Healthcare Cyber Security 2023: Key M&A Themes and Future Trends

Exec Summary:

There have been 49 healthcare cybersecurity M&A deals this year as of June 18, 2023.

This number is up from 45 deals in 2022. The most active acquirers in the healthcare cybersecurity M&A space in 2023 have been Symphony Technology Group (10 deals), Thoma Bravo (7 deals), and Insight Partners (6 deals).

The reasons for healthcare cybersecurity M&A deals in 2023 include:

• To expand product and service offerings. M&A deals can help companies expand their product and service offerings by acquiring companies with complementary technologies or capabilities.

• To enter new markets. M&A deals can help companies enter new markets by acquiring companies with a presence in those markets.

• To achieve economies of scale. M&A deals can help companies achieve economies of scale by combining their operations and resources.

• To reduce competition. M&A deals can help companies reduce competition by acquiring their competitors.

The healthcare cybersecurity M&A landscape is expected to remain active in 2023 and beyond. As the healthcare industry continues to face increasing cybersecurity threats, healthcare organizations are increasingly looking to M&A as a way to improve their cybersecurity posture.

Key M&A Themes

• The rise of managed security services providers (MSSPs). MSSPs are companies that provide a range of cybersecurity services to healthcare organizations, such as threat detection and response, vulnerability management, and incident response. The demand for MSSPs is growing as healthcare organizations face increasing cybersecurity threats. As a result, we are likely to see more M&A activity in the MSSP space in the coming years.

• The convergence of IT and OT security. IT and OT (operational technology) security are becoming increasingly converged, as healthcare organizations rely on more and more connected devices. This convergence is creating new challenges for healthcare organizations, as they need to protect both their IT and OT networks from cyberattacks. As a result, we are likely to see more M&A activity in the OT security space in the coming years.

• The increasing focus on data privacy and security. The healthcare industry is subject to a wide range of data privacy and security regulations, such as HIPAA and GDPR. As these regulations become more stringent, healthcare organizations are increasingly looking for ways to improve their data privacy and security posture. As a result, we are likely to see more M&A activity in the data privacy and security space in the coming years.

• The growing importance of artificial intelligence (AI). AI is increasingly being used in healthcare cybersecurity to automate tasks, detect threats, and respond to incidents. AI-powered solutions can help healthcare organizations to improve their security posture and reduce the risk of cyberattacks. As a result, we are likely to see more M&A activity in the AI cybersecurity space in the coming years.

• The need for integrated solutions. Healthcare organizations need cybersecurity solutions that can protect their entire environment, including their IT, OT, and cloud networks. Integrated solutions can help healthcare organizations to improve their security posture and reduce the risk of cyberattacks. As a result, we are likely to see more M&A activity in the integrated cybersecurity solutions space in the coming years.

Future Trends

• The increasing sophistication of cyberattacks. Cyberattacks are becoming increasingly sophisticated, as attackers are using more advanced techniques to exploit vulnerabilities in healthcare organizations' systems. As a result, healthcare organizations need to be constantly vigilant and invest in cutting-edge cybersecurity solutions.

• The growing importance of cloud security. Healthcare organizations are increasingly moving their data and applications to the cloud. This shift has created new cybersecurity challenges, as cloud environments are more complex and difficult to secure. As a result, healthcare organizations need to have a strong cloud security strategy in place.

• The increasing regulation of healthcare cybersecurity. Governments around the world are increasingly regulating healthcare cybersecurity. This regulation is designed to protect patients' data and ensure that healthcare organizations are taking appropriate steps to protect their systems from cyberattacks. As a result, healthcare organizations need to be aware of the latest regulations and make sure that they are compliant.

These are just some of the key M&A themes and future trends in healthcare cybersecurity. As the healthcare industry continues to evolve, it is likely that these trends will continue to develop.

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Healthcare Cyber Security:

Healthcare cybersecurity is the practice of protecting sensitive patient data and healthcare information systems from unauthorised access, use, disclosure, disruption, modification, or destruction.

Healthcare organisations are increasingly targeted by cyberattacks, as they hold some of the most valuable and sensitive data in the world. The goals of healthcare cybersecurity are to:

• Protect the confidentiality of patient data. This means ensuring that only authorized individuals can access patient data.

• Protect the integrity of patient data. This means ensuring that patient data is not modified or tampered with.

• Protect the availability of patient data. This means ensuring that patient data is accessible when it is needed.

Healthcare organisations can implement a number of measures to improve their cybersecurity posture, including:

• Implementing strong security controls, such as firewalls, intrusion detection systems, and data encryption.

• Educating employees about cybersecurity risks and best practices.

