Also, J.P. Morgan Healthcare Conference was very positive with some companies already giving pro-active guidance of their results after being challenged by investors worried over Covid-impact. Drivers toward this cycles crest in mid-2021 have been well documented. We recommend individuals and companies seek professional advice on their circumstances and matters. Increasingly, benefit managers are now looking at social factors as well when making purchasing decisions. In short, we do not have the answers. The management company may decide to cancel the arrangements it has made for the distribution of the units of its collective investment undertakings in accordance with Article 93a of Directive 2009/65/EC and Article 32a of Directive 2011/61/EU. Forty-five percent of provider organizations reported accelerating their software investments in 2022 to streamline operations. Revenue multiples for B2B SaaS companies declined rapidly throughout 2022, with median multiples for Q4 below pre-pandemic levels, at 5.8x. . The sites are intended exclusively for use by legal entities and natural persons having their registered office or residing in countries in which the investment funds or the related subfunds or share classes of the Bellevue Group have been properly licensed or approved for publicoffer or sale in accordance with the applicable local legislation. In addition to dealing with frontline priorities, 2022 saw key health systems continue to carve out brainspace to expand and explore new businesses that would diversify revenue streams in years to comean important balance even as tough times bias toward short-term solutions. We see three prominent themes emerging: Lastly, the siloed nature of care doesnt only exist between the virtual and the physical world, it also exists among specialties. As we redesigned GI care into a patient-centered, value-based model, we recognized that our virtual care supports many important clinical needs, but we also needed to bridge our services with in-person care like colonoscopies and diagnostic tests. Google returned to its roots and unveiled several medical search initiatives for clinicians and consumers. In all other countries, the funds may, if any, via "Private Placement" according to the local applicable laws. COVID-19 continues to put a strain on our healthcare system and cause burnout to the heroes who have been on the frontlines fighting this pandemic. Between Q3 2019 and Q2 2021, investors continuously increased investments into digital health quarter-over-quarter for seven straight quarters, with one dip in Q2 2020. You can read more about his story here. About What If Ventures What If Ventures exists to invest in mental health and digital health focused startups. Medly Pharmacy, which operates a full-service digital pharmacy, saw . 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. What is the right multiple? Fund documents StarCapital Equity Value plus, StarCapital Multi Income, StarCapital Strategy 1 and StarCapital Dynamic Bonds. In a market where late-stage transaction volume has plummeted, we anticipate that 2022s cohort of larger Series A deals may experience above average value attrition, risking down rounds at their Series B raises or later. These new companies are great examples of the new breed of digital MSOs serving the independent practitioner. You can also find us on twitter and LinkedIn. 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). 2021 saw a record-breaking number of new companies and newly minted unicorns leveraging telemedicine as a tool to deliver care virtually. Lifestance Health Group is the only pure mental health comp that I can find. Similarly, we have seen a dramatic shift in market valuation multiples for digital health companies. By 2028, it's expected that this number will reach $720.44 billion, with a CAGR of 25.25% during the forecast period of 2022 - 2028. December 7, 2022. This tells me that analysts believe the operating environment for companies in our space will continue to be at least good, if not improving. About the Author: Stephen Hays After decades of addiction and struggling with bipolar disorder, Stephen was fortunate to receive help and has focused his attention on funding solutions to the problems he lived with. Big H2 2022 splashes from retail giants Walmart and Walgreens have raised the stakes for primary care, at-home, and omnichannel care delivery expansion. Health systems werent the only ones facing uphill battles in 2022. Specifically, Teladoc Health(NYSE: TDOC) and Lifestance Health Group (NASDAQ: LFST) have underperformed the broader underperforming peer group. This exodus from traditional healthcare settings can be an opportunity for digital health. Mobile privacy updates gave way to rising customer acquisition costs (CAC); for some D2C digital health startups, CAC is estimated to have rocketed from $150 in 2018 to $500-$1,000 in 2022. U.S.-based digital health startups brought in almost $30 billion in 2021, almost doubling the total investment the year prior. Ulili Onovakpuri, Managing Partner, Kapor Capital, Investors interested in strong horses spent 2022 scoping out earlier-stage opportunities. Be sure to check out Rock Health's Digital Health Funding Report. Even companies where investors generally want to see more proof that their strategies work, show very good return potential, and levels of risk that are tolerable in view of their significant corrections and the investment communitys modest expectations. As Avi Dorfman, founder and CEO of Clearing told us: As telemedicine becomes increasingly mainstream, digital infrastructure companies with turnkey offerings will emerge, enabling entrepreneurs to focus product & engineering resources on the creation of personalized patient experiences. Of course, I am not hoping this happens, but when it does, I will not be surprised. Inflationary pressures burned consumers discretionary dollars. By clicking on "Accept", you confirm that you agree