In the first half of 2024, the public markets as a whole demonstrated a robust performance, with major indices having seen revenue and EBITDA multiples trickle back up towards the favorable conditions seen in the low interest rate environment of 2021. This rally was predominantly driven by the strong performance of AI giants and a noticeable easing of inflationary pressures. The Federal Reserve’s decision in June to signal only a single rate cut for the year, contrary to earlier predictions of multiple reductions, did not dampen the market’s momentum, culminating in a vigorous finish to H1 2024.
Conversely, Digital Health vendors struggled to keep pace with the broader market’s growth. Despite this, there has been notable IPO activity within the sector, namely the public market debuts of Waystar and Tempus AI. Looking ahead to the latter half of the year, the capital markets face continued uncertainty, particularly with the upcoming election casting a shadow over future prospects.
Private placement activity continued to be dominated by small-scale deals, with transactions under $10M comprising 45% of aggregate deal volume in Q2 2024. The Life Sciences sector emerged as the largest end market, surpassing Health Systems. In the M&A arena, deal volume decreased by 15% QoQ to 76 deals, reflecting levels consistent with 2022 and 2023. Nonetheless, M&A deal value YTD reached $27B, accounting for 88% of 2023’s total. The $1.5B take-private transaction of Model N by Vista Equity was the standout deal of Q2.