netsmart
(Allscripts/GI), Healthland (CPSI), 
HealthFusion (QSI), Merge (IBM)
Utilization Mgmt (9 deals)
Median: 1.9X
Std. Dev.: 2.4X
Payer-oriented software and services 
vendors focused on traditional 
utilization management.
HealthHelp (WNS), Alere (Abbott), 
HSM & CDMI (Magellan)
Clinical Trial Mgmt (9 deals)
Median: 1.9X
Std. Dev.: 0.7X
Includes traditional CTMS vendors as 
well as other vendors that deliver 
value in the clinical trial process.
NOTOCORD (Instem), Phlexglobal
(Bridgepoint), BioClinica (JLL), 
eResearch (Genstar)
RCM Services (18 deals)
Median: 1.7X
Std. Dev.: 1.1X
Outsourced revenue cycle 
management services generally 
serving hospitals and physicians.
Anthelio (Atos), Cardon (MedData), 
Equian (New Mountain), 
MedSynergies (Unitedhealth)
Consulting (15 deals)
Median: 1.6X
Std. Dev.: 1.0X
Project-based IT consulting and staff 
augmentation companies generally 
serving provider organizations.
HCI Group (Tech Mahindra), 
CynergisTek (Auxilio), Encore 
(Quintiles), Vonlay (Huron)
Outsourced Services (23 deals)
Median: 1.4X
Std. Dev.: 1.6X
Includes non-RCM outsourced 
services primarily serving payers as 
well as providers.
Connextions (TeleTech), Edco
(ExamWorks), Patriot National (Ebix), 
HealthPlan Holdings (Wipro)
Copyright 2018 Healthcare Growth Partners
9
HGP 2017 Corporate Survey
Results and Commentary
Q1: What is your job title?
To assess the general sentiment on the status and future of Health IT, we surveyed C-level and
business development professionals at 500 companies across the Health IT sector and broke down
the findings in this edition of our report. Out of the 500 companies surveyed, we gathered
responses from 85 distinct companies across the Health IT landscape. HGP surveyed a mix of C-level
executives, M&A professionals, and private equity professionals.
It is important to note that our survey most likely has
selection bias, which we cannot fully assess given the
confidential nature of the survey response data.
Anyone likely to respond to a survey about M&A in
Health IT is likely to have an interest or pursuit in
M&A. Furthermore, we are more likely to generate
responses from individuals who are familiar with
HGP, and HGP generally interacts with companies
interested in Health IT transactions.
It is safe to
conclude that our survey findings have a bias toward
respondents who are more interested in Health IT
investments and acquisition than not. However, we
believe that the data set is broad enough to be
meaningful and deliver
insights, particularly
in
mapping out the priorities and criteria of active
buyers.
Q2: How large is the company you represent?
Respondents represent a mix of large and small companies. The largest share involves companies
with over $100mm in revenue, representing 40% of responses. When selecting smaller companies
to include in the survey, which includes the 49% of companies surveyed with under $50mm revenue,
HGP aimed to include companies with the capital wherewithal to execute M&A transactions, such as
private-equity backed platforms.
3
Corp Dev/M&A 
Professional
40%
CFO
9%
CEO
26%
Private Equity 
Professional
26%
23%
26%
11%
40%
<$20mm revenue
$20-50mm revenue
$50-100mm revenue
$100mm+ revenue
Copyright 2018 Healthcare Growth Partners
10
HGP 2017 Corporate Survey
Results and Commentary
Q3: Would you define your company's primary business (>50% revenue) as Health IT?
For purposes of the survey, we broadly define Health IT as any health software, data, information,
consulting, or technology-enabled outsourcing company that may serve providers, payers, pharma,
employers, or consumers. The 29% of non-Health IT respondents were given the option to write-in
the nature of their company, and responses included Enterprise Software, Employee Benefits
Brokerage, Healthcare Services, Health Insurance, and IT Consulting. In addition to these categories,
HGP also surveyed medical device, biopharma, media, pharmacy benefit managers, distributors and
group purchasing organizations, and telecom organizations, and these responses are likely included
among the 29% non-Health IT.
Q4: Since 2015, has your company made any Health IT acquisitions?
Noting that our survey likely has selection bias, we expected respondents to this question to have a
history of Health IT transactions, but were surprised to see that the largest share and over 1/3 of
respondents had not consummated a Health IT transaction in the prior three years. The rest of the
respondents, give or take 20% each, have completed one, two, and three plus acquisitions in the
prior three years.
3
29%
71%
No, Health IT is one
of many business
lines
Yes
36%
24%
18%
22%
No acquisitions
1 acquisition
2 acquisitions
3+ acquisitions
13%
15%
18%
21%
29%
29%
37%
39%
53%
58%
Life Sciences Technology
Benefits Tech
Direct-to-Consumer Tech or Services
Employee & Member Wellness/Care
EMR/Clinical Documentation
Virtual Care, Remote Care, or Telemedicine
Infrastructure Tech
Payer Services
RCM Tech or Services
Population Health/Data/Analytics/CDS
Copyright 2018 Healthcare Growth Partners
11
HGP 2017 Corporate Survey
Results and Commentary
Q5: In which sectors are you seeking acquisitions (check all that apply)?
The initial four questions aimed to gather information about the type of organizations that were
responding to the survey. The next series of questions gathers information about their perspective
on the market, acquisition criteria, and strategic priorities.
HGP has performed the Health IT Corporate M&A Survey since 2014, and in each of those surveys,
Population Health Management (58% in 2017 vs 77% in 2015) and Revenue Cycle Management
(53% in 2017 vs 41% in 2015) ranked as the top two sectors. Payer Services (39%) and Infrastructure
Technology (e.g., resource management, supply chain, compliance) received 39% and 37% of
responses, respectively. EMR received 29% responses, which is consistent with the 30% and 26% in
the 2015 and 2014 surveys. Write-in responses included Quality, Release of Information, Media,
Contract Management, Compliance, Communications, and Device Connectivity.
The survey audience generally reflects the market share across customer segments (provider, payer,
employer, biopharma), and as such, a potential flaw in the survey is that this mix potentially
understates the potential interest in segments with a lower overall market share, such as life sciences
IT, especially when compared to provider technology (hospital, physician, post-acute, alternative site,
etc.).
Write-In Responses
Quality
Release of Information
Media
Contract Management
Compliance
Communications
Device Connectivity
3
HGP 2017 Corporate Survey
Results and Commentary
Q6: In which customer segments are you seeking Health IT acquisitions (check all that apply)?
Given the range of potential customer end-markets in the provider segment, we broke the provider
segment into three categories: Hospital/Health System (including ACO), Physician, and Other Clinical
Settings (e.g., urgent care, post-acute). Write-in responses would be included in the Other Clinical
Settings category and include pharmacy IT, behavioral health IT, and physical therapy IT. We
consolidated
the Payer/TPA/Employer
segments
since
these end-markets
share
similar
characteristics. The largest share of respondents expressed interest in the Hospital/Health System
(including ACO) (77%) followed by the Payer/TPA/Employer segment (51%). The preference for
customer end-markets is consistent with the sector interest themes in the prior question.
Q7: Do you seek a certain financial threshold for your acquisition target(s)?
Based on the response data, it would appear that size, in terms of revenue and EBITDA, is not a key
criteria for transactions. Our experience says otherwise. Approximately 35% of respondents stated
that they do not have a target revenue threshold and 59% do not have a target EBITDA threshold.
We would agree that EBITDA is often not mission-critical to drive a successful transaction. However,
companies generally need to generate enough revenue to prove their value proposition, commercial
viability, and scale in order to position for a transaction. Based on our experience, $5mm is a
reasonable revenue threshold, and the data supports this with 30% of respondents selecting this
threshold. However, it is clear that there is not hard and fast policy  great businesses can transact
at any size. Strategic buyers have less sensitivity toward EBITDA thresholds due to the fact that they
often focus on growth first, profitability second, and profitability can be realized through integration
synergy and does not necessarily need to be generated by the stand-alone entity that is selling. It is
worth noting that private equity buyout funds will take a different stance and have a much stronger
preference for material profitability.
26%
26%
31%
49%
51%
77%
Pharma/Device
Patient/Patient Family
Other Clinical Settings (urgent care, post-acute)
Physicians
Payer/TPA/Employer
Hospital/Health System (including ACO)
Copyright 2018 Healthcare Growth Partners
12
18%
30%
8%
8%
35%
33%
8%
0%
0%
59%
At least $1mm
At least $5mm
At least $10mm
At least $20mm
No Threshold
Revenue
EBITDA
Pharmacy IT
Behavioral Health IT
Physical Therapy IT
3
HGP 2017 Corporate Survey
Results and Commentary
Q8: How important are the following criteria when evaluating an acquisition target?
The most important criterium for a seller is growth and recurring revenue, representing a 'must-
have' response from 75% and 67% of respondents. The days of one-time revenue are gone, and all
companies should orient their pricing model toward recurring revenue. This is especially difficult for
early stage companies that use revenue as a form of non-dilutive financing. A growing category of
lower dilution financing sources are now available for early stage recurring revenue companies, such
as SaaS-based lending models. The third most important criterium is addressable market size.
In
health IT, true addressable markets of over $1 billion tend to be fewer. A solid and true addressable
market in the $100-200 million range may more than satisfy a buyer. Our view is that quality trumps
quantity when it comes to addressable markets. Respondents were relatively split on profitability,
with 44% stating 'must-have' and 56% 'nice to have'. While profitability is not a key metric in our
survey findings, we believe that significant losses can have a significant drag on valuation, even in
high growth situations.
Thus, companies may be comfortable operating around breakeven but
should cautiously and thoughtfully approach strategies that drive substantial losses.
Q9: Does your company consider or seek investments
(not just acquisitions) in Health IT?
Strategic investing is increasingly common across all markets,
but it is especially prevalent in healthcare.
Examples of
strategic investors include health plans, biopharma and med
device, health systems, healthcare services companies,
benefits brokers, and enterprise software companies.
At
HGP, we have experienced strategic investment firsthand
through transactions
involving Anthem, Optum, UPMC,
LabCorp, and Hearst, to name a few. Many of these entities
have gone so far as to set up corporate venture capital funds,
while many
leverage
their
innovation or
corporate
development teams to make investments. Over half (54%) of
respondents would consider direct
investments
(versus
acquisitions).
The
response
rate
is especially high
considering that a number of our respondents are private
equity backed platform companies that would seem less
likely to make strategic investments due to the constraints on
the time horizon of the private equity investment.
Copyright 2018 Healthcare Growth Partners
13
28%
35%
44%
53%
67%
75%
0%
20%
40%
60%
80%
Strong Management
SaaS Technology
Profitability
Large Market Size
Recurring Revenue
Growth Trajectory
Yes
55%
No
45%
Nice to Have
Must Have
3
HGP 2017 Corporate Survey
Results and Commentary
Q10: What is the regulatory impact of the Trump Administration on your company?
When we woke up the morning after the November
presidential election, we felt certain that the Affordable
Care Act as we know it would be dramatically altered or
repealed.
We were concerned that
this uncertain
regulatory path under the new administration would result
in a bit of a headwind for the Health IT industry because
industry stakeholders may not have the conviction to invest
in technologies due to unclear regulatory incentives and
requirements for many of these programs.
