Digital health is everything, everywhere

Digital health is everything, everywhere unknown Digital health is everything, everywhere PitchBook News & Analysis

The COVID-19 pandemic led to an explosion in digital services throughout the healthcare system, from telehealth to online care navigation and digital pharmacies.

Our new Digital Health Report, as we launch full-time analyst coverage of the vertical, highlights that VC investment fell by half in 2022 compared to its 2021 peak.

Innovation remains strong in digital health, as startups find new ways to deliver care through home health programs, digital therapeutics, virtual reality, and hybrid care models.

But the industry is also encountering significant point solution fatigue among payers and employers. And startups also face the prospect of customers critically evaluating spending, a headwind for both direct-to-consumer and employer-facing business models.

Startups that offer ways to lower the cost of care with improved convenience while demonstrating a path to profits are likely to emerge stronger on the other side of the current environment.

As healthcare systems continue to become more expensive and more complicated, care coordination services are becoming an increasingly important tool in the toolbox.

Looking ahead, the digital health vertical is unlikely to lead the way on the IPO front, but we anticipate many startups will be looking to make the jump to the public markets when the tide turns.

We are also keeping an eye on new digital health unicorns given the current higher bar for funding. News that Headway is in talks to raise $100 million at a $1 billion valuation is a sign of robust VC investment to come in behavioral health.

PitchBook clients can access the full version of our Digital Health Report. Non-clients can download a free preview.

Best,

Aaron DeGagne, CFA
Emerging Technology Analyst, Healthcare