Q3 2020 Healthcare Industry Trends

Q3 2020 Key Highlights

The largest transaction in Q3 2020 and year-to-date was TelaDoc’s announced merger with Livongo for $16.6 billion. The combination of TelaDoc and Livongo will create a global leader in consumer-centered virtual care.

Healthcare IT volume represented nearly half of the industry’s aggregate deal activity in Q3 2020.

Q3 2020 Key Trends

Total transaction volume in Q3 2020 increased by 19 percent over Q2 2020, from 124 to 148. Financial sponsors accounted for 40 percent of volume in Q3 2020, compared to 20 percent in Q2 2020.

Total transaction value rose from $2.4 billion in Q2 2020 to $22.6 billion in Q3 2020. This was its highest level over the past seven quarters. If the TelaDoc-Livongo merger is excluded, value still more than doubled during the quarter.

Multiples & Value Trends

The median revenue multiple from 2019 through the 1st 3 Quarters of 2020 improved 17 percent, from 2.3x to 2.7x.

The median EBITDA multiple from 2019 through the 1st 3 Quarters of 2020 gained 22 percent, from 12.4x to 15.1x.

Top Ten Deals Through Q3 2020

The top ten deals by value have seen four new additions since our half year report.

Two of these four transactions were completed by financial sponsors: Madison Dearborn Partners’ announced acquisition of Benefytt Technologies for $629 million in the Healthcare Business Services segment; and Pacific Equity Partners’ announced acquisition of The Citadel Group for $370 million in the Healthcare IT segment.