The Trump
administration
immediately and aggressively pursued
repeal, as part of the overall preference for deregulation,
price transparency, and patient responsibility. As the year
passed and bills did not gather the required support of
Republicans, the GOP moved on from healthcare reform to
tax reform, thus leaving much of the ACA construct in-
place. However, even tax reform addresses core pillars of
the ACA, such as the elimination of the individual mandate.
In the face of all of this, it is surprising to see nearly 80% of respondents state that the Trump
administration has a neutral or positive impact on their performance. Only 1 out of every 5
respondents have experienced a negative impact. We suspect that the positive results indicate a
combination of generally strong purchasing trends for Health IT, as well as a capital budgeting cycle
for FY 2017 that was put into place prior to the November election. No doubt health systems are
betting on a future of tougher operating conditions, given the recent mega-mergers between
Ascension and Providence St. Joseph Health, Catholic Health Initiatives and Dignity Health, and
Advocate Health Care and Aurora Health Care, as well as pay-vider deals such as CVS Health buying
Aetna and Unitedhealth buying Davita's Medical Group. As we roll into the FY 2018 budget cycle, we
will continue to closely monitor the link between purchasing cycles, regulation and policy.
Q11: What is the regulatory impact of the Trump Administration on your acquisition strategy?
Respondents overwhelmingly agree that the Trump Administration has no material impact on their
M&A strategy. In a way, the biggest development in healthcare regulatory reform last year was that
there was not any major development!
Copyright 2018 Healthcare Growth Partners
14
Positive
7%
Negative
21%
No impact
72%
We intend to make 
more acquisitions
8%
We intend to make 
fewer or no acquisitions
8%
No impact
84%
3
HGP 2017 Corporate Survey
Results and Commentary
Q12: Health IT has attracted significant investment recently and seen an accelerating number
of acquisitions; do you think Health IT is in a "bubble"?
An interesting observation to this question is
the trendline from our 2015 survey:
Respondents tilted more in favor of bubble than in prior surveys. Perhaps the over 20% rise in the
stock market in 2017 influences this sentiment. Most likely, it reflects the 46% annual growth in
global Health IT investment since 2011, according to HGP's data. At HGP, we think the Health IT
market offers unbelievably strong fundamentals as well as a superior investment thesis. That said,
there is certainly bubble behavior among pockets of investors and acquirors and no shortage of
distressed assets in the market. Write-in responses were as follows:
Copyright 2018 Healthcare Growth Partners
15
Bulls
Bears
 Expect that mega mergers (e.g., 
CVS/Aetna) will continue as scale and 
leverage is required to herd care to 
appropriate settings and to reduce 
costs; expect many assets to get 
picked up along the way and others 
to become obsolete; all eyes appear 
to be on Amazon (again). 

Industry consolidation will continue 
for years to come in revenue cycle.
 The growth trajectory is positive. 
Trump Administration changes may 
perhaps lead to fewer lives insured, 
however, the market is too big for any 
negative impact. We are very bullish 
in this space and hope to have more 
acquisitions soon.
 View it from the health plan as a user 
of IT vendors and there is a lot of 
changing needs for the plans and 
how they serve the 
consumer/member.
 The healthcare industry continues to 
operate in a massive transformation 
that will require technology to enable 
and support.  Demand for services will 
increase, health system complexity 
will increase, patients are more 
demanding than ever before...all 
factors that bode well for growth and 
opportunity.
 Steady growth wins the race in Healthcare IT; Inflow of 
capital doesn't change the fact that payers and 
providers are historically not early adopters for cutting 
edge technology.  Evolution not revolution especially 
for AI and machine learning.
 Scarcity of high quality, profitable, mid-market targets
 We need certainty on what will happen to Healthcare. 
Trump's and Republicans attempts to destabilize and 
inability to pass a deal therefore creating uncertainty 
will not help. A bi-partisan effort to correct the faults of 
Obamacare is the only way. Limiting access to care for 
poor people will further cause the divide to increase 
but may be that is what the current administration 
seeks. 
 The lack of exit activity is a bit concerning. 
 The Trump Administration's inability to confirm clarity 
on healthcare reform causes indecision on hospital 
purchasing decisions as they take a cautious "wait and 
see" position
 M&A landscape is still strong, but there seems to be 
some separation between value for strong companies 
and ones that may be borderline.  Previously, even 
somewhat weaker companies could command a 
premium if (for example) a strategic buyer was seeking 
rapid provider growth via consolidation, or a financial 
sponsor was seeking a HIT platform.   At this point, 
strong companies are getting a lot of attention and can 
command a premium value, while deals are not getting 
done for marginal businesses.  
 Lots of targets short on current performance and long 
on future hopes - hoping to price on the latter (!)
Survey Year
Yes
No
Maybe
2017
36%
18%
46%
2015
29%
31%
40%
3
Health IT M&A (Including Buyout) 
Overview
HGP has observed a number of tangible and intangible company and transaction characteristics that
typically define where a deal falls on the valuation distribution. Growth, profitability, and recurring
revenue are the most commonly identified factors used to justify valuation multiples. Not all health
IT companies capture premium valuations just because they operate in health IT. However, those
companies that offer a combination of growth, address an unmet need, and fit into the vision of
healthcare reform are seeing valuations significantly higher than historical patterns of activity.
Premium value is also created when a seller fulfills the specific needs of a buyer at a specific point in
time. Timing and serendipity are external factors that play a large and sometimes unpredictable role
in the creation of value.
Health IT Revenue Multiples Distribution
Among the many business and market characteristics that drive superior valuations, the following
are core components to healthcare IT businesses that have established themselves as outliers:
SaaS Architecture and Delivery
 Single database enabling robust analytics
 Delivery model that creates scale on the cost
side, and recurring revenue on the top line
Reform-Centric Value Proposition
 Addresses healthcare structural flaws rather
than take advantage of them in an effort to
deliver sustainable change in a policy-based
environment
Pricing Alignment with ROI
 Pricing methodology
that
aligns with
customer ROI  the vendor wins when the
customer wins
General Considerations
 Market leadership (or opportunity to lead) =
favorable supply/demand characteristics at
exit
 Large and growing market opportunity with
strong financial characteristics = recurring
revenue and growth, inherent scalability if
not profitability, strong management, and
size
Scalable Distribution Model
 Efficient distribution model (eg, customer
acquisition cost < customer value)
Data Rights
 Contract structures that contain explicit 
rights to data
16
4
1
2
3
5
6
4
Copyright 2018 Healthcare Growth Partners
0%
10%
20%
30%
40%
50%
0-1X
1-2X
2-3X
3-5X
5-7X
7-10X
>10X
Software
Services
Health IT M&A (Including Buyout) 
Health IT M&A Activity
The following chart summarizes annual M&A activity since 2008, according to the Healthcare Growth
Partners database.
After a record 373 transactions in 2016, health IT M&A activity continued at a healthy pace of 366
transactions in 2017. Total transaction value tends to be much more volatile than deal volume since
it only takes one or two very large deals to skew the data and the majority of transactions do not
disclose value, thus HGP looks toward transaction volume as a better indicator of deal activity.
Generally, sub $100 million companies have three valuation inflection points: proof-of-concept,
growth scalability, and mature scalability.
17
4
Copyright 2018 Healthcare Growth Partners
0
5
10
15
20
25
30
0
2
4
6
8
10
12
14
16
Stage of Growth Valuation
Proof of Concept
Growth Scalability
Mature Scalability
Revenue <$1mm
Revenue $5-10mm
Revenue >$20mm
Stage of Growth Chart (for Companies <$100mm in Revenue)
$7,020 $20,698 $17,967 $13,336 $16,356 $5,093 $35,736 $14,014 $53,892 $22,290 
$1,752 
$249 
$599 
$1,069 
$593 
$359 
$2,520 
$1,084 
$747 
$721 
167
141
221
234
264
192
274
285
296
298
50
42
38
50
43
40
47
51
77
68
0
50
100
150
200
250
300
350
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
 $-
 $5,000
 $10,000
 $15,000
 $20,000
 $25,000
 $30,000
 $35,000
 $40,000
 $45,000
 $50,000
 $55,000
 $60,000
Deal VolumeDeal Value ($mm)Deal Value - US
Deal Value - Non-US
Deal Volume - US
Deal Volume - Non-US
Health IT M&A (Including Buyout) 
Health IT M&A Valuation
Proof-of-concept is value created when a company shows that its product can be successfully sold
and deployed in a commercial setting. The proof-of-concept inflection point is generally of more
importance to venture investors than it is to acquirers, as companies at this stage tend to be too
immature to realize significant value through a sale. Growth scalability occurs when an earlier stage
company begins to show profitability or at least scale at high levels of growth, although the
organization is still small and lean. Mature scalability takes place after a company has matured to a
level where it takes on real infrastructure, and the company begins to show strong profitability after
building out a mature corporate organization.
Although the size of a company at each inflection point can vary significantly based on a company's
product or services and sector, the general rule of thumb in health IT is that proof of concept occurs
at revenue of less than $1 million, growth scalability occurs in the $5 to $10 million revenue range,
and mature scalability occurs starting in the $20 million revenue range.
18
4
Copyright 2018 Healthcare Growth Partners
HIT Software Companies
HIT Services Companies
Transaction 
Value
Revenue 
Multiple
EBITDA 
Multiple
Transaction 
Value
Revenue 
Multiple
EBITDA 
Multiple
All 
Transactions
# of Transactions
267
265
136
71
71
46
Median
$ 82.30
3.00X
13.00X
$ 144.00
1.55X
9.90X
Mean
$ 399.07
3.96X
14.42X
$ 626.67
1.99X
11.15X
<$30mm 
Transactions
# of Transactions
87
94
34
17
17
9
Median
$ 9.50
2.17X
8.30X
$ 11.50
1.21X
9.00X
Mean
$ 11.07
3.36X
9.87X
$ 11.59
1.25X
8.85X
$30-100mm 
Transactions
# of Transactions
50
50
20
15
15
9
Median
$ 48.05
3.00X
10.00X
$ 44.00
1.44X
8.00X
Mean
$ 52.04
4.43X
11.97X
$ 56.07
1.70X
8.40X
$100-500mm 
Transactions
# of Transactions
91
84
53
26
26
17
Median
$ 220.00
3.57X
14.00X
$ 248.65
1.71X
11.00X
Mean
$ 236.55
4.23X
17.12X
$ 263.64
2.55X
11.67X
$500mm-$1B 
Transactions
# of Transactions
17
15
11
6
6
4
Median
$ 720.85
4.32X
18.00X
$ 727.50
2.25X
16.00X
Mean
$ 698.17
4.89X
16.65X
$ 714.70
2.43X
13.75X
>$1B 
Transactions
# of Transactions
22
22
18
7
7
7
Median
$ 1790.77
3.13X
14.15X
$ 4291.71
2.20X
15.50X
Mean
$ 3163.33
3.82X
16.42X
$ 4616.11
1.94X
14.91X
Health IT M&A (Including Buyout) 
Health IT M&A Valuation, continued
Continuing the analysis on the prior page, HGP evaluated the distribution of transaction size by
target enterprise value. HIT Software valuations experience a nice inflection above $30mm in value,
which steadily climbs until approximately the $1B valuation mark. HIT Services multiples experience
a similar inflection at $30mm, and a second inflection at $100mm especially with higher percentile
transactions. The second inflection is in part due to a private equity universe that has expanded
leverage capacity for larger transactions, which in turn drives up valuation multiples.