to the legal provisions. Particularly for health systems, 2022 may be remembered as the year things went upside down. Although HealthTech companies posted their best-ever multiples in 2021, they are still significantly lower than the SaaS industry median. performing companies, the valuation premium is much higher. According to the Digital Health Funding and M&A 2021 First Half Report released by Mercom Capital, the first half of 2021 closed with $14.7 billion invested across 372 US digital health deals with a $39.6 million average deal size. Excluding COVID-19 and behavioral care visits, patient encounters were 6.2% lower compared to early 2019, suggesting that some patients permanently forwent pandemic-delayed care. Take a look at the above chart which shows the average EV/NTM Revenue multiple for the peer group. Stephen Hays, Founder of What If Ventures www.whatif.vc a mental health focused venture capital fund and host of the Stigma Podcast. Funding for Digital Health Companies has continued to grow year on year. Investors aggressively fundraise into the downturn. The indications for the new year are good. Deal Type Date Amount Raised to Date Post-Val Status Stage; 5. We expect future M&A activity in the data center industry to be largely driven by the shrinking supply of available, high-quality data center real estate, which will continue to push valuation multiples higher. As a cherry on top, burnout pushed record numbers of clinicians to retire or work fewer hours, which kept health systems in crisis modeand paying crisis wages. The S&P Healthcare Services Index decreased by 13.4% in January compared to the S&P 500 Index, which decreased 5.3%. In January: The sectors that experienced the highest growth were Consumer Directed Health/Wellness (up 8.5%), Assisted/Independent Living (up 2.6%) and Distribution (up 1.0%). Growth and crossover funds that are new to digital health have been particularly active in digital health (e.g., Tiger Global made 25 digital health investments in 2021) On the other hand, 55% of digital health investors in 2021 were repeat investorssimilar to the average 58% repeat investors across the prior three years 2018-2020 Multiples dropped in four of the seven sub-sectors whose multiples we track, led by outsourcing (down from 19.2x to 15.0x) and managed care (down from 17.3 to 14.2). The first half of 2020 has seen unprecedented digital health activity: record levels of venture funding of $5.4 billion 1 ; megadeals, such as Teladoc Health's $18.5 billion acquisition of Livongo; and accelerated virtual care delivery, such as telehealth and remote monitoring. All but one company have rising revenue expectations on the whole across all analysts. Registered address: Spaces, Mappin House, 4 Winsley Street, London W1W 8HF. As an investor, Im starting to anticipate that great deals will once again be available, at better prices. The management company may decide to cancel the arrangements it has made for the distribution of the units of its collective investment undertakings in accordance with Article 93a of Directive 2009/65/EC and Article 32a of Directive 2011/61/EU. This percentage includes digital health companies that sell exclusively to consumers, as well as those that sell to consumers in addition to other customer types (e.g., employers, providers, payers). In day-to-day SaaS company operations, questions like the above are common. Despite . Through the largest virtual network of LGBTQ+-specialized clinicians, FOLX offers end-to-end virtual primary care, gender-affirming services (e.g., hormone therapy, counseling), sexual and reproductive health (e.g, PrEP), community (e.g. 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). Later Stage . But spring is on the horizon. In Switzerland you can obtain sales prospectus, the annual reports and the german key investor information documents free of charge from the agent and also from the paying agent. Representative agent in Switzerland Waystone Fund Services (Switzerland) SA, Avenue Villamont 17, CH-1005 Lausanne and paying agent in Switzerland: DZ PRIVATBANK (Schweiz) AG Mnsterhof 12, PO Box, CH-8022 Zrich. Bellevue SICAV: The Bellevue Funds (Lux) SICAV is admitted for public offering and distribution in Switzerland . Rarely do we find a pure-play public comp that we can compare to a startup. Not to mention, conservative VC activity shortened cash runways. And while these companies did not perform as well in the public markets in 2021 as in prior years, we are confident that the overall basket of digital health assets is more mature and valuable than ever before. What will differentiate virtual care companies is outstanding clinical outcomes for their patients built upon best-in-class clinical protocols, as well as personalized and delightful consumer-centric experiences that put the whole patient first. An increasing number of venture funds are entering the space. HGP Releases its July 2021 Semi-Annual Digital Health Market Review July 22, 2021. As you can see from our index of disruptive healthcare peers, the group has been drastically underperforming the broader S&P 500 over the last 12 months leading into January 2022. Why does this matter? The front-and-center focus on efficiency gains boosted investment for nonclinical workflow solutions. As we start the new year, we at BVP are excited to forge ahead and partner with audacious healthcare entrepreneurs who want to create revolutions of their own. Past performance is not an indication or guarantee of the future performance of the investment. The funding slowdown was especially severe in the second half of the year, with Q4'22 funding clocking in at $10.7bn the lowest quarterly level . Report. The best healthcare entry points exist where teams already hold expertise (fertile ground remains in these familiar pastures). Jennifer Bellin, VP of Marketing, Artemis Health: The market has seen an influx of healthcare point solutions over the past few years. What is occurring