Digital Health | Q3 2024 Market Review

In Q3 ‘24, the private Digital Health market showcased promising trends, where there were notable upticks in both the number of M&A deals and the average ticket size in private placements. The increase in larger transactions reflects growing confidence in the sector’s potential as firms seek strategic partnerships to enhance their offerings and expand their reach. There is also growing enthusiasm by investors in the advancements in artificial intelligence and machine learning applications within Digital Health, albeit in workflow automation or diagnostics. These developments not only underscore the sector’s resilience but also position it for continued growth amid evolving market dynamics.

Still, the landscape for Digital Health remains uncertain, particularly with increasing regulatory scrutiny surrounding generative AI applications in healthcare and the looming impact of the upcoming U.S. elections. These could influence both investment sentiment and policy direction in the sector.

Private placement activity in Q3 ‘24 remained heavily driven by small-scale deals, with transactions under $10M accounting for 44% of total deal volume. Health Systems reclaimed its position as the largest end market this quarter, surpassing Life Sciences, which had led in the previous quarter. Q3 ’24 M&A deal value rebounded after a lackluster Q2, while deal volume experienced a modest rise. YTD deal value reached $43B, a $13B outperformance over 2023’s total deal value. Notably, this quarter featured three $1B transactions, which accounted for $10B+ of Q3 ‘24 deal value.