Veeva has agreed to acquire Crossix for up to $550 million in cash, equity grants and options.
Crossix has developed a healthcare system media and marketing technology platform.
VEEV is paying up for broader and deeper market share with big pharma and biotechs seeking to have greater insight into patients and prospective users.
Quick Take
Veeva Systems (VEEV) announced it has agreed to acquire Crossix for $430 million plus $120 million in equity grants and options.
Crossix operates as a healthcare data and analytics platform for media and marketing purposes.
With the acquisition, VEEV is gaining deeper and broader market share in the big pharma and biotech industries.
Target Company
New York-based Crossix was founded in 2005 to drive greater marketing effectiveness through its analytics platform that connects health and non-health, including Rx, over-the-counter [OTC], clinical, claims, consumer, hospital, and media data among others, for US patients.
Management is headed by Co-Founder and CEO Asaf Evenhaim, who was previously EVP at InterCure.
Crossix’s primary offerings include:
SafeMine
DIFA
Customer Insights
Source: Company website
Market & Competition
According to a market research report by Market Study Report, the global healthcare analytics market is projected to surpass $18.25 billion by 2025.
The US healthcare analytics market accounted for the largest share of the global industry in 2018 and is projected to grow at a CAGR of 12.5% between 2019 and 2025, primarily due to a rising healthcare expenditure, growing demand for better quality services, and technological advancements.
The main drivers for this expected growth include increasing funding for healthcare analytics through VC funds due to a growing interest of investors in healthcare data management technologies, as well as organizations’ continuous efforts to reduce expenses and increase operational efficiencies.
According to another market research report by Technavio, the global healthcare big data spending market will grow by $5.78 billion during the period between 2018 and 2022.
IBM (IBM)
OptumHealth (UHN)
McKesson (MCK)
Allscripts Healthcare Solutions (MDRX)
Cerner (CERN)
Athenahealth
Inovalon (INOV)
Computer Programs and Systems (CPSI)
Change Healthcare (CHNG)
Tenet Healthcare (THC)
GE Healthcare (GE)
Source: Sentieo
Acquisition Terms and Financial
VEEV disclosed the acquisition price and terms as $430 million in upfront cash plus ‘long term equity retention grants valued at approximately $120 million in the aggregate.
Management did not provide a change in financial guidance as a result of the proposed acquisition.
A review of the firm’s most recent published financial results indicate that as of July 31, 2019 it had $1.4 billion in cash and short-term investments and $414.8 million in total liabilities with no long-term debt.
Free cash flow for the six months ended July 31, 2019, was $334.5 million, so VEEV has ample resources and cash flow to close the acquisition of Crossix without undue hardship..
In the past 12 months, VEEV’s stock price has risen 55.7% vs. the broad U.S. Healthcare ETF (IYH) industry’s drop of 7.72% and the S&P 500 Index’ (SPY) rise of 0.64% , as the chart below indicates:
Crossix has been the pioneer in patient data, privacy, and analytics. As we look toward the future of a more patient-centric healthcare system, Asaf and I are excited to join forces to help the industry deliver better patient outcomes.
Pharma firms have a growing need to market to patients but also for understanding and accessing insights about potential patients for clinical trials.
For pharma and biotech firms seeking long-term advantage and reducing trial risk, matching patients with clinical trial opportunities is a significant challenge.
While we don’t know the multiples that Veeva is paying for Crossix, by increasing its market penetration, Veeva is gaining share of mind with the pharma and biotech industries.
VEEV will need to demonstrate in the quarters ahead that it can parlay the deal into continued revenue and earnings growth.
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