In 2017, Healthcare Growth Partners monitored 366 health IT and related services M&A transactions,
compared to 373 transactions in 2016.
In terms of aggregate deal size, only $23 billion in
transactions was announced in 2017, well short of the excessive $54.6 billion in all of 2016 and more
in line with the $15.1 billion announced in 2015. The $54.6 billion number in 2016 was skewed by
several large transactions, including the $9 billion sale ($4.9 billion equity) of Alere to Abbot Labs,
the $2.6 billion sale of Truven to IBM, and the $13.5 billion ($8.8 billion equity) acquisition of IMS by
Quintiles. The median revenue multiple in 2017 was 3.7x for HIT Software, a slight decrease from
3.8x in 2016, and 2.0x for Health IT Services, an increase over the 1.8x reported in 2016.
Detailed annual trends can be found in the following bar chart.
It should be noted that multiple
trends can be very volatile given the limited availability of data. Refer to Appendices A and B for a
list of notable M&A and Buyout transactions in 2017.
19
4
HIT Software Revenue Multiple Distribution by Target Enterprise Value
Percentile
<$30mm
$30-100mm
$100-500mm
$500mm-$1B
>$1B
90th Percentile
6.31X
8.35X
7.94X
7.88X
7.07X
75th Percentile
3.52X
4.41X
5.50X
7.02X
4.78X
50th Percentile
2.17X
3.00X
3.57X
4.32X
3.13X
25th Percentile
1.38X
2.28X
2.17X
3.80X
2.30X
HIT Services Revenue Multiple Distribution by Target Enterprise Value
Percentile
<$30mm
$30-100mm
$100-500mm
$500mm-$1B
>$1B
90th Percentile
2.31X
2.58X
6.21X
nm
nm
75th Percentile
1.66X
2.43X
3.08X
3.85X
2.70X
50th Percentile
1.21X
1.44X
1.71X
2.25X
2.20X
25th Percentile
0.77X
1.20X
1.22X
0.84X
1.10X
Copyright 2018 Healthcare Growth Partners
Health IT M&A (Including Buyout) 
Median M&A Multiples 2010  2017
It is important to note that transaction multiples are based on trailing-twelve-month financial
information, assume the achievement of all contingent consideration, such as earnouts, and most
EBITDA multiples do not include any adjustments for unusual items. It is also important to note that
less than one-third of transactions contain a disclosed multiple, therefore the multiple data
represents only a portion of the overall transaction activity.
HIT M&A Deals by Quarter
20
4
Copyright 2018 Healthcare Growth Partners
1.2X
1.2X
1.2X
1.4X
1.2X
2.1X
1.8X
2.0X
9.0X
14.0X
16.0X
9.0X
10.0X
9.0X
10.0X
9.6X
0.0X
5.0X
10.0X
15.0X
20.0X
2010
2011
2012
2013
2014
2015
2016
2017
Health IT ServicesRevenue
EBITDA
84
64
81
55
90
70 75 72
63
56 55 58
71
97
76 77
91
68
92
85
99
86
104
84
96
88 91 91
0
20
40
60
80
100
120
Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr42011
2012
2013
2014
2015
2016
2017
2.1X
2.1X
2.3X
4.7X
3.8X
3.8X
3.8X
3.7X
11.0X
12.0X
10.6X
14.0X
14.0X
14.0X
13.0X
14.3X
0.0X
5.0X
10.0X
15.0X
20.0X
Health IT Software
Health IT Capital Raises (Non-Buyout) 
The chart below summarizes quarterly private-equity and venture capital activity in Health IT and
related services since 2008, according to the Healthcare Growth Partners database. The data below
and in this section do not include buyout private equity activity. In 2017, Healthcare Growth Partners
monitored 654 capital raise transactions, a massive increase over the 494 transactions monitored in
2016.
HIT Investment Activity
HIT Investment Deals by Quarter
Refer to Appendix C for a list of notable non-buyout capital raises in 2017. 
21
5
Copyright 2018 Healthcare Growth Partners
37 43 48 49 46 49 49
52
68 68 70
78 75
100
116
92 87
122
102
115 107
97
135
154
128
188 186
147
0
40
80
120
160
200
Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr42011
2012
2013
2014
2015
2016
2017
$958 
$484 
$884 $1,040 $1,426 $2,849 $4,555 
$6,173 $5,565 $7,102 
$145 
$172 
$63 
$43 
$171 
$254 
$870 
$1,012 
$2,374 
$3,179 
89
92
120
162
173
245
311
360
361
401
23
26
15
25
33
42
73
68
133
253
0
50
100
150
200
250
300
350
400
450
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
 $-
 $2,000
 $4,000
 $6,000
 $8,000
 $10,000
 $12,000
Deal VolumeDeal Value ($mm)Deal Value - US
Deal Value - Non-US
Deal Volume - US
Deal Volume - Non-US
Healthcare Capital Markets
HGP tracks a basket of stock indices within health IT and closely related sectors.
It is important to
consider sectors outside of pure "HIT" because the universe of health IT and related services
encompasses many companies that share similar characteristics to other healthcare sectors. What
classifies a company in the universe of health IT and related services, and ideally creates a valuation
premium, is a strong information technology and data component that creates scalability and
competitive strength. This is particularly relevant to services organizations that use technology and
data analytics to streamline their operations. With this in mind, HGP considered seven sectors when
evaluating the performance of publicly traded companies  details of the components of these
sectors can be found on page 25.
U.S. stock markets ended 2016 with an election-rally uptick which continued forcefully into 2017.
Strikingly, the HGP HIT Index, which performed the worst in 2016 with a decline of 16.6%, gained
25.7% in 2017, topped by the Payer Services Index with gains of 29.7%, the CRO Index with gains of
35.3%, and the Payers Index with gains of 47.6%. The 25%+ gains for these sectors are significant for
a 12-month period. The chart and the table on the following page summarize the performance of
the HGP health IT and services indices in 2017.
HIT & Related Index Performance 2017
22
6
Copyright 2018 Healthcare Growth Partners
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
12/30/2016
2/28/2017
4/30/2017
6/30/2017
8/31/2017
10/31/2017
HIT
HIT Services
PBM
Healthcare Services
Payers
CRO
Payer Services
S&P 500
12/31/2017
Jan. 20  President 
Trump enters office
May 4  House passes 
ACA repeal bill the 
"American Health 
Care Act"
July 18  The "Better Care 
and Reconciliation Act" to 
repeal the ACA dies 
July 28  Senate vote on 
'skinny repeal' bill fails
Aug. 14  The CMS proposes 
cancelling, rolling back 
bundled payment programs
Sept. 26  ACA repeal bill 
"Graham-Cassidy" is shelved
Sept. 29  HHS Secretary 
Tom Price resigns
Oct. 12  Trump executive 
order ends cost-sharing 
reduction payments to 
insurers
HIT Index Performance Detail  2017
Company
Share Price 
% Change
EV/
Rev
EV/
EBITDA
Company
Share Price 
% Change
EV/
Rev
EV/
EBITDA
Allscripts (MDRX) 
42.5%
2.6x
26.2x
McKesson Corporation 
(MCK) 
11.0%
0.2x
10.5x
athenahealth (ATHN) 
26.5%
4.7x
nmf
Medidata Solutions 
(MDSO) 
27.6%
6.9x
nmf
Benefitfocus (BNFT) 
-9.1%
3.5x
nmf
MINDBODY (MB) 
43.0%
7.9x
nmf
Care.com (CRCM) 
110.5%
3.1x
nmf
Model N (MODN) 
78.0%
3.5x
nmf
Castlight Health (CSLT) 
-24.2%
3.5x
nmf
NantHealth (NH)
-69.3%
5.0x
nmf
Cerner (CERN) 
42.3%
4.6x
16.7x
National Research 
Corp. (NRCI.B) 
34.5%
8.0x
24.0x
Computer Programs & 
Systems (CPSI) 
27.3%
2.1x
19.9x
Omnicell (OMCL) 
43.1%
3.0x
nmf
Connecture (CNXR) 
-90.5%
1.3x
nmf
OneView Group 
(ONEV) 
-68.4%
2.5x
nmf
Cotiviti Holdings 
(COTV)
-6.4%
5.6x
15.7x
Orion Health Group 
(OHE) 
-54.5%
0.9x
nmf
eHealth (EHTH) 
63.1%
1.5x
nmf
Premier (PINC) 
-3.9%
3.1x
8.8x
Evolent Health (EVH) 
-16.9%
2.0x
nmf
Quality Systems (QSII) 
3.3%
1.7x
15.2x
Fitbit (FIT) 
-22.0%
0.4x
nmf
Roper (ROP) 
41.5%
7.3x
21.7x
Health Insurance 
Innovations (HIIQ) 
39.8%
1.3x
8.3x
Simulations Plus (SLP) 
66.8%
10.8x
25.9x
HealthEquity (HQY) 
15.2%
12.8x
nmf
Streamline Health 
Solutions (STRM) 
35.2%
1.8x
nmf
HealthStream (HSTM) 
-7.5%
2.6x
23.7x
Tabula Rasa Healthcare 
(TRHC) 
87.2%
5.7x
nmf
HMS (HMSY) 
-6.7%
3.3x
17.3
Teladoc (TDOC) 
111.2%
12.4x
nmf
Inovalon (INOV) 
45.6%
4.1x
24.1x
The Advisory Board 
Company (ABCO) 
61.9%
3.3x
21.9x
Invitae (NVTA) 
14.4%
8.1x
nmf
Veeva Systems (VEEV) 
35.8%
11.4x
nmf
IQVIA (IQV)
28.7%
3.7x
16.9x
Vocera (VCRA) 
63.4%
5.4x
nmf
iRhythm Technologies 
(IRTC) 
86.6%
14.7x
nmf
WebMD Health Corp. 
(WBMD) 
34.1%
2.3x
11.2x
Healthcare Capital Markets
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Copyright 2018 Healthcare Growth Partners
2017 Index Performance
S&P 500
19.4%
Payers
47.6%
NASDAQ
28.2%
PBM
18.4%
CRO
35.3%
Healthcare Services
-3.8%
HIT
25.7%
HIT Services
-8.4%
Payer Services
29.7%
24
Revenue Multiples
EBITDA Multiples
Sector
2016
2017
2018P
2016
2017
2018P
Health IT
3.3x
3.9x
3.3x
14.8x
17.4x
15.1x
HIT Services
1.3x
1.2x
1.2x
10.7x
9.8x
10.0x
CRO
2.6x
3.5x
3.0x
11.9x
17.3x
13.2x
Healthcare Services
1.3x
1.4x
1.2x
9.5x
9.2x
9.0x
Payer Services
1.8x
2.9x
2.6x
10.2x
12.4x
10.6x
Payers
0.6x
0.7x
0.7x
8.2x
10.3x
9.3x
PBM
0.6x
0.5x
0.6x
10.6x
9.2x
9.0x
Healthcare Capital Markets
The Health IT IPO market has all but dried up in the last year.
Following nine IPOs in 2014
(Care.com, IMS, Castlight, Everyday Health, Medical Transcription Billing, Imprivata, HealthEquity,
Connecture, Orion), eight IPOs in 2015 (Inovalon, Press Ganey, Teladoc, Evolent, Invitae, Fitbit,
Mindbody, Adherium) and five IPOs in 2016 (Tabula Rosa, Oneview, Cotiviti, NantHealth, iRhythm),
not a single health IT IPO issued in 2017, however, word on the street is that Change Healthcare may
file for an IPO in 2018.
