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Average Multiples and Key Drivers of Digital Musculoskeletal (MSK) M&A deals in 2023



Executive Summary:

Digital MSK (musculoskeletal) companies have seen a decline in valuation multiples in 2023 compared to 2022. This is due to a number of factors, including the overall economic slowdown, rising interest rates, and increased regulatory scrutiny.


In 2022, the average enterprise value (EV) to sales multiple for digital MSK companies was 7.0x. However, as of November 2023, the average EV to sales multiple has declined to 5.5x. This represents a decrease of 21%.


Similarly, the average EV to EBITDA multiple for digital MSK companies has also declined. In 2022, the average EV to EBITDA multiple was 13.0x. However, as of November 2023, the average EV to EBITDA multiple has declined to 10.0x. This represents a decrease of 23%.


Despite the decline in valuation multiples, there is still a strong appetite for investment in digital MSK companies. This is due to the growing demand for digital health solutions in the MSK space. The MSK market is expected to reach $462 billion by 2026, driven by factors such as the aging population, the increasing prevalence of chronic musculoskeletal conditions, and the rising cost of traditional MSK care.


Digital MSK companies are developing innovative solutions to address these challenges. These solutions include digital therapeutics, remote patient monitoring, and virtual care platforms. These solutions have the potential to improve patient outcomes, reduce costs, and increase access to care.


As a result of the strong demand for digital MSK solutions, investors are still willing to invest in these companies, even though valuation multiples have declined. Investors are attracted to the potential for these companies to disrupt the MSK market and achieve significant growth.


Here are some of the key trends to watch in the digital MSK M&A market in 2023 and 2024:

  • Focus on digital therapeutics: Digital therapeutics are software-based solutions that are used to treat or manage medical conditions. Digital therapeutics are a rapidly growing segment of the digital MSK market, and investors are particularly interested in companies that are developing digital therapeutics for chronic musculoskeletal conditions.

  • Increasing consolidation: There has been a trend of consolidation in the digital MSK market in recent years, and this trend is expected to continue in 2023. As companies seek to expand their product offerings and reach a wider audience, they are likely to acquire smaller companies with complementary technologies.

  • Geographic expansion: Digital MSK companies are increasingly expanding their operations into new markets. As the global demand for digital MSK solutions grows, companies are looking to expand into markets where there is a high demand for their solutions.

Overall, the digital MSK M&A market is expected to remain active in 2023. Investors are still interested in investing in innovative digital MSK companies with the potential to disrupt the industry and improve patient care. However, valuation multiples are likely to remain more subdued than they were in 2022.


Corporate Development for Healthcare Technology companies in EMEA


Healthcare Technology Thought Leadership from Nelson Advisors – Market Insights, Analysis & Predictions. Visit https://www.healthcare.digital


HealthTech Corporate Development - Buy Side, Sell Side, Growth & Strategy services for Founders, Owners and Investors. Email lloyd@nelsonadvisors.co.uk


HealthTech M&A Newsletter from Nelson Advisors - HealthTech, Health IT, Digital Health Insights and Analysis. Subscribe Today! https://lnkd.in/e5hTp_xb


HealthTech Corporate Development and M&A - Buy Side, Sell Side, Growth & Strategy services for companies in Europe, Middle East and Africa. Visit www.nelsonadvisors.co.uk



Digital Musculoskeletal (MSK):


Digital MSK, or digital musculoskeletal (MSK) care, refers to the use of technology and digital tools to improve the diagnosis, treatment, and management of conditions affecting the musculoskeletal system, which includes bones, joints, muscles, and other connective tissues.


Digital MSK solutions can include telemedicine consultations, remote monitoring of patient symptoms and progress, digital platforms for self-assessment and self-management, and virtual physical therapy and rehabilitation programs. These solutions aim to make MSK care more convenient, accessible, and cost-effective for patients, while also improving outcomes and reducing the need for in-person visits.