in the public markets, and how do these developments impact startups and VCs in the digital health and mental health markets? By Steve Kraus, Sofia Guerra, Andrew Hedin, Morgan Cheatham, $14.6 billion across 464 companies in 2020, we saw a drop in the number of visits and declining satisfaction across consumers with telemedicine in 2021, has increased wages for per-diem and travel nursing and Allied Health 3x in 12 months, Roadmap: Enabling entrepreneurship in the creator economy. According to research firm CB Insights ' latest annual report on the State of Fintech in 2022: " funding reached $75.2bn in 2022 marking a 46% drop from 2021, but up 52% compared to 2020. In our 10 laws of healthcare, we talked about the importance for healthcare companies to demonstrate strong clinical and financial ROI. End-to-end automation with human-in-the-loop AI will decrease the amount of manual administrative work, decrease staff burnout rates, and increase patient access to medication in healthcare., Ogi Kavazovic, Cofounder and CEO, and Tesh Khullar, Cofounder and President, HouseRx: Further consolidation in specialty pharmacy space, likely led by PBMs acquiring specialty pharmacy competition, which once again will result in fewer patient options and a suboptimal patient experience.. Today, we are seeing a crop of new platforms that are viable partners for us.. We saw a record of more than 30 IPOs and 80 mergers and acquisitions. The behavioral health industry is coming off a record number of transactions and as multiples remain high, companies are having to get smarter about . Restrains on movements forced most businesses to move their day-to-day operations online, including many health clinics and GPs. The next mental health startup to reach a billion dollar valuation was Calm in 2019. Currently, the Digital Health sector is valued significantly lower than at the beginning of 2021. For employers, health plans, and life science firms bracing for cost challenges or new mandates in 2023not to mention the impending end of the COVID-19 public health emergencywe hope health systems 2022 moves set the tone for all enterprises balancing the immediate with long-term innovation decisions. However, we believe that a highly selective portfolio of fast-growing, transformative and disruptive companies offering digital technologies that improve healthcare services and systems while lowering costs can quickly bounce back from short-term stock market trends. Health systems strategizing for the years ahead are coming to realize that their beyond-the-hospital care offerings must stand up to a growing pool of competitors. The swiss agent is IPConcept (Schweiz) AG, In Gassen 6, PO Box, CH-8022 Zurich. Ultimately, virtual care companies will be early adopters of these new tools and as they scale, help transition the pre-existing ecosystem away from legacy platforms. This is reflected in the significantly better performance of large-cap healthcare companies as tracked by the Russell 1000 Healthcare Index (+23.3%) compared to the performance of the Russell 2000 Healthcare Index (-17.6%), which focuses on small and mid-cap companies. This year's winning companies include startups working on interoperability and data integration, home care and monitoring, AR/VR in healthcare, hybrid care, and more. As the digital health field becomes more crowded, clinical outcomes will become a key competitive differentiator, 4. For information on opportunities and risks as well as tax information, please refer to the current detailed sales prospectus. A mandatory rule is that the represented . 10 paragraph 3 and 3ter CISA in conjunction with Art. Due to the historically low rating, 2022 presents itself with enormous growth potential. Stephen Hays, Founder of What If Ventures www.whatif.vc a mental health focused venture capital fund and host of the Stigma Podcast. MedCity News - Healthcare technology news, life science current events Join our community of 3,000 + Founders, Entrepreneurs & Advisors. The Bellevue funds have NOT been licensed for public offer or sale to the public in the United States in accordance with the US Investment Company Act of 1940 or the US Securities Act of 1933, or in Canada, Japan, Taiwan, Malaysia, Hong Kong or Israel in accordance with the laws in force in those countries. 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). Companies able to unlock non-obvious types of workers and a new supply of practitioners are well-positioned to scale in a world of limited clinician supply. If you can't read this PDF, you can view its text here. We believe that companies with deep clinical services alongside therapeutic regimes will become enduring care models for patients and establish market leadership in the long term. The financial products mentioned on this site are not suitable for all investors. In 2022, there is an opportunity for a new crop of companies to successfully build the connective tissue between the physical and digital worlds. Especially for young D2C digital health entrants that needed to invest heavily upfront to establish brand recognition and consumer leads, last years unfavorable macro conditions raised roadblocks for market penetration. Mental Health Startup Community Slack Channel We have created a slack channel for founders, investors, and supporters of the mental health startup ecosystem. By Peter Micca, partner, National Health Tech Practice leader, and Neal Batra, principal, Deloitte & Touche LLP. The funds are currently registered for public distribution offer in the following countries: Luxembourg, Switzerland, Germany, Austria, Spain and Portugal. However, 2022 didnt go as well for D2C digital health players, with only 37% of the digital health companies that raised in 2022 selling directly to consumers, compared to 43% in 2021.5 Not to mention, D2C stocks felt crushing pressure in the public marketsand not just in the healthcare industry.

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