Valuation multiples across the healthcare sector remain strong. The HIT and CRO sectors receive the
most significant valuation premiums over the rest of the market.
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Copyright 2018 Healthcare Growth Partners
0
2
4
6
8
10
2013
2014
2015
2016
2017
IPOs
Healthcare Capital Markets
As discussed previously, HGP tracks seven indices across the health IT and services sectors. The
components of each index are listed below. Each index is based on an equal-weighted portfolio.
25
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Copyright 2018 Healthcare Growth Partners
Sector Components 
Healthcare IT (HIT)
Allscripts Healthcare Solutions, Inc. (NasdaqGS:MDRX)
athenahealth, Inc. (NasdaqGS:ATHN)
Benefitfocus, Inc. (NasdaqGM:BNFT)
Care.com, Inc. (NYSE:CRCM)
Castlight Health, Inc. (NYSE:CSLT)
Cerner Corporation (NasdaqGS:CERN)
Computer Programs and Systems, Inc. (NasdaqGS:CPSI)
Connecture, Inc. (NasdaqGM:CNXR)
Cotiviti Holdings, Inc. (NYSE:COTV)
eHealth, Inc. (NasdaqGS:EHTH)
Evolent Health, Inc. (NYSE:EVH)
Fitbit, Inc. (NYSE:FIT)
Health Insurance Innovations, Inc. (NasdaqGM:HIIQ)
HealthEquity, Inc. (NasdaqGS:HQY)
HealthStream, Inc. (NasdaqGS:HSTM)
HMS Holdings Corp. (NasdaqGS:HMSY)
Inovalon Holdings, Inc. (NasdaqGS:INOV)
Invitae Corporation (NYSE:NVTA)
IQVIA Holdings, Inc. (NYSE:IQV)
iRhythm Technologies, Inc. (NasdaqGM:IRTC)
McKesson Corporation (NYSE:MCK)
Medidata Solutions, Inc. (NasdaqGS:MDSO)
MINDBODY, Inc. (NasdaqGM:MB)
Model N, Inc. (NYSE:MODN)
NantHealth, Inc. (NasdaqGS:NH)
National Research Corporation (NasdaqGS:NRCI.B)
Omnicell, Inc. (NasdaqGS:OMCL)
OneView Group plc (AIM:ONEV)
Orion Health Group Limited (NZSE:OHE)
Premier, Inc. (NasdaqGS:PINC)
Quality Systems, Inc. (NasdaqGS:QSII)
Roper Technologies, Inc. (NYSE:ROP)
Simulations Plus, Inc. (NasdaqCM:SLP)
Streamline Health Solutions, Inc. (NasdaqCM:STRM)
Tabula Rasa Healthcare, Inc. (NasdaqGM:TRHC)
Teladoc, Inc. (NYSE:TDOC)
The Advisory Board Company (NasdaqGS:ABCO) [de-listed 
November 17, 2017]
Veeva Systems Inc. (NYSE:VEEV)
Vocera Communications, Inc. (NYSE:VCRA)
WebMD Health Corp. (NasdaqGS:WBMD) [de-listed 
September 14, 2017]
Payers - Constituents
Aetna Inc. (NYSE:AET)
Anthem, Inc. (NYSE:ANTM)
Centene Corporation (NYSE:CNC)
Cigna Corporation (NYSE:CI)
Humana Inc. (NYSE:HUM)
Molina Healthcare, Inc. (NYSE:MOH)
UnitedHealth Group Incorporated (NYSE:UNH)
WellCare Health Plans, Inc. (NYSE:WCG)
HIT Services
DXC Technology Company (NYSE:DXC)
Conduent Incorporated (NYSE:CNDT)
Huron Consulting Group Inc. (NasdaqGS:HURN)
CBIZ, Inc. (NYSE:CBZ)
DST Systems, Inc. (NYSE:DST)
Kforce Inc. (NasdaqGS:KFRC)
Navigant Consulting, Inc. (NYSE:NCI)
Accenture plc (NYSE:ACN)
CACI International Inc (NYSE:CACI)
PBMs - Constituents
BioScrip, Inc. (NasdaqGS:BIOS)
CVS Health Corporation (NYSE:CVS)
Express Scripts Holding Company (NasdaqGS:ESRX)
Rite Aid Corporation (NYSE:RAD)
Walgreens Boots Alliance, Inc. (NasdaqGS:WBA)
Healthcare Services - Constituents
Amedisys, Inc. (NasdaqGS:AMED)
Brookdale Senior Living Inc. (NYSE:BKD)
Civitas Solutions, Inc. (NYSE:CIVI)
Community Health Systems, Inc. (NYSE:CYH)
Encompass Health Corporation (NYSE:EHC)
Envision Healthcare Holdings, Inc. (NYSE:EVHC)
Genesis Healthcare, Inc. (NYSE:GEN)
HCA Holdings, Inc. (NYSE:HCA)
Kindred Healthcare, Inc. (NYSE:KND)
Laboratory Corporation of America Holdings (NYSE:LH)
LifePoint Health, Inc. (NasdaqGS:LPNT)
MEDNAX, Inc. (NYSE:MD)
Quest Diagnostics Incorporated (NYSE:DGX)
Select Medical Holdings Corporation (NYSE:SEM)
Tenet Healthcare Corp. (NYSE:THC)
Universal Health Services, Inc. (NYSE:UHS)
Payer Services - Constituents
CorVel Corporation (NasdaqGS:CRVL)
Tivity Health, Inc. (NasdaqGS:TVTY)
Magellan Health, Inc. (NasdaqGS:MGLN)
WageWorks, Inc. (NYSE:WAGE)
CROs - Constituents
Charles River Laboratories International, Inc. (NYSE:CRL)
ICON Public Limited Company (NasdaqGS:ICLR)
INC Research Holdings, Inc. (NasdaqGS:INCR)
PAREXEL International Corporation (NasdaqGS:PRXL) [de-
listed September 29, 2017]
PRA Health Sciences, Inc. (NasdaqGS:PRAH)
26
Macroeconomics
2017 Macroeconomic and Market Summary
As the new year begins, President Donald Trump's election continues to prompt bullish growth of
the U.S. stock market. The Dow Jones Industrial Average rose by almost 25% in 2017, one of the
strongest growth rates in the last decade. The S&P 500 climbed an additional 19%, which marks
further gains over the 9% growth in 2016 to deliver triple the returns expected by some Wall Street
experts. Additionally, the NASDAQ Composite increased by 28% last year, quadrupling 2016's
performance. All three indexes eclipsed previous all-time highs in recent weeks, while the dollar
reached its highest value in 15 years in the Fed's Trade-Weighted U.S. Dollar Index. After the oil
market's massive plunge in 2016, which lowered the barrel price from $100 to $30, it reached a
stabilized recovery mode in 2017.
Taking advantage of the anticipated bullish trend in 2018,
analysts are expecting further upturn in the oil market mostly due to higher demand for crude
because of synchronized global economic growth. Healthcare also experienced a boost of more
than 20% in 2017, along with 33% growth in the technology sector, the most significant gain among
S&P 500 sectors.
The U.S. economy overall continued to see a consistent upturn in the last year. Gross domestic
product rose to an annualized rate of 3.3% in the third quarter, the highest since the third quarter of
2014. The unemployment rate fell to 4.1% in December 2017, a record 17-year low. Over the year,
the unemployment rate decreased by 0.6% and job growth totaled 2.1 million, compared to 2.2
million additions in 2016. Nonfarm payroll employment rose by 148,000 in December, and health
care, construction, and manufacturing all added jobs. The healthcare sector contributed 300,000 jobs
in 2017 but was slower than the 379,000 jobs gained in 2016. Significantly, the Federal Reserve
raised the target range of the federal fund by a quarter point to 1.5% in December, in line with
market expectations. The Federal Reserve has also signaled it will further raise the range of the
federal fund to 2% in 2018, 2.5% in 2019, and 3% in 2020, which could be critical for the U.S.
economic outlook.
After a severe downturn in the previous year, the U.S. IPO market rebounded strongly in 2017 with
189 IPOs raising $49.33B, an increase of 55% in capital and 52% in the number of IPOs from 2016.
Although the 2017 data shows a lot of promise compared to 2016, which was the worst year in
terms of IPO volume since 2003, many bankers and investors are yet to be convinced due to the lack
of high value, marquee companies emerging on the IPO market. Further discouragement stemmed
from Snap Inc., one high profile deal of 2017, which ended up trading below its IPO price for most of
the year. 2018 could host some of the notable names' market debut, such as music-streaming
company Spotify, but other big-name companies including Uber, Airbnb, and Lyft will hold off for at
least another year before going public.
Global M&A volume reached $3 trillion for the fourth consecutive year, with total deal volume
reaching $3.5 trillion in 2017, a 1% drop from 2016. Although the U.S. market remained the most
active, making 12,400 deals worth $1.4T, the value of M&A deals in the U.S. dropped by 16% in
contrast with those of 2016. However, European deals rose by 16% from last year to close at
$856.3B. Deals in the Asia-Pacific region also climbed by 11% to reach $911.6B. 2017 witnessed a
few blockbuster transactions sparked by the threat of Amazon, Facebook, and Netflix using their size
and scale to push into new horizons. Amazon's acquisition of grocery chain Whole Foods for $13.7B
disrupted an entire industry. The mere rumor of Amazon's desire to enter the pharmacy business
triggered the U.S.'s largest drugstore chain, CVS Health, to acquire healthcare insurer Aetna for
$69B.
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27
Macroeconomics
2017 Macroeconomic and Market Summary, continued
In the same vein, media mogul Rupert Murdoch sold 21st Century Fox to Disney for $66B, as
Facebook and Netflix try to muscle into the sports, media, and film production industries. The
momentum of M&A deals is expected to continue in 2018, as every industry is being disrupted by
innovative technologies, and companies will be buying strategic assets to better position themselves
to remain relevant and survive against global competition.
Globally, investors deployed $213.6B to 15,700 venture-capital deals materializing in 2017.
In
contrast to Q3 of 2017, Q4 experienced a downturn of 15.8% for angel and seed-stage deal volume
globally, however, dollar volume in the deals increased by 11.3%. Compared to Q4 2016, early-stage
deal and dollar volume increased by 8.1% and 43.7%, respectively, in Q4 of 2017. Similarly, late-
stage deal and dollar volume increased by 7.9% and 61.6%, respectively, in Q4 of 2017 compared to
Q4 2016. 1,577 late-stage deals occurred in 2017 globally, 11.2% higher than the 1,418 deals of
2016. Although there is an upturn in the annual deal and dollar volume, Q4 2017 experienced a
cool-off period in comparison to Q3 of 2017.
2017 also experienced a craze around digital assets or cryptocurrencies,
leading to soaring
cryptocurrency prices and several initial coin offerings. The applications of a digital, borderless
currency appealed to a wide range of investors to convert fiat into cryptocurrency. The value of
bitcoin, the symbolic elephant in the decentralized crypto world, rose from a mere $970 at the start
of the year to nearly $20,000 by December, a gain of 2000%. Other major blockchain players,
including ethereum and litecoin, skyrocketed in value by more than 12000% and 5500% in the last
12 months. While the beginning of 2018 has seen a significant correction in the value of
cryptocurrencies with the value of bitcoin dropping below 50% of its 2017 peak, we believe 2018 will
see continued interest in this hot segment of the market.