Digital MSK has become increasingly popular in recent years, particularly as a result of the COVID-19 pandemic, which has led to a rise in remote healthcare services. The use of digital tools for MSK care is particularly relevant given the high prevalence of MSK conditions, which affect millions of people around the world and can have a significant impact on quality of life and healthcare costs.


Digital MSK is commonly referred to as digital physical therapy, so what is DPT?


Digital physical therapy refers to the use of technology and digital tools to provide physical therapy services remotely, without requiring in-person visits to a physical therapy clinic or office. Digital physical therapy solutions can include telehealth consultations, remote monitoring of patient symptoms and progress, and digital platforms for self-assessment and self-management.


Digital physical therapy solutions may use a variety of technologies, such as video conferencing, mobile apps, wearable devices, and virtual reality. These tools enable physical therapists to provide personalized treatment plans and exercises, monitor patient progress, and offer support and guidance to patients remotely.


Digital physical therapy has become increasingly popular in recent years due to its convenience, accessibility, and cost-effectiveness. It also allows physical therapists to reach a broader patient population and provide more frequent and consistent care. However, it's important to note that digital physical therapy may not be appropriate for all patients or conditions, and in-person physical therapy may still be necessary for some patients.



Key Drivers of Digital MSK M&A Deals in 2023:


the digital MSK M&A market is poised for continued growth in 2023, driven by the aging population, rising prevalence of chronic MSK conditions, technological advancements, value-based care initiatives, strategic consolidation, and increasing demand for personalized and remote care.


Investors and healthcare stakeholders alike are recognising the potential of digital MSK solutions to improve patient outcomes, reduce costs, and enhance access to care, leading to increased investment and M&A activity in the sector.

  1. Aging Population and Rising Prevalence of Chronic MSK Conditions: The global population is aging, leading to an increase in the prevalence of chronic musculoskeletal (MSK) conditions such as arthritis, osteoporosis, and back pain. These conditions are a major source of pain, disability, and healthcare costs, creating a significant demand for effective and affordable treatment solutions. Digital MSK companies are developing innovative solutions to address these challenges, making them attractive targets for acquisition.

  2. Growing Demand for Digital Health Solutions: The COVID-19 pandemic has accelerated the adoption of digital health solutions across various healthcare sectors, including MSK care. Telehealth, remote patient monitoring, and virtual care platforms have become increasingly popular, providing patients with convenient and accessible care options. Digital MSK companies are at the forefront of this trend, offering solutions that can improve patient outcomes, reduce costs, and increase access to care.

  3. Technological Advancements and Convergence: Advancements in artificial intelligence (AI), machine learning (ML), and data analytics are enabling the development of more sophisticated and personalized digital MSK solutions. These technologies can be used to analyze vast amounts of patient data, identify patterns, and provide personalized treatment recommendations. The convergence of these technologies with traditional MSK care is creating opportunities for innovation and collaboration, driving M&A activity.

  4. Strategic Expansion and Diversification: Established healthcare companies are seeking to expand their product offerings and reach new patient populations through acquisitions of digital MSK companies. This allows them to gain expertise in the digital health space and enhance their value proposition to patients and providers. Additionally, digital MSK companies are merging to consolidate their market positions, share resources, and accelerate growth.

  5. Investor Interest and Funding Landscape: Investors are increasingly recognizing the potential of digital MSK companies to disrupt the traditional MSK care industry and achieve significant growth. This has led to a surge in funding for digital MSK companies, making them more attractive acquisition targets. Investors are particularly interested in companies that are developing digital therapeutics, remote patient monitoring, and virtual care platforms.

  6. Regulatory Landscape and Market Dynamics: The regulatory landscape for digital MSK solutions is evolving, with governments and healthcare organizations establishing guidelines and standards for their use. This creates both opportunities and challenges for digital MSK companies. Acquisitions can help companies navigate the regulatory landscape and gain access to new markets. Additionally, market dynamics such as reimbursement policies and payer preferences are influencing M&A activity.

