Executives across the digital health sector shared their insights with MobiHealthNews on whether mergers and acquisitions will continue to play a major role in the industry in 2025. Many pointed to factors such as shifts in the political climate, company valuations and large organizations seeking to expand their portfolios as potential drivers of increased M&A activity.
Sean Mehra, cofounder and CEO of HealthTap
There will be many "quiet" transactions at unflattering terms as struggling startups decide to sell or shut down. Many such deals will be categorized as "market consolidation" but it really is just a wave of company death as a natural market correction from a digital health bubble during the pandemic. Investors will require brand new theses around which tech-enabled services, software platforms and digital therapeutics/diagnostics have a right-to-win in a market with more realistic expectations and less green space.
Neil Patel, head of new ventures at Redesign Health
Consolidation is inevitable. Many companies raised during the 2021/2022 boom face a stark reality check as they try to secure follow-on funding. I expect several well-known names to either consolidate or restructure as investors focus on sustainable unit economics rather than growth at all costs.
Don Woodlock, head of global healthcare solutions at InterSystems
Companies that can successfully integrate acquired technologies and achieve interoperability at scale will be highly sought after and command premium valuations.
Healthcare providers may be cautious about large mergers and acquisitions in 2025, assessing the new presidential administration's stance on the issue and the economic climate we will find ourselves in. If M&A activity remains strong, though, the industry's biggest hurdle will be achieving secure and standardized interoperability between acquired companies – a frequent obstacle to realizing the full potential of these deals. Companies capable of achieving interoperability at scale will have a significant advantage in digital health.
Lisa Suennen, managing partner at American Heart Association Ventures
The pace [of mergers and acquisitions] is likely to accelerate. There is a clear exhaustion among buyers of digital health, all sectors, to manage dozens of unintegrated vendors. Patients/consumers could not be bothered to deal with dozens of apps and devices. We will also see the final chapter in the story of overpriced but interesting digital health companies being acquired as a way to avoid going out of business – that chapter involves the roll-up of the better products into a cohesive suite of solutions.
Ellen Rudolph, cofounder and CEO of WellTheory
Although the M&A market has been more tepid over the last few years, many late-stage digital health companies have been quietly preparing behind the scenes to go public. Given the incoming administration, I expect to see more activity in the IPO space in 2025 for tech-enabled companies like Hinge Health, Omada Health, Sword Health and Maven.
With new public companies on the market and a more supportive regulatory environment, we'll likely see M&A activity in the digital health space pick back up in the next year.
Anu Sharma, founder and CEO of Millie
I don't think [mergers and acquisitions will remain a large part of the digital health space].
It has been two to three years since the last funding round for many digital health companies, and 2024 was a year of reckoning. The best performers were able to raise (although valuations were lower), those with valuable assets got acquired and the rest found themselves trying to extend runways with tightened belts or shutting down.
The dust has largely settled there and M&A activity will be slower after the first half of 2025 now that capital is starting to become more accessible.
Dan Nardi, CEO of Reimagine Care
Given that the fundraising environment continues to be challenging, I anticipate that even more companies will find it hard to raise their next round and could explore M&A options to keep their doors open and products in the market.
Overall, I don't feel like this is bad for the space, as a little consolidation will be helpful to ensure the best solutions rise to the top.
Aaron Neiderhiser, cofounder and CEO of Tuva Health
M&A has the potential to accelerate in 2025 as the Trump administration takes over and Lina Khan exits the FTC [Federal Trade Commission]. In the last few years in tech, M&A slowed substantially as the FTC challenged many acquisitions. This is generally positive for venture capital and the ecosystem in general.
Mudit Garg, CEO and cofounder of Qventus
Despite the downtick of mergers and acquisitions this year, especially in peer transactions because of high interest rates, we expect private equity firms to continue to buy in on low valuations and acquire public health tech companies in 2025. This is evidenced by some transactions we've seen in the past year, like PE firm Altaris' purchase of Sharecare in June and R1 RCM's $8.9 billion take-private in August.
Should interest rates lower in the new year, we can expect more digital health companies to acquire competitors and others in the space to "merge" capabilities, offering more comprehensive solutions for the healthcare system.
Brooke Boyarsky Pratt, CEO and cofounder of knownwell
I suspect [M&A will remain a large part of the space] given how much funding happened in 2020/2021, leaving companies now looking to exit as opposed to raise more capital.
Karl Ulfers, CEO and cofounder of DUOS
With the incoming administration, we certainly expect M&A activity to increase in many different sectors, and the healthcare industry will be no exception. With unified government control, healthcare deal activity is expected to increase due to a more permissive environment, fostering a faster progression of change.
The reason for this is because Medicare Advantage is expected to become more stable and plan growth should continue with an administration that favors privatization. Because of this increased stability, companies will have more equity with underlying balance sheets in a better space, leaving room to capitalize on their stocks and make purchases.
Previous antitrust enforcement slowed M&A and innovation, but there's hope for future deals that can expand access to value-based care without concentrating market power or raising prices.
Looking ahead to 2025, we'll have a more supportive environment for M&A from a regulatory body perspective based on what we're already seeing happening with the Federal Trade Commission's approach to antitrust claims in many other industries, from big tech to pharma.