2017 U.S. Major Indices
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-5%
0%
5%
10%
15%
20%
25%
30%
35%
12/30/2016
2/28/2017
4/30/2017
6/30/2017
8/31/2017
10/31/2017
S&P 500
NASDAQ
DOW JONES
12/31/2017
Health IT Headlines
Overview
Notable headlines from 2017 are outlined in the following pages on a quarterly basis. The
headlines in 2017 illustrate the significant influence that policy and regulatory intervention
has on the incentives that dictate health IT investment trends and innovation.
Q1 Headlines
Battle lines drawn as GOP maps first steps to repeal ACA
With congressional Republicans poised to take their first step in a bid to dismantle the Affordable Care Act, leaders
both for and against the healthcare reform law are gearing up for a high-stakes battle. Republicans are expected
to use the budget reconciliation processas they did in a measure Obama vetoed in 2015to defund key parts of
the law. That would include the penalty for remaining uninsured and subsidies that help make insurance premiums
affordable, NPR noted. The House plans to vote on a budget blueprint during the week of Jan. 9 and act on
legislation to carry it out the week of Jan. 30, The New York Times reported. The rules of the budget reconciliation
process would exempt any bill that replaces or reforms the ACA from being challenged on the House floor, a
measure that would normally affect a bill if it introduces new spending.
Republican lawmakers float ACA replacement bill
Hours after the GOP engaged Democrats in a war of words over the Affordable Care Act, the Republican Study
Committee offered up a bill it hopes will serve as a framework for a health law replacement. The bill in question
the American Health Care Reform Actwas first introduced in 2013 by GOP Rep. Phil Roe, M.D., of Tennessee. At a
news conference on Jan. 4, Roe touted his plan as a way to put patients and doctors back in charge of healthcare
decisions, instead of bureaucrats and health insurance companies. While his bill has not been endorsed by
Republican leadership, according to CNN, it is the first concrete ACA replacement suggestion to emerge since the
115th Congress convened on Jan. 3.
Patients don't trust health IT
More than 50% of consumers are skeptical about the benefits of healthcare information technologies, including
patient portals, mobile apps, and electronic health records, according to a Black Book research survey of more than
12,000 adults. Moreover, the survey revealed that 70% of Americans distrust health technology, up sharply from
just 10% in 2014. High-profile cybersecurity incidents were part of the reason patient respondents don't think
providers are keeping their information private and secure, the survey found.
Respondents fear that their
pharmacy prescriptions (90%), mental-health notes (99%) and chronic-condition data (81%) are shared beyond
their chosen provider and payer to retailers, employers, or the government without their consent.
Trump's regulatory freeze delays HHS rules
An announcement from the White House freezing all new and pending federal regulations has forced the
Department of Health and Human Services to withdraw a dozen rules, including one in which the freeze could
delay eligibility for those with exchange plans, Medicare Part D, or Medicaid.
Senate confirms Price as HHS secretary
The Senate voted 52-47 on Feb. 10 to confirm Rep. Tom Price, R-Ga., as HHS secretary. Price, an orthopedic
surgeon who has held a House seat since 2005, has backed repeal of the Affordable Care Act and conversion of
Medicaid to a block grant program.
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Health IT Headlines
Q1 Headlines, cont'd
Republicans outline ACA replacement
Republicans met Feb. 16 to discuss plans for repealing and replacing the Affordable Care Act, and House Speaker
Paul Ryan, R-Wis., said legislation would be introduced after the House returns from a 10-day recess on Feb. 27.
Lawmakers received a 19-page "policy brief" with details on an ACA replacement plan, including restructuring
Medicaid, eliminating penalties for the uninsured and employers that do not offer coverage, offering incentives for
health savings accounts, and introducing an age-based monthly tax credit that does not vary with income for
those who purchase coverage.
Rx drugs dominate healthcare spending, AHIP analysis shows
An infographic and analysis from political advocacy association AHIP break down where consumers' premium
dollars go, and prescription drugs account for the largest share at 22.1%. Physician and outpatient services account
for 22% and 19.8%, respectively, and inpatient care accounts for 15.8%.
GOP releases ACA replacement plan
House Republicans' proposal to replace the Affordable Care Act would end funding for Medicaid expansion by
January 2020 while capping federal spending on the program, eliminate the mandate to buy health insurance, and
replace income-based subsidies with age-based tax credits. The plan would require insurers to cover those with
preexisting conditions without charging more as long as coverage is continuous, give states a $100 billion budget
for programs such as high-risk pools, and retain but delay the Cadillac tax until 2025.
CBO: Republican healthcare bill would cover millions fewer than ACA but reduce federal deficit
The Congressional Budget Office released its highly anticipated score of House Republicans' healthcare bill today,
finding that it would increase the number of uninsured individuals by millions, but also lower individual market
premiums in the long run and decrease the federal deficit.

In 2018, 14 million more people would be uninsured under the GOP bill than under the Affordable Care Act
mostly due to the repeal of individual mandate penalties. By 2026, that number would swell to 24 million
because of changes to subsidies in the individual market and in the Medicaid program.
 Relative to projections for the ACA, the Republicans' bill would lead to higher average premiums in the
individual market before 202015% in 2018 and 20% in 2019and lower average premiums after that. The
CBO notes, though, that premium changes under the new proposal would differ "significantly" for people of
different ages, given the bill's provision that allows insurers to charge older customers up to five times more for
coverage.
AHCA failure is not the end of healthcare policy debate
When GOP leaders pulled the proposed American Health Care Act from the House floor March 24 after falling
short on votes, Speaker Paul Ryan, R-Wis., called the Affordable Care Act "the law of the land," and it appeared the
administration would move on to other priorities. But Republicans speaking over the weekend said their efforts to
reshape health care are not finished, and some advocated for a bipartisan approach.
Q2 Headlines
CMS proposes new hospital payment rates, CQM requirements
The Centers for Medicare and Medicaid Services (CMS) released proposed payment policies for fiscal year 2018
that aim to "reduce burdens for hospitals so they can focus on providing high quality care for patients," CMS
Administrator Seema Verma said. The proposed rule would result in 2.9% higher inpatient operating prospective
payments, reduce payments to long-term hospitals by nearly 3.75%, and relax clinical quality measure reporting
standards for hospitals with an electronic health record system.
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Health IT Headlines
Q2 Headlines, cont'd
Amendment might bring AHCA back to House floor for vote
An amendment to the American Health Care Act proposed by Rep. Tom MacArthur, R-N.J., would retain the
Affordable Care Act's essential health benefits (EHBs) at the federal level but allow states to request approval to
replace the EHBs with their own list. States could also let insurers charge higher premiums to people with
preexisting conditions if they create high-risk pools for those patients, according to the amendment, which has
been billed as a tool for resurrecting the legislation for a vote the White House would like to see happen next
week.
AHCA clears House, but Senate is likely to draft its own bill
After narrowly clearing the House, the American Health Care Act heads to the Senate, but Republican leaders there
said they are likely to draft their own legislation. Among senators' concerns about the AHCA are cuts to Medicaid
and the number of people who would be covered.
Senate confirms Gottlieb as FDA commissioner; health IT organizations rejoice
The U.S. Senate voted 57-42 to confirm Scott Gottlieb as President Donald Trump's nomination to lead the Food
and Drug Administration, ushering in a new era of drug and device regulation. Gottlieb's confirmation was widely
expected, although he faced criticism from Democratic senators over his close ties to the pharmaceutical and
digital health industry. But health IT organizations were generally pleased with Gottlieb's confirmation. Digital
health CEOs and investors said that they saw Gottlieb's experience as both a regulator and an investor as a benefit
for the industry.
Huge cyberattack hits nearly 100 countries with 'Wanna Decryptor' malware
Hospitals, schools, companies, and governments around the world were assessing the damage after a massive
cyberattack hit almost 100 countries on May 12, infecting computers with malware that demanded ransom
payments. Antivirus provider Avast reported that the crippling malware had infected some 100,000 computers and
that the "WanaCrypt0r 2.0" ransomware, as it is called, had been detected in 99 countries, with Russia, Ukraine, and
Taiwan the top targets.
FDA to create centralized digital health unit
The Food and Drug Administration is creating a digital health unit within its Center for Devices and Radiological
Health in an effort to develop internal technical expertise and streamline the agency's software review process and
regulation of medical devices. Among its responsibilities, the digital health unit will work on:
 Developing software and digital health technical expertise to provide assistance for premarket submissions that
include Software as a Medical Device (SaMD), software inside of medical devices (SiMD), interoperable devices,
or other novel digital health technologies.
 Utilizing technical experts as appropriate or when requested by the manufacturer for submissions that include
SaMD, SiMD, interoperable devices or other novel digital health technologies.

Incorporating appropriate metrics for digital health improvements to monitor, track, analyze, and report the
results of digital health premarket review timelines.
Feds fine eClinicalWorks $155M for EHR performance issues
A major vendor of electronic health record systems for physicians, eClinicalWorks, will pay the federal government
$155 million to settle a False Claims Act lawsuit contending that its products are faulty. The settlement is the first
of its kind for a healthcare information technology company facing formal charges that its systems did not help
providers achieve objectives of the Meaningful Use Program for EHRs and that usability shortcomings put patient
lives at risk. In addition, the settlement contends that eClinicalWorks paid kickbacks in exchange for promoting its
product, which had flaws that could expose patients to potential safety issues.
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Health IT Headlines
Q2 Headlines, cont'd
FDA chief makes plans to tackle high drug costs
FDA Commissioner Scott Gottlieb said he intends to use the agency's powers to lower drug prices by promoting
competition between generic and brand-name drug manufacturers, including prioritization of generic-drug
applications for brand-name drugs that have fewer than three generic competitors. Other ideas include expediting
approval of generics that copy complex therapies, such as Mylan's EpiPen epinephrine auto-injector or
GlaxoSmithKline's Advair asthma inhaler, and releasing a list of 180 branded drugs that no longer have patent
protection yet lack generic competition.
GOP aims to release revised bill on June 30
Moderate and conservative GOP senators have conflicting ideas about how the Better Care Reconciliation Act
should be modified, and it's not clear both sides can be satisfied, but Republicans are aiming to finalize changes to
the legislation by June 30 and vote after the coming recess. Senate conservatives say the bill doesn't do enough to
reduce premiums, government spending, and regulation, while moderates want the bill to allocate more funding
for Medicaid and fighting the opioid epidemic.
Q3 Headlines
McConnell pivots to full ACA repeal plan after losing support for BCRA
Senate Majority Leader Mitch McConnell, R-Ky., said the effort to repeal and immediately replace portions of the
Affordable Care Act will fail after two more colleagues -- Sens. Jerry Moran, R- Kan., and Mike Lee, R- Utah --
announced that they would oppose a measure to advance the Better Care Reconciliation Act. The announcement
left McConnell short of the required votes to advance the legislation, so he said the Senate will instead vote on a
full ACA repeal with a two-year delay.