  7. Geographic Expansion and Global Opportunities: The demand for digital MSK solutions is not limited to developed markets. Developing countries are also experiencing a growing burden of chronic MSK conditions, creating opportunities for digital MSK companies to expand their reach and tap into new markets. Acquisitions can help companies establish a presence in new geographies, gain local expertise, and adapt their solutions to specific market needs.

  8. Talent Acquisition and Skillsets: The digital MSK industry requires specialized skills in areas such as AI, ML, data analytics, and software development. Acquisitions can help companies acquire the talent they need to develop and deploy innovative digital MSK solutions. Moreover, acquisitions can bring together complementary skillsets and expertise, fostering a culture of innovation and collaboration.

  9. Data Acquisition and Strategic Partnerships: Digital MSK companies rely on large datasets of patient data to develop and improve their solutions. Acquisitions can provide access to valuable patient data, enabling companies to gain deeper insights into patient populations and refine their products. Strategic partnerships can also provide access to data and expertise, accelerating innovation and expanding market reach.

  10. Cost Synergies and Operational Efficiency: Acquisitions can lead to cost synergies through economies of scale, shared resources, and streamlined operations. This can improve the financial performance of the combined entities, making them more attractive to investors and partners. Acquisitions can also enhance operational efficiency by eliminating redundant processes and optimising workflows.



Future of Digital Musculoskeletal (MSK) M&A:


The future of digital MSK (musculoskeletal) M&A is expected to be characterised by continued consolidation, expansion into new markets, and a focus on innovative technologies.

  1. Continued Focus on Digital Therapeutics: Digital therapeutics are software-based solutions that are designed to treat or manage medical conditions. This segment of the digital MSK market is expected to experience significant growth in the coming years, as companies invest in developing innovative digital therapeutics for a wider range of MSK conditions.

  2. Accelerated Innovation and Cross-Industry Partnerships: The digital MSK space is expected to see a surge of innovation, as companies collaborate with each other and with other industries to develop new and more effective solutions. This includes partnerships with technology companies, healthcare providers, and device manufacturers.

  3. Emerging of MSK Super-Platforms: Larger companies are likely to emerge as MSK super-platforms, offering a comprehensive suite of digital MSK solutions that address the entire patient journey. These platforms will provide patients with a single point of entry for their MSK care and will integrate with other healthcare systems.

  4. Focus on Data-Driven Solutions: Data is becoming increasingly important in the digital MSK space, as companies use it to develop personalized treatment plans, identify risk factors, and predict patient outcomes. This will lead to the development of more sophisticated data analytics tools and the creation of new data-driven business models.

  5. Global Expansion: Digital MSK companies are expanding their reach into new markets, driven by the growing demand for MSK care solutions around the world. This expansion is being facilitated by advancements in technology, such as cloud computing and data security.

Overall, the future of digital MSK M&A appears bright. The market is expected to experience significant growth in the coming years, driven by a combination of demographic trends, technological advancements, and changing consumer preferences.


Investors and healthcare stakeholders are recognizing the potential of digital MSK solutions to improve patient care, reduce costs, and enhance access to care. This recognition is fuelling M&A activity and encouraging innovation in the space.


Corporate Development for Healthcare Technology companies in EMEA


Healthcare Technology Thought Leadership from Nelson Advisors – Market Insights, Analysis & Predictions. Visit https://www.healthcare.digital


HealthTech Corporate Development - Buy Side, Sell Side, Growth & Strategy services for Founders, Owners and Investors. Email lloyd@nelsonadvisors.co.uk


HealthTech M&A Newsletter from Nelson Advisors - HealthTech, Health IT, Digital Health Insights and Analysis. Subscribe Today! https://lnkd.in/e5hTp_xb


HealthTech Corporate Development and M&A - Buy Side, Sell Side, Growth & Strategy services for companies in Europe, Middle East and Africa. Visit www.nelsonadvisors.co.uk



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