digital health valuation multiples 2022

Noom and Oura targeted employers interested in modernizing health and wellness benefits, Calibrate sought out payer reimbursement, and Whoop explored applications in remote monitoring.6, D2C businesses that have established strong consumer DNA and proven unit economics could be well-positioned to add more healthcare services under their brand umbrellas. Revenue valuations have come in. Sectors ranging from telemedicine to medical devices to AI healthcare all raised record-high funding. We hope 2022 is a turning point for the digital health industry when it comes to clinical outcomes and would encourage all companies to make these necessary investments even from their earliest days. But downhill paths carry both positive and negative connotations, and the following lessons from 2022 can help to make the most of the current market: Read on for our analysis of 2022s biggest digital health moments and trends, plus takeaways to make for a smoother slide into 2023. Bottoms-up sales strategies may become the norm as companies evangelize clinicians as their customers and focus on use cases spanning clinician-focused fintech products, retail, healthcare, and online community-building ecosystems. [15] VALUATION The three most common valuation approaches - the Income, Market and Cost Approaches - can all be applied when valuing a physical therapy practice. As weve shared before, some of 2022s missing mega deals stemmed from growth-stage digital health companies reluctance to raise in this market environment for fear of the dreaded down round. But the principle driving revenue multiples is that startups of a particular industry operate in similar . Valuation Multiples Over Last 12 Months The single biggest question facing my business today is what valuation multiple is the right one to use when pricing private financing rounds in this space. Fund documents StarCapital Premium Bonds plus. Interestingly, the average round size in 3Q20 was $41.2 million, greater than the year-to-date . 2021 saw a record-breaking number of new companies and newly minted unicorns leveraging telemedicine as a tool to deliver care virtually. Similarly, we have seen a dramatic shift in market valuation multiples for digital health companies. An overview of Bellevue Healthcare Strategies. For information on opportunities and risks as well as tax information, please refer to the current detailed sales prospectus. For digital health insights targeted to your needs, drop us a note. The re-emergence of the independent clinician also gives rise to a new go-to-market channel: the new D2C or Direct to Clinician. As clinicians have increasingly become consumer-facing during the pandemic while educating the public via social media, they have become an addressable class of customers with specific needs, uncoupled from the four walls of a clinic or hospital. All things equal, based on our experience we estimate digital health valuations rose at least 30% from pre- to post-pandemic. We expect to see a record number of acquisitions as large digital health companies, both public and private, recognize the need to add mental health to their offerings to deliver comprehensive care., There has been much debate about the tension between DTC companies doing good by expanding access or doing harm by scaling irresponsibly. 1. Hampleton Partners' latest Healthtech M&A Market Report highlights how the Covid-19 pandemic revealed the inadequacies and opportunities in the world's healthcare systems and how venture and growth capital poured into digital health companies, raising a total of $57.2 billion in funding in 2021, an increase of 79 per cent from 2020. Depending on your domicile and the investor type that you select, you will have full or restricted access to the information due to legal reasons. Widely known examples are Apollo Hospitals in India; Pulse by Prudential in Asia; Ping An in China; and the global Vitality program by Discovery in South Africa. In the current VC climate, strong horses will beat out unicornsthough investors run the risk of betting on the wrong equine. Digital-health startups banked $10.3 billion in the first half of 2022, trailing the $14.7 billion the industry raised in the first half of 2021. Global venture capital funding, including private equity and corporate VC, into digital health was the highest ever in the first quarter 2021 at $7.2 billion, according to Mercom Capital Group. In 2021, there were eight completed IPOs and 15 SPAC mergers in the digital health space, which was by far the . Last year we predicted that the commoditization of telemedicine would unlock holistic virtual care. Some studies even estimate that 30% of the remaining healthcare workforce are considering leaving their full-time hospital jobs in the next two years. Moreover, pure-play telehealth and mental health companies have underperformed not just the market, but also the peer group (see the chart below). 6a CISO. MedCity News - Healthcare technology news, life science current events Lifestance Health Group is the only pure mental health comp that I can find. Tech, Trends and Valuation. 2022 marks the 13th anniversary of the passage of the HITECH Act which ushered in the digital era in healthcare. What is the right multiple? All things considered, we believe the outlook for the 2022 investment year is extremely attractive. Why does this matter? The funds are currently registered for public distribution offer in the following countries: Luxembourg, Switzerland, Germany, Austria, Spain and Portugal. Fifty-nine percent of that funding came from 48 "mega deals" that involved over $100 million each, including . In this period of difficult economic changes, much of digital healths up came down (see: unicorn stumbles, big ticket IPO tanks). How the medtech industry can capture value from digital health [Online]. Investment Company/Closed Ended Equity Funds, European Equities - Entrepreneur Strategies, Bellevue Emerging Markets Healthcare (Lux), Specialized Regional & Multi Asset Strategies, Bellevue Sustainable Entrepreneur Europe (Lux), Bellevue Entrepreneur Swiss Small & Mid (Lux), Emerging Markets Healthcare sector comeback, We expect M&A activity to increase in the coming quarters., Healthcare Observer: Major breakthrough in Alzheimers treatment, Regional healthcare strategies: China in focus. For that reason, I created a Next Twelve