Report analyzes data breach incidents for first half of 2017
An Identity Theft Resource Center report found that a record 791 data breaches in the U.S. in the first half of this
year have exposed the information of 12.4 million people, with the health care sector accounting for 179 incidents,
or 22.6% of the total. 63.0% of data breaches across all industries were caused by hacking. Of the reported hacking
attacks, 47.7% involved phishing, while 18.8% of the hacking data breaches were from ransomware or malware
incidents.
FDA unveils precertification pilot program for digital health technology, maps out upcoming guidance
The FDA's Software Pre-Cert Pilot Program, part of a broader Digital Health Innovation Action Plan released by the
agency on July 27, would soften the regulatory requirements for digital health companies with a track record of
developing and testing quality products. Broadly, the agency's plan sketches out a rough timeline for the FDA to
provide additional guidance on various types of medical software detailed in the 21st Century Cures Act, including
clinical decision support software, mobile medical applications, data systems, medical image storage devices and
low-risk wellness products, along with additional clarifications regarding when software modification requires a
new 510(k) clearance.
Early filings show impact of ACA uncertainty
Health plans have until August 16 to finalize premiums for coverage offered through HealthCare.gov, but a Kaiser
Family Foundation analysis suggests the health insurance tax, questions about whether the individual mandate will
be enforced and especially uncertainty about whether cost-sharing reduction payments will continue is driving
premium increases. In many areas, increases are modest, foundation Associate Director Cynthia Cox says, but
Senior Vice President Larry Levitt says most markets would already have stabilized if not for the continued
uncertainty.
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Health IT Headlines
Q3 Headlines, cont'd
CDC finds record overdose mortality in U.S.
U.S. drug overdose death rates increased to 18.5 cases per 100,000 people for the 12-month period ending
September 2016 from 16.1 per 100,000 for the 12 months prior, according to a quarterly report from the CDC's
National Center for Health Statistics. Deaths from drug overdoses continued to climb from 2015, when a record
52,404 people died, and 33,091 of those overdoses were attributed to opioids.
CMS proposes to cancel, pare back bundled payment models
The CMS on August 15 published a proposed rule to cancel the cardiac bundled payment program and the
episode payment models program, which were set to begin in January. The agency also proposed reducing the
mandatory geographic areas for the joint bundled program from 67 to 34. Providers in the areas no longer
required to participate would be able to do so voluntarily. The CMS predicts between 450 and 470 hospitals would
participate in the joint bundled program, including 60 to 80 on a voluntary basis.
Trump quietly signs FDA reauthorization bill, officially funding a new digital health unit
For the health IT sector, the FDARA officially authorized the Medical Device User Fee Agreement (MDFUA),
codifying several new approaches to digital health. Perhaps most notably, the MDFUA establishes a central digital
health unit within the Center for Devices and Radiological Health (CDRH). Efforts to overhaul the agency's
approach to digital health are already well underway with a new software precertification program announced last
month, part of a broader Digital Health Innovation Plan that aims to provide clearer regulatory guidance to the
industry.
The Equifax Breach Exposes America's Identity Crisis
Equifax's revelation that 143 million Americans may have had their SSNs stolen (along with other sensitive personal
information) has security experts pressing for a fundamental reassessment in how, and why, we identify ourselves.
Some regulatory initiatives have had success curtailing SSN distribution, like the Center for Medicare Services
recent announcement that SSNs will be removed from Medicare benefits cards.
U.S. uninsured rate fell to record low in 2016
A Census Bureau report found that the percentage of Americans who were uninsured fell to a record low of 8.8%
in 2016 from 9.1% in 2015. Last year was the third consecutive year the uninsured rate declined, a trend that
started in 2014 when the majority of the Affordable Care Act's coverage provisions were implemented.
FDA selects participants for new digital health software precertification pilot program
After culling through the applications of over 100 interested companies, the FDA selects Apple, Fitbit, Johnson &
Johnson, Pear Therapeutics, Phosphorus, Roche, Samsung, Tidepool, and Verily to participate in its Pre-Cert pilot
program. Announced in late July, the pilot will help the FDA better understand how the fast-tracking of pre-
certified companies could impact the market. The nine companies have agreed to give the FDA access to measures
related to their software development, testing, and maintenance; and to participate in FDA site visits.
Tom Price resigns as HHS secretary; President Trump taps Don J. Wright as acting replacement
HHS Secretary Tom Price has resigned following days of controversy related to his use of private planes for travel.
President Trump will name Don J. Wright, the acting assistant secretary for health, to serve as acting secretary.
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Health IT Headlines
Q4 Headlines
Calif. drug-price transparency bill signed into law
A bill requiring drugmakers to inform health insurers and government health plans at least 60 days before raising a
drug's price by more than 16% over a two-year period has been signed into law by California Gov. Jerry Brown. The
law, which will also require pharmaceutical firms to justify the price hike, will take effect on Jan. 1.
Trump signs executive order that starts effort to unwind ACA
President Donald Trump signed an executive order that aims to succeed where Congress has failed in a bid to
reshape the country's health insurance markets. The executive order does not in itself implement any policies, but
rather directs federal agencies to draft regulations. The order seeks to do that by issuing three primary directives
to federal agencies:
 Consider ways to expand access to association health plans, potentially allowing employers to purchase
insurance across state lines.
 Consider expanding coverage through short-term health insurance plans, which are not subject to the
Affordable Care Act's regulations such as minimum coverage requirements.
 Consider changes to health reimbursement arrangements (HRAs)employer-funded accounts that reimburse
workers for healthcare expensesto allow employers to make better use of them.
Senators reach bipartisan agreement to stabilize ACA markets
Senate health committee Chairman Lamar Alexander, R-Tenn., and ranking member Sen. Patty Murray, D-Wash.,
announced a deal to stabilize the individual insurance market by funding cost-sharing reduction payments through
2019, giving states more flexibility to skirt certain Affordable Care Act requirements, allowing consumers over age
30 to purchase copper plans, and providing $106 million to support ACA enrollment. However, the proposal
garnered mixed messages from President Donald Trump, while Senate Majority Leader Mitch McConnell, R-Ky.,
has not said whether he will allow a vote, and some Republicans said they oppose it.
Trump nominates Alex Azar as new HHS Secretary
Taking advantage of Twitter's new 280 character limit, President Trump announces that he will nominate Alex Azar
for HHS Secretary, quickly followed by a tweet calling for an end to Obamacare's "unfair & highly unpopular"
individual mandate. Azar served as HHS general counsel from 2001 to 2005, and then as deputy secretary until
2007, when he joined pharmaceutical giant Eli Lilly. He resigned as president of Eli Lilly affiliate Lilly USA in January.
AHIP and other health care organizations praised the nomination.
CVS Health to acquire health insurer Aetna for $69B
Drugstore chain CVS Health has agreed to take over Aetna, one of the biggest health insurers in the U.S., for $69
billion. The two companies said they can cut costs for patients by turning CVS' 10,000 pharmacies and clinics into
community health care facilities.
UnitedHealth to buy DaVita primary care unit for $4.9 billion
The largest U.S. health insurer UnitedHealth Group Inc will buy DaVita Inc's primary and urgent care services for
$4.9 billion in its second acquisition this year to expand its fast-growing medical group. Denver-based DaVita
operates medical groups in six states that serve 1.7 million patients through about 300 clinics, adding to
UnitedHealth's 250 MedExpress urgent care centers and its 200 surgical centers that are part of recently acquired
Surgical Care Affiliates.
U.S. health care spending grew at slower rate last year, CMS finds
An analysis from the CMS Office of the Actuary showed growth in U.S. health care spending slowed last year,
increasing by 4.3% to $3.3 trillion, compared with 5.1% growth in 2014 and 5.8% in 2015. The decline was driven
by slower enrollment growth in government and private health insurance programs, which resulted in decelerated
use of medical services, according to the report.
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Copyright 2018 Healthcare Growth Partners
Health IT Headlines
Q4 Headlines, continued
Statement from FDA Commissioner Scott Gottlieb, M.D., on advancing new digital health policies to
encourage innovation, bring efficiency and modernization to regulation
FDA releases three sets of digital health guidance: clinical decision support (draft), reassertion that lifestyle apps
will not be treated as medical devices (draft), and how software will be assessed as a medical device (final). FDA
will focus its attention and medical device status on software that analyzes medical images, physiological
monitoring data, sound waves, sleep apnea monitor data, spectroscopy data, and slide pathology, as well as
software that uses undisclosed algorithms.
Humana, private-equity firms buy Kindred Healthcare for $4 billion
U.S. health insurer Humana and two private-equity firms agreed to buy home health-care and long-term care
operator Kindred Healthcare for about $4 billion, the latest expansion by a U.S. health insurer into patient care.
Humana, TPG Capital, and Welsh, Carson, Anderson & Stowe will pay $9 per share in cash for the home health-
care provider and hospice operator, a 4.7 percent premium over the stock's Friday close, and split the company
into two parts.
Senate passes tax package eliminating ACA individual mandate penalty
The Senate approved a $1.5 trillion tax package that would cut the corporate tax rate from 35% to 21% and the
top individual rate from 39.6% to 37%, while eliminating the Affordable Care Act tax penalty for Americans who do
not buy health insurance. The bill passed the House on Tuesday but will be sent back to the lower chamber for a
re-vote after changes to three minor provisions were made in the Senate.
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Copyright 2018 Healthcare Growth Partners
About Healthcare Growth Partners
Healthcare Growth Partners (HGP) is an exceptionally experienced Investment Banking &
Strategic Advisory firm exclusively focused on the transformational Health IT market. We
unlock value for our clients through our Sell-Side Advisory, Buy-Side Advisory, Capital
Advisory, and Pre-Transaction Growth Strategy services, functioning as the exclusive
investment banking advisor to over 100 health IT transactions representing over $2 billion
in value since 2007.
Our passion for healthcare inspires us to not only create value for our clients, but to also
generate broad, overarching improvements to the functionality and sustainability of health.
With our focus, we deliver knowledgeable, honest and customized guidance to select
clients looking to execute high value health IT, health information services, and digital
health transactions.
Contact Information
Christopher McCord
Managing Director
chris@hgp.com
2001 Kirby Drive, Suite 814
Houston, TX 77019
(713) 955-7935
www.hgp.com
Securities offered through HGP Securities, LLC, member FINRA & SIPC, broker-dealer affiliate of Healthcare
Growth Partners, LLC.
Sources of Information:
Bureau of Economic Analysis, Bureau of Labor Statistics, S&P Capital IQ, CMS, Company press releases,
Company SEC filings, Health Data Management, Healthcare Growth Partners database, HealthLeaders Media,
HIStalk, Mercom Capital Group, Modern Healthcare, The New York Times, Mergermarket, MarketsandMarkets
Research, Allied Market Research, FierceHealthcare, StartUp Health, Rock Health, Pitchbook, Thomson-Reuters,
Renaissance Capital IPO Intelligence, Dealogic, and The Wall Street Journal.
These statistics are presented for informational purposes only. While the information presented has been obtained
from sources deemed to be reliable, no representation or warranty, express or implied, is made as to the accuracy
or completeness of such information.
35
9
Copyright 2018 Healthcare Growth Partners
36
HGP Transaction Experience
10
Copyright 2018 Healthcare Growth Partners
Copyright 2018 Healthcare Growth Partners
37
HGP Transaction Experience
10
38
HGP Transaction Experience
10
Copyright 2018 Healthcare Growth Partners
Appendix A
Strategic M&A Highlights
39
Quarter
Acquiror
Seller
Deal Size ($mm)
Q1
Hearst Corporation
Polyglot Systems
na
Q1
WNS Holdings
HealthHelp
95
Q1
HMS Holdings Corp.
