Sector snapshot: software royalty rates for telehealth solutions

One software-savvy sector with strong growth rates is telehealth. Telehealth relates to the distribution of health-related services and information via electronic information and telecommunication technologies. It allows for long-distance patient and clinician contact, care, advice, reminders, education, intervention, monitoring, and remote admissions. Delivery can occur within four distinct domains: live video (synchronous), store-and-forward (asynchronous), remote patient monitoring, and mobile health.

Telemedicine can be beneficial to patients in isolated communities and remote regions, enabling them to receive care from doctors or specialists far away without the need to travel. Remote patient monitoring through mobile technology can reduce the need for outpatient visits and enable remote prescription verification and drug administration oversight, potentially significantly reducing the overall cost of medical care. It may also be preferable for patients with limited mobility.

For companies offering telehealth solutions, the value of developed software typically ranges between 8% and 15% of the company’s enterprise value. Usual software licensing royalty rates range from 4.5% to 7% of revenue (see table below).