• Conducting regular security assessments to identify and mitigate vulnerabilities.

• Responding promptly to security incidents.

Healthcare cybersecurity is an ongoing process, as new threats emerge and evolve all the time. Healthcare organizations need to be constantly vigilant and take steps to protect their data and systems.

Here are some of the specific challenges that healthcare organizations face in cybersecurity:

• The increasing use of connected devices in healthcare. These devices are often not as secure as traditional IT systems, making them more vulnerable to attack.

• The growing number of cyberattacks targeting healthcare organizations. These attacks are becoming more sophisticated and targeted, making them more difficult to defend against.

• The lack of awareness of cybersecurity risks among healthcare employees. This can lead to human errors that can be exploited by attackers.

• The complex regulatory environment governing healthcare data privacy and security. Healthcare organizations need to comply with a wide range of regulations, which can be a challenge.

Despite these challenges, healthcare organizations can take steps to improve their cybersecurity posture. By implementing strong security controls, educating employees about cybersecurity risks, and conducting regular security assessments, healthcare organizations can help to protect their data and systems from attack.

Key themes in healthcare cybersecurity M&A:

Here are some specific examples of healthcare cybersecurity M&A deals that have taken place in recent years:

• In 2021, FireEye was acquired by Symphony Technology Group for $1.2 billion. FireEye is a leading provider of cybersecurity solutions, including AI-powered threat detection and response solutions. This acquisition demonstrates the growing interest in the healthcare cybersecurity market from both private equity firms and strategic buyers.

• In 2020, Tenable Network Security was acquired by Thoma Bravo for $5.7 billion. Tenable is a leading provider of vulnerability management solutions. This acquisition demonstrates the growing importance of vulnerability management in healthcare cybersecurity.

• In 2019, CrowdStrike was acquired by Symphony Technology Group for $1.1 billion. CrowdStrike is a leading provider of endpoint security solutions. This acquisition demonstrates the growing importance of endpoint security in healthcare cybersecurity.

These deals demonstrate the growing interest in the healthcare cybersecurity market from both private equity firms and strategic buyers. As the healthcare industry continues to face increasing cybersecurity threats, it is likely that we will see more M&A activity in this space in the coming years.

Future Trends:

The healthcare cybersecurity landscape is constantly evolving, and there are a number of future trends that are likely to shape the M&A landscape in this space.

The rise of managed security services providers (MSSPs). MSSPs are companies that provide a range of cybersecurity services to healthcare organizations, such as threat detection and response, vulnerability management, and incident response. The demand for MSSPs is growing as healthcare organizations face increasing cybersecurity threats. As a result, we are likely to see more M&A activity in the MSSP space in the coming years.

The convergence of IT and OT security. IT and OT (operational technology) security are becoming increasingly converged, as healthcare organizations rely on more and more connected devices. This convergence is creating new challenges for healthcare organizations, as they need to protect both their IT and OT networks from cyberattacks. As a result, we are likely to see more M&A activity in the OT security space in the coming years.

The increasing focus on data privacy and security. The healthcare industry is subject to a wide range of data privacy and security regulations, such as HIPAA and GDPR. As these regulations become more stringent, healthcare organizations are increasingly looking for ways to improve their data privacy and security posture. As a result, we are likely to see more M&A activity in the data privacy and security space in the coming years.

The growing importance of artificial intelligence (AI). AI is increasingly being used in healthcare cybersecurity to automate tasks, detect threats, and respond to incidents. AI-powered solutions can help healthcare organizations to improve their security posture and reduce the risk of cyberattacks. As a result, we are likely to see more M&A activity in the AI cybersecurity space in the coming years.

The need for integrated solutions. Healthcare organizations need cybersecurity solutions that can protect their entire environment, including their IT, OT, and cloud networks. Integrated solutions can help healthcare organizations to improve their security posture and reduce the risk of cyberattacks. As a result, we are likely to see more M&A activity in the integrated cybersecurity solutions space in the coming years.

These are just some of the future trends that are likely to shape the M&A landscape in healthcare cybersecurity. As the healthcare industry continues to evolve, it is likely that these trends will continue to develop.

Engage with the HealthTech Community

HealthTech M&A Newsletter from Nelson Advisors - Market Insights & Analysis for Founders & Investors. Subscribe today! https://lnkd.in/e5hTp_xb

HealthTech M&A Advisory by Founders for Founders, Owners & Investors. Buy Side, Sell Side, Growth and Strategy mandates - Email lloyd@nelsonadvisors.co.uk

HealthTech Thought Leadership from Nelson Advisors - Industry Insights & Analysis for Founders, Owners & Investors. Visit https://www.healthcare.digital