Eliza Corporation
170
Q1
nThrive
e4e
na
Q1
Tech Mahindra
The HCI Group
220
Q1
One Call Care Management
High Line Health
na
Q1
Centauri Health Solutions
Human Arc
na
Q1
McKesson
CoverMyMeds
1400
Q1
Formativ Health
Etransmedia Technology
na
Q1
Castlight Health
Jiff
155
Q2
Roche Holding AG
mySugr
na
Q2
MatrixCare (MDI Achieve)
eHealth Solutions
na
Q2
Teladoc
Best Doctors
440
Q2
athenahealth
Praxify Technologies
63
Q2
Accenture
LabAnswer
na
Q2
Mediware Information Systems
Kinnser Software
na
Q2
symplr
Vistar Technologies Corp
na
Q2
Cochlear Limited
Sycle
78
Q2
INC Research Holdings
InVentiv Health
na
Q2
Apple
Beddit.com 
na
Q2
DocuTAP
ClockwiseMD (Lightshed Healthcare 
Technologies)
na
Q2
Surgical Information Systems
Source Medical
na
Q2
CIOX Health
ArroHealth
127
Q2
Quality Systems
Entrada
34
Q2
Keais Records Service
National Legal Services
na
Q2
TeleTech Holdings
Connextions
80
Q2
ABILITY Network
ShiftHound
na
11
Copyright 2018 Healthcare Growth Partners
Appendix A
Strategic M&A Highlights, continued
40
Quarter
Acquiror
Seller
Deal Size ($mm)
Q3
Konica Minolta
Ambry Genetics Corp
1000
Q3
Press Ganey Holdings
Soyring Consulting Group
na
Q3
Cotiviti Holdings
Rowdmap
70
Q3
UDG Healthcare plc
Vynamic
32
Q3
Internet Brands
DentalPlans.com
na
Q3
Magellan Healthcare
Senior Whole Health
400
Q3
eMids Technologies
Encore Health Resources
na
Q3
UDG Healthcare plc
Cambridge BioMarketing Group
35
Q3
Netsmart Technologies
DeVero
na
Q3
Internet Brands
WebMD
3751
Q3
Medasys SA
Netika
9.8
Q3
Quality Systems
EagleDream Health
23
Q3
Allscripts Healthcare Solutions
Enterprise Information Solutions business 
from McKesson
185
Q3
PRA Health Sciences
Symphony Health Solutions
530
Q3
PRA Health Sciences
Parallel 6
49.7
Q3
TELUS Corporation
Kroll Computer System
250
Q3
Decision Resources
Context Matters
na
Q3
eSolutions
RemitDATA
na
Q3
AIM Specialty Health
Applied Pathways
na
Q3
UnitedHealth Group
The Advisory Board Company
1300
Q3
Tabula Rasa Healthcare
SinfoniaRx
132
Q3
Navicure
ZirMed
750
Q3
Livongo Health
Diabeto
na
Q3
UDG Healthcare plc
MicroMass Communications
76
Q3
Konica Minolta
InviCRO
285
Q4
MEDecision
AxisPoint Health
na
Q4
WellTok
Tea Leaves Health
90
Q4
Express Scripts
EviCore Healthcare
3600
11
Copyright 2018 Healthcare Growth Partners
Appendix A
Strategic M&A Highlights, continued
41
Quarter
Acquiror
Seller
Deal Size ($mm)
Q4
Azalea Health Innovations
Prognosis Innovation Healthcare
na
Q4
Medsphere Systems Corporation
Stockell Healthcare Systems
na
Q4
Navigant Consulting
Quorum Consulting
70
Q4
Diplomat Pharmacy
Pharmaceutical Technologies, Inc.
47
Q4
Roche Holding AG
Viewics
na
Q4
Koninklijke Philips Electronics NV
Analtytical Informatics
400
Q4
Jensen Hughes
Russell Phillips and Associates
na
Q4
Koninklijke Philips NV
Forecare
35
Q4
Koninklijke Philips NV
VitalHealth
na
Q4
Cigna Corp.
Brighter
na
11
Copyright 2018 Healthcare Growth Partners
Appendix B
Financial Sponsor Buyout Highlights
42
Quarter
Acquiror
Seller
Deal Size ($mm)
Q1
GPB Capital Holdings
Healthcare Software assets of NTT Data 
(nka Cantata Health)
na
Q1
Spectrum Equity; Cressey & Company
Verisys Corporation
na
Q1
Cedar Springs Capital; Crestline Investors
CarePayment Technologies
na
Q1
HGM; HOV Services Limited; Quinpario
Acquisition Corp; Saratoga Investment 
Corp
SourceHOV
na
Q1
Vesey Street Capital Partners
HealthChannels
na
Q1
Thompson Street Capital Partners
Revenue Management Solutions
na
Q1
JMI Equity
HealthX
na
Q1
Frontier Capital
AccessOne MedCard
na
Q1
Genstar Capital
Bracket Global LLC
na
Q1
Riverside Partners
Medical Reimbursements of America
na
Q1
ABRY Partners
Integrity Tracking, dba MobileHelp
130
Q1
Veritas Capital
Harris Corporation, Government IT 
Services Business
690
Q2
LLR Partners
Kemberton Healthcare
na
Q2
Cimarron Healthcare Capital; Leavitt 
Equity Partners; RAF Industries
Advanced Medical Pricing Solutions
na
Q2
GTCR
GreatCall
na
Q2
Summa Equity
Ivbar Institute
na
Q2
New Mountain Capital
OneDigital health and Benefits
560
Q2
IFM Investors Pty Ltd
Genie Solutions
na
Q2
Platform Partners; Galtney Partners
Beneplace
na
Q2
CareCapital Advisors; Clayton, Dublier & 
Rice
Carestream Dental
na
Q2
Main Capital Partners
Verklizan
na
Q2
Great Hill Partners
Quantum Health
na
Q2
Nexus AG
CHILI GmbH
na
Q2
Great Hill Partners
PartsSource
na
Q2
Temasek Holdings
Global Healthcare Exchange
na
Q2
Warburg Pincus
Modernizing Medicine
231
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Copyright 2018 Healthcare Growth Partners
Appendix B
Financial Sponsor Buyout Highlights, continued
43
Quarter
Acquiror
Seller
Deal Size ($mm)
Q3
Silver Lake, General Atlantic
A Place For Mom
na
Q3
EQT Equity
Certara
na
Q3
Graphite Capital
Random42
na
Q3
MTS Health Investors
Accuity Delivery Systems
25.5
Q3
Primus Capital
EnableComp
65
Q3
Sverica Capital Management
Womens Health USA
na
Q3
FNFV Group
T-System
200
Q3
Yukon Partners
Practice Insight
na
Q3
Clanwilliam Group
Healthlink Ltd
na
Q3
Anthem, Blue Cross and Blue Shield 
Association, Francisco Partners, Health 
Care Services Corp., Humana
Availity
na
Q4
Water Street Healthcare Partners
Employee Benefit Management Services
na
Q4
Primus Capital
Care Operative (aka Healthcare Bluebook)
na
Q4
777 Partners
ML Healthcare Services LLC
na
Q4
New Mountain Capital
Cytel
na
Q4
Accel-KKR
InfoMC
na
Q4
Odyssey Investment Partners
TrialCard
na
Q4
Leonard Green Partners
MDVIP
560
Q4
The Carlyle Group
Centerstone Insurance and Financial 
Services (dba BenefitMall)
na
Q4
Praesidian Capital, Topspin Partners
Remedy Health Media
na
Q4
New Mountain Capital
CenseoHealth
na
Q4
New Mountain Capital
Advance Health 
na
Q4
Beecken Petty O'Keefe & Company
Zenith American Solutions
na
Q4
Level Equity Management, The Carlyle 
Group
Net Health Systems
na
Q4
The Carlyle Group
MedRisk
na
Q4
Symphony Corporation
Influence Health Empower Patient Portal
na
Q4
The Carlyle Group
Visionary RCM Infotech India
na
11
Copyright 2018 Healthcare Growth Partners
Appendix C
Private Equity Highlights (non-buyout)
44
Quarter
Investor
Target
Raise ($mm)
Q1
Edgewood Partners Insurance Center; Two 
Sigma Ventures
Decisely Insurance Services
60
Q1
Blue Cross and Blue Shield Association; 
Sandbox Industries
Higi
na
Q1
Hakim Unique Internet
California Healthcom Group (Haoeyou)
40
Q1
Updata Partners
Jellyvision Lab
20
Q1
American Investment Holdings; EDB 
Investments; General Catalyst Partners; 
Investment AB Kinnevik; Microsoft
Livongo Health
52.5
Q1
Omron Healthcare; Mayo Clinic
AliveUSA (dba AliveCor)
30
Q1
Express Scripts
Mango Health
na
Q1
Venrock; Allen & Company; Ev Williams 
Obvious Ventures; Redmile Group; Scifi VC
Virta Health
37
Q1
Warburg Pincus
Alignment Healthcare
115
Q1
F-Prime Capital Partners; WuXi Healthcare 
Ventures
Fluidnet Corporation (aka Ivenix)
50
Q1
BOE Technology
Cnoga Medical
50
Q1
Allen & Company; AME Cloud Ventures; 
Andreessen Horowitz; Asset Management 
Ventures; CRV; Data Collective; GV; 
Innvoation Endeavors; Polaris Partners; 
Spectrum 28 Capital; The Founders Fund
Freenome
65
Q1
Edgewood Partners Insurance Center; Two 
Sigma Ventures
Decisely Insurance Services
60
Q1
Blue Cross and Blue Shield Association; 
Sandbox Industries
Higi
na
Q1
Hakim Unique Internet
California Healthcom Group (Haoeyou)
40
Q1
American Investment Holdings; EDB 
Investments; General Catalyst Partners; 
Investment AB Kinnevik; Microsoft
Livongo Health
52.5
Q1
Omron Healthcare; Mayo Clinic
AliveUSA (dba AliveCor)
30
Q1
Express Scripts
Mango Health
na
Q1
Venrock; Allen & Company; Ev Williams 
Obvious Ventures; Redmile Group; Scifi VC
Virta Health
37
Q1
Warburg Pincus
Alignment Healthcare
115
Q1
F-Prime Capital Partners; WuXi Healthcare 
Ventures
Fluidnet Corporation (aka Ivenix)
50
11
Copyright 2018 Healthcare Growth Partners
Appendix C
Private Equity Highlights (non-buyout), continued
45
Quarter
Investor
Target
Raise ($mm)
Q1
BOE Technology
Cnoga Medical
50
Q1
Allen & Company; AME Cloud Ventures; 
Andreessen Horowitz; Asset Management 
Ventures; CRV; Data Collective; GV; 
Innvoation Endeavors; Polaris Partners; 
Spectrum 28 Capital; The Founders Fund
Freenome
65
Q1
Wellcome Trust; Goldman Sachs; Four 
Rivers Group; Benchmark Capital; The 
Founders Fund
ResearchGate
52.6
Q1
Tencent Holdings
Beijing Interactive Peak (Good Doctor 
Online)
200
Q1
Koninklijke Philips NV
OneLife Health
na
Q1
IDG Capital Partners; Matrix Partners; 
Qiming Weichuang Venture Capital