Months (NTM) revenue forecast index for each of the companies in our peer group. This is what we finance types call a re-rating. Teladoc Health is a pure-play tech-enabled disruptive healthcare peer that was recently trading north of 20x forward revenue. In a tight labor market, employers are keen to attract and retain the best and most diverse workforce and many employees expect certain benefits as part of the compensation package. Digital Health Valuation Trends in 2022 - What If Fund documents Bellevue Funds and Bellevue Healthcare Strategy, Prospectus, Key Investor Information Document (KID), fund contract as well as the annual and semi - annual reports of the Bellevue Medtech and Services fund established under Swiss law in the category "Other Funds for Traditional Investments" are available free of charge from : Switzerland : Swisscanto Fondsleitung AG, Bahnhofstrasse 9 , CH - 8001 Zrich or Bellevue Asset Management AG, Seestrasse 16 , CH - 8700 Kusnacht. 2022 Spending Benchmarks for Private B2B SaaS Companies. The most successful companies in this infrastructure category will enable virtual care companies to go to market quickly, be flexible to evolve as companies grow, and integrate seamlessly with other tools and API platforms. Volatile active user numbers and declining profitability due to weakened advertising revenue deeply depressed Big Tech stock prices, and we expect that these pressures will further push the MAMAA crowd toward new revenue opportunities outside of tried-and-true social media advertising. The front-and-center focus on efficiency gains boosted investment for nonclinical workflow solutions. Take a look at the above chart which shows the average EV/NTM Revenue multiple for the peer group. Hampleton Partners, an M&A advisory firm specialised in technology companies, has recently published their 2022 Report on the state of HealthTech. Finally, stay up to date with the latest headlines in healthcare technology and Rock Health news by subscribing to the Rock Weekly. Of course, I am not hoping this happens, but when it does, I will not be surprised. Pharmaceutical & life sciences deals outlook. Now, startups with strong financials and balanced valuations are attracting investor and acquirer interest. Lyra hit unicorn status in 2020 in a pandemic-fueled funding round, and Modern Health, BetterUp and Ginger . Rarely do we find a pure-play public comp that we can compare to a startup. In late 2021 and early 2022, what went up started to come down. Trends in Digital Health Funding and Transactions: A Tremendous Year So Far 2022. Value on investment alongside return on investment, Additional predictions from healthcare leaders. Last year, we talked about the critical role that Advanced Practice and Ancillary Providers (APAPs) would play in clinical teams. At the beginning of 2022 when Big Tech companies were awash in cash reserves, MAMAA players propped up internal healthcare experiments and waded into new territory with partnerships and acquisitions. Investors and . I believe that the right valuation multiple is above where the market is now (likely in the 7x to 10x forward revenue range broadly with some upside exceptions). Additionally, startups that once expected to mega-raise their way into the unicorn club were faced with investors who were less willing to take flights of fancy on $1B valuations; as a result, they may have chosen to delay big raises. We need to find ways to help health systems reduce admin burden and free up clinician time. The most impactful findings of the "2022 RIA Deal Room" report include: Eye-opening valuations and a flattening curve. Others expanded their revenue potential by diversifying into B2B. I was slightly curious regarding whether or not equity research analysts believed that the operating environment would deteriorate over the coming 12 months. Increasingly, benefit managers are now looking at social factors as well when making purchasing decisions. Provider venture capital funds remained the top corporate investors by deal volume, and provider organizations increased their acquisitions by 5x, from three deals in 2021 to 15 in 2022 (acquisition targets included specialty care coordinators and telemedicine startups). In August 2021, the median public B2B SaaS company hit a record high value at 16.9x its current run-rate annual recurring revenue (ARR). For example, Amazon now has built an omnichannel experience between online, prime delivery, and wholefoods shopping experiences. Meta applied its artificial intelligence chops to protein folding, and Apple invested in proving out the clinical fidelity of its wearable devices. As a16z. Is Digital Turbine Stock At Fair Valuation? What Investors Should Staffing crises and wage inflation hiked up operating costs faster than CMS-influenced rate adjustments, squeezing health system margins rather than allowing hospitals to pass costs through to payers. Using this category of valuation multiple indeed has its merits; however, it is also important to note the loopholes as well. If you can't read this PDF, you can view its text here. Join our community of 3,000 + Founders, Entrepreneurs & Advisors. This marked a reversal in capital concentration (a funding environment where late-stage companies attract a disproportionate share of total dollars invested), a phenomenon prevalent in digital health from 2019-2021. Healthcare Investments and Exits Report Annual 2022 - Silicon Valley Bank As an investor, Im starting to anticipate that great deals will once again be available, at better prices. The company . Today, we are seeing a crop of new platforms that are viable partners for us.. Revenue is increasing, so why are stock prices going down? We believe changes in consumer demand and reimbursement patterns will drive the adoption of this same business model across other medical specialties where companies can aggregate demand for services to negotiate better rates with insurers. 2022 Public SaaS Valuation Multiples. At one point, the group traded at 15.4x NTM revenue and most recently traded at 4.6x NTM revenue. Whenever investment starts to pick up again, digital healths next growth trajectory will look more like 2011-2019 than 2019-2021a slower and more sustained path that better reflects startup risk and prioritizes companies taking measured paths to success. Oops! By clicking on "Accept", you confirm that you agree to the legal provisions.