The dramatic drop in funding for the digital health market has led to growing merger and acquisition discussions.
A recent Rock Health report profiled the four types of digital health buyers in the merger and acquisition market:
- Acquisitions for inorganic growth: Some buyers can use acquisition as a way to show growth to investors. As funding slows down, acquisitions can prove to investors that a company is serious about growth.
- Acquisitions that enhance core operations: Digital health companies can pursue acquisitions that will help them streamline their operations. Often, companies aim to have their cost savings through newly acquired efficiencies cover the acquisition price.
- Acquisitions that add new features: Companies can look to acquisitions that will complement their current product portfolio.
- Disruptive acquisitions: Disruptive acquisitions are acquisitions that reshape a market and introduce a new competitor. Amazon's planned acquisition of One Medical is an example of a disruptive acquisition.