HealthTech: 2022 Valuation Multiples

9 March 2022

In the second half of 2021, the trailing 12-month median EV/S multiple was 5.6x up from from a 3.6x the previous period and 3x the year prior.

reports : Exit, Investment, Tech and Valuation

HealthTech – the use of technology to deliver or improve clinical health services to patients – was one of the most active and growing industries of 2020.

While the sector was expanding before COVID-19, the pandemic has caused a critical acceleration toward digitalising systems, with HealthTech solutions booming.

Healthcare stakeholders are increasingly joining efforts with HealthTech companies to improve and increase access to remote care.

Restrains on movements forced most businesses to move their day-to-day operations online, including many health clinics and GPs.

Through HealthTech, and the TeleHealth sub-sector in particular, patients can connect with their doctors and access health care services via videoconferencing and wireless communications from the safety and comfort of their homes.

In turn, doctors can perform electronic consultations as well as monitor their patients remotely for less threatening situations and illnesses. HealthTech has the potential to make healthcare more accessible and convenient far beyond the worldwide pandemic.

Global healthcare funding grew 45% YOY in 2020, and then added a further 79% in 2021, reaching a record $57.2bn invested.

Sectors ranging from telemedicine to medical devices to AI healthcare all raised record-high funding.

The European market in particular saw investment levels skyrocket by a whopping 131% from $2.9bn in 2020 to $6.7bn in 2021.

Healthcare Software (relating to hospital management, patient analytics and pharmaceuticals) was the most active sector, accounting for 65% of transactions.

The biggest M&A deal of the year was Data to Decision AG acquisition of MEDIQON GmbH—a software company providing data analysis solutions to generate insights capable of driving healthcare sector decisions—for $30bn.

According to Rock Health, a US-based venture fund dedicated to digital health, the number of HealthTech unicorns is growing, and share prices for digital health companies have broadly increased since the COVID-19 pandemic took hold.

HealthTech 2022 Valuation Multiples

Hampleton Partners, an M&A advisory firm specialised in technology companies, has recently published their 2022 Report on the state of HealthTech.

In the second half of 2021, the trailing 12-month median EV/S multiple was 5.6x up from from a 3.6x the previous half-year and around 3x the year prior.

Despite reaching higher levels in previous years—up to 26.4x in the first half of 2020, HealthTech EBITDA multiples fell to 12.5x in the second half of 2021. Decreasing EBITDA multiples paired with growing Revenue multiples are not necessarily bad news: in fact they could be a sign of companies within the sectors widening their profit margins.

Although HealthTech companies posted their best-ever multiples in 2021, they are still significantly lower than the SaaS industry median.

The unprecedented number of M&A deals, as well as consistently good—and growing—revenue multiples shows that the HealthTech sector is approaching its maturity, and it’s keeping its momentum in the crucial stages of the post-pandemic era.

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