The global outlook for M&A in the digital health and particularly the telehealth sector has never been brighter than today. Telehealth’s global growth story, its inherent potential for upheaval in the healthcare industry and the immense potential to create profits continues to attract the interest of dealmakers internationally.
According to McKinsey & Co., in 2020 46% of U.S. healthcare consumers were using telehealth services, up from 11% in 2019. Total annual revenues for U.S. telehealth companies were "only" USD 3 billion prior to the COVID-19 pandemic, however, McKinsey estimates that this annual figure could soon rise to a staggering USD 250 billion in the US alone. The market also soars in Europe. Market Data Forecast, a research provider, estimates that telehealth in Europe will grow at a compound annual growth rate of 14% annually for the next five years from a market size of approx. EUR 9 billion in 2020 to at least EUR 19 billion in 2025.
This exceptional growth story is underpinned by unprecedented regulatory change. As described in detail in our global DLA telehealth guide for a number of jurisdictions, the pandemic has caused healthcare systems around the globe to rapidly and often radically rethink the delivery of medical care. This ongoing development that continuously creates new business opportunities already causes and will, together with the very fragmented market today, continue to attract the attention of venture capital, private equity as well as large corporate investors to the telehealth market.
Unsurprisingly, in Germany, we expect interest of (international) dealmakers to increase in the coming years as well. Although telehealth in Germany is not yet the "white hot M&A market" it already is in the US, over the past months, we have already seen a rising number of international companies exploring the idea of entering and/or consolidating the German market through acquisitions. In the future, we expect this trend to intensify and investors to try even harder to capitalize on the sector's exceptional growth story as well as favourable overall market conditions.
“I think telehealth’s going from non-critical urgent care to behavioral healthcare to dermatology to chronic care management to post-acute-care management to helping seniors age at home and everything under the sun, except for–this is an overstatement–but except for surgery,”