Beijing Hilficom Information Consulting 
(dba Anxin Doctor)
29
Q1
Ascension Ventures
Intelligent Medical Objects
na
Q1
Foresite Capital Management; 
NanoDimension Management Limited; 
Paladin Capital Group; Spruce Capital 
Partners; Venrock
Muse Biotechnology
23
Q1
TA Associates Management
Retriever Medical/Dental Payments
na
Q1
Dragoneer Investment Group; JMI Equity
PointClickCare
85
Q1
Goldman Sachs
M3
457
Q1
Temasek Holdings
Verily Life Sciences
800
Q1
Accel Partners; Bpifrance
Doctolib
28
Q1
Kleiner Perkins Caufield & Byers
Nuna
90
Q1
Altimeter Capital Management; CapitalG; 
Matrix Partners; Recruit Holdings; RSI I 
Fund; ruNet Holdings; Sequoia Capital; 
Sofina Societe Anonyme; Tencent 
Holdings; Thrive Capital
Practo Technologies
55
Q1
Biomatics Capital; GV; Maryland Venture 
Fund; Venrock; Arch Venture Partners
Aledade
20
Q1
Merck; GE Ventures; Peloton Equity; Zaffre
Investments; Morgan Stanley
Arcadia Healthcare Solutions
30
Q1
iCarbonx; The Invus Group
PatientsLikeMe
100
Q1
Primus Capital
Payspan
na
Q2
Spectrum Equity
Headspace
36.7
11
Copyright 2018 Healthcare Growth Partners
Appendix C
Private Equity Highlights (non-buyout), continued
46
Quarter
Investor
Target
Raise ($mm)
Q2
Collaborative Fund; Maverick Capital; 
Norwest Venture Partners; Union Square 
Ventures
Science Exchange
28
Q2
Accel Partners; Index Ventures; Creandum; 
Project A Ventures
Webbhalsa AB (dba KRY)
22.7
Q2
Georgian Partners; Insulet Corporation; 
Mayo Clinic; Canaan Partners; Social 
Capital; Medtronic; Samsung NEXT
Glooko
35
Q2
Searchlight Capital Partners; Silver Point 
Capital
PatientPoint
140
Q2
Health Catalyst Capital Management; 
Vision+; TEXO Ventures; SoftTech VC; 
Lifeline Ventures; B-Fore Capital
BetterDoctor
11
Q2
Acequia Capital; CRV; General Catalyst 
Partners; GV; M13 Inc.; Temasek Holdings; 
Thrive Capital
ClassPass
70
Q2
ABS Capital; BroadOak Capital Partners; 
Pablo Capital
LabConnect
24.5
Q2
S. C. Johnson & Son
Clean Hands Safe Hands
na
Q2
Greenoaks Capital Partners; Jackson 
Square Ventures
ScriptDash (dba Alto)
23
Q2
Johnson & Johnson Innovation; Seventure 
Partners; Mayo Clinic
DayTwo
13.5
Q2
Bessemer Venture Partners; Cross Creek 
Advisors; Flare Capital Partners; 
Greenspring Associates; Greycroft 
Partners; New Enterprise Associates; 
Redpoint Ventures
Bright Health
160
Q2
Balyasny Asset Management; CapitalG; 
Goldman Sachs; Leerink Transformation 
Partners; Pritzker Group Venture Capital
Contextmedia Health (Outcome Health)
500
Q2
Balyasny Asset Management; Fidelity 
Investments; GGV Capital; Kleiner Perkins 
Caufiled & Byers; NBCUniversal Media; 
QuestMark Partners; True Ventures; 
Wellington Management Group
Peloton Interactive
325
Q2
Questa Capital Management
Medrio
30
Q2
Baxter Ventures; MVM Life Science 
Partners
Vital Connect
33
Q2
Thrive Capital; Sound Ventures; Virgin 
Group
Capsule Corporation
20
Q2
5AM Venture Management; Bootstrap 
Incubation; Heritage Provider Network; 
Leerink Transformation Partners
Assay Depot (Scientist.com)
24
Q2
Asia-Pac eCommerce; Penta Global 
Advisors Fund
Guangdong Jianke Pharmaceutical
50
11
Copyright 2018 Healthcare Growth Partners
Appendix C
Private Equity Highlights (non-buyout), continued
47
Quarter
Investor
Target
Raise ($mm)
Q2
Hillhouse Capital Management; Banyan 
Capital; Sequoia Capital; Yunfeng Capital; 
ZhenFund
Shanghai Yitu Network Technology
55.2
Q2
GV
Clover Health
130
Q2
Dell Technologies Capital; Moore Venture 
Partners; Qualcomm Ventures
Edico Genome
22
Q2
Yunfeng Capital; Temasek Holdings; 
Amgen Ventures; 3W Partners
WuXi NextCODE Genomics
75
Q2
Nokia Growth Partners; Xiaomi Ventures
Yuedongquan
14.5
Q2
Glynn Capital Management; GV; Amgen 
Ventures; Redmile Group; dRx Capital; 
Sanofi Genzyme BioVentures; Lux Capital 
Management
Science 37
29
Q2
Undisclosed
Babylon Healthcare Services
60
Q2
GV; Qiming Weichuang Venture Capital; 
SR One
ZappRx
25
Q2
.406 Ventures; CrossLink Capital; New 
Enterprise Associates; Sapphire Ventures
Reltio
40
Q2
CITIC Capital Asset Management
MORE Health
36.3
Q2
Eight Partners
Blink Health
90
Q2
Sanofi Genzyme BioVentures; GE Ventures; 
B Capital Group
Evidation Health
10
Q2
Tech Mahindra; Eight Roads Ventures; F-
Prime Capital Partners
MedWell Ventures
21
Q2
Singapore Technologies Telemedia
Armor Defense
89
Q2
Accel Partners; Aspect Ventures; CRV; 
Highland Capital Partners; Pilot Wall 
Group; The Northwestern Mutual Life 
Insurance Company
Amino
25
Q2
Sequoia Capital
HealthEngine
26.7
Q3
Pamlico Capital
Beckers Healthcare
na
Q3
Aberdare Ventures
Gravie
14.1
Q3
F-Prime Capital Partners
Wellframe
15
Q3
Medica
HealthEdge Software
34
Q3
Cohen Private Ventures
DocAsap
na
Q3
General Catalyst Partners
Color Genomics
80
11
Copyright 2018 Healthcare Growth Partners
Appendix C
Private Equity Highlights (non-buyout), continued
48
Quarter
Investor
Target
Raise ($mm)
Q3
Canaan Partners, New Leaf Venutre
Partners, Tribeca Venture Partners, 
McKesson, New Atlantic Ventures
Truveris
24.7
Q3
F-Prime Capital Partners, Venrock, New 
Enterprise Associates, Portag3 Ventures
Stride Health
23.5
Q3
Draper Fisher Jurvetson, Social Capital, 
True Ventures
Lumity
19
Q3
.406 Ventures, Aetna, Bain Capital, HLM 
Venture Partners, Horizon Healthcare 
Services, Sandbox Industries
AbleTo
36.6
Q3
Accel Partners, IDG Ventures, Kalaari
Capital, Rnt Associates
Cure Fit Healthcare
25
Q3
Sequoia Capital, Sofina Societe Anonyme, 
Zodius Advisors India
MedGenome Labs
30
Q3
Sequoia Capital, Fidelity Investments, 
Altimeter Capital Management, Casdin
Capital, Euclidean Capital, The Knut and 
Alice Wallenberg Foundation
23andMe
250
Q3
Compound, Firstime, Norwest Venture 
Partners, Qumra Capital, SoftBank Capital, 
Spark Capital Partners
Groop Internet Platform (dba Talkspace)
31
Q3
Camden Partners Holdings, HighBar
Partners, Merck & Co., Psilos Group, TPG 
Growth
PatientSafe Solutions
25
Q3
360 Capital, Alychlo NV, Balderton Capital, 
Invoke Capital
Sophia Genetics
30
Q3
Index Ventures, Redmile Group, Refactor 
Capital, Western Technology Investment, 
Y Combinator
Call9
24
Q3
Undisclosed
98point6
19.5
Q3
Hearst Health Ventures
Moffitt Genetics (dba M2Gen)
75
Q3
Elsewhere Partners
Relatient
na
Q3
Alta Partners, Questa Capital 
Management, US Acute Care Solutions
DispatchHealth
30.8
Q3
Khosla Ventures, True Ventures, Angel 
Investor
Deep Genomics
13
Q4
Canaan Partners, New Enterprise 
Associates, Bessemer Venture Partners
WellTok
25.5
Q4
Beyond Ventures, eGarden Ventures, 
G10 Anson Roadobi Partners, Hong 
Kong Entrepreneurs Fund, Mfund, 
Yuantai Investment Partners
Prenetics
40
11
Copyright 2018 Healthcare Growth Partners
Appendix C
Private Equity Highlights (non-buyout), continued
49
Quarter
Investor
Target
Raise ($mm)
Q4
Eight Roads Ventures
Doctorlink
26.3
Q4
General Catalyst Partners, Pillar 
Companies, Refactor Capital, 8VC, 
Danhua Capital, kdT Ventures
PathAI
14.9
Q4
LabCorp
MC10
na
Q4
Cigna Corp., GIS Strategic Ventures, 
Hermed Alpha Industrials Co., Hikma
Ventures, MAYWIC Select Investments, 
Merck & Co., Safeguard Scientifics
Medivo (dba Prognos.ai)
20.5
Q4
Perceptive Advisors
Counsyl
80
Q4
Ascension Ventures, GE Ventures, 
Intermountain Healthcare, Safeguard 
Scientifics, Social Capital, Amgen 
Ventures, Medidata Solutions, Merck & 
Co., Roche Venture Fund
Syapse
30
Q4
Kleiner Perkins Caufield & Byers, Kaiser 
Permanente Ventures, Providence 
Ventures, Peterson Ventures, Maverick 
Ventures, EPIC Ventures, Bessemer 
Venture Partners
Collective Medical Technologies
47.5
Q4
Andreessen Horowitz, CRV, First Round 
Capital
Health IQ
34.6
Q4
Insight Venture Partners
LeanTaas
26
Q4
GE Ventures, Northwell Ventures, Varian 
Medical Systems, DNA Capital, Emergent 
Medical Partners, Temasek Holdings, New 
York Presbyterian Fund, ORI Capital
Arterys
30
Q4
Bpifrance, Eurazeo
Doctolib
41.6
Q4
TT Capital Partners
Revel LLC
17
Q4
Avista Capital Holdings
United BioSource Corporation
na
Q4
Lerer Hippeau Ventures, Greycroft
Partners, Blue Pool Capital, Advancit
Capital, Canvas Venture Fund, Female 
Founders Fund, Angel Investors
Thrive Global
30
Q4
Insight Venture Partners, Arena Ventures, 
Pear Ventures, Switch VC
Aaptiv
38
Q4
China Electronics Corp., China Renaissance 
Partners, Sequoia Capital, Tencent 
Holdings
Medlinker
60.5
Q4
The Founder Fund, Thrive Capital, Martin 
Ventures, SV Angel
Cedar, Inc.
13
Q4
Venrock, Biomatics Capital
Aledade
23
11
Copyright 2018 Healthcare Growth Partners
</p>