2021 was generally a very challenging year for small and mid-sized growth stocks. Rock Health Advisory provides guidance on digital health strategy, access to proprietary funding data, and in-depth perspectives on the digital health market. 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. As Bessemer has been investing in healthcare for four decades, last year was unlike anything we have seen before. Types of Valuation Multiples - Equity & Enterprise Value Multiples 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. We also expect M&A activity to pick up significantly. Inflationary pressures burned consumers discretionary dollars. Venture Funding For Mental Health Startups Hits Record High As - Forbes Sectors ranging from telemedicine to medical devices to AI healthcare all raised record-high funding. We assume that large healthcare companies are eyeing deals with disruptive, fast-growing digital health companies. By using the website www.bellevue.ch, you confirm that you have read, understood and accepted the general information provided by the Bellevue Group AG as well as these legal provisions. 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. In the absence of cheap cash to purchase consumers or a captive audience of pandemic-time buyers, D2C companies were forced to look hard at operational efficiency and customer lifetime value. Retail clients: according to Art. Given the current economic situation, its possible that consumers will spend even more conservatively in the months aheadwhich means that macro headwinds for D2C wont be relenting. Only one company, Amwell, has analysts who believe that their revenue will be lower in one year than it is now. Ahh, 2022: the year of inflation, stock drops, and a whopping seven (7!) The digital health market is on fire. Legal entities or natural persons to which such prohibitions apply must not access or use these sites. [Online]. Fund documents StarCapital Premium Bonds plus. 2021 Update: Physical Therapy Clinics & Centers Bellevue Asset Management (Deutschland) GmbH: You can obtain the sales prospectus, the annual reports and the german key investor information documents free of charge from Bellevue Asset Management (Deutschland) GmbH, and also from banks and financial advisers. Since that time, our industry has quickly matured from the infant stages of technology adoption (think: EMRs, HIE, PHM) to its current teenage digital health self. Mass General Brigham announced plans to grow its hospital-at-home programs from 25 patients to 200 over the next two years, while 12-hospital health system Allina Health partnered with Flare Capital Partners to spin out hospital-at-home company Inbound Health ($20M), delivering extra-clinical care across 185 different diagnoses. Take a look at the above chart which shows the average EV/NTM Revenue multiple for the peer group. For others, 2023s continued pressures might be a final nail in the coffin, with shuttered doors or acquisitions on the horizon. An example was seen in early 2022 when Stryker issued a takeover bid for Vocera, a leading provider of communication software and hardware for hospitals. The value of revenue is being re-rated by the markets as the macro capital environment tightens. 2 FinSA, Professional/Institutional investors: according to Art. A tech-enabled renaissance for the independent clinician, 6. $230M / (1 + 50%)^5 < Post-money valuation < $230M / (1 + 40%)^5. 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. Nothing on this page is intended to be or should be construed or taken as accountancy, investment, tax or any other kind of advice. 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. Not only did 2022's annual funding total come in at just over half of 2021's $29.3B 2, but it also just squeaked past 2020's $14.7B sum. 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. : 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. We therefore recommend that you check this statement regularly. LGBTQ+ people are a large and growing part of the workforce, with 1 in 5 Gen Z identifying as LGBTQ+. Forty-five percent of provider organizations reported accelerating their software investments in 2022 to streamline operations. Tech, Trends and Valuation. Of course, I am not hoping this happens, but when it does, I will not be surprised. FinTech M&A Market: Trends, Deals & Valuation Multiples. Adopting a more conservative mindset, Q4 2022 saw Big Tech players recenter digital health strategies within their tried-and-true operational fields. The digital health industry is still very early in proving itself on this dimension with many of the market leading and even already public companies lacking gold standard evidence of their clinical efficacy, especially when compared to their offline competitors. Reinforcing our experience, from pre- . There are some companies we can point to that are similar in how they generate revenue, who their customers are, as well as their growth rates and margins, but it is almost always impossible to find the perfect pure-play comp. Rarely do we find a pure-play public comp that we can compare to a startup. H2 2021 averaged $7.1B in quarterly funding, a small decline from the first half of that year. Funding for this value proposition earned third place in 2022 ($2.2B), jumping from seventh place in 2021. In the last year alone, over 200 mental and behavioral health startups received over $4 billion in new capital to scale. If you do not agree with this statement you should refrain from accessing any further pages of this website. Where will the market settle? 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. No recommendation and/or offer for subscription (or for purchase) and/or redemption (or for sale). eCommerce businesses are generally valued on a revenue multiple to reflect high growth potential and recurring or repeat revenue patterns. United States: EV/EBITDA health and pharmaceuticals 2022 - Statista Strategic healthcare M&A rebounded in 2021 from a down year in pandemic-ravaged 2020, with volume up 16% and total deal value rising by 44%, to $440 billion. Refreshingly simple financial insights to help your business soar. Due to the historically low rating, 2022 presents itself with enormous growth potential. We support this omnichannel delivery of care through our care coordinators that navigate members to high performing in-network gastroenterology providers, labs and pharmacies, as needed, said Founder and CEO Sam Holliday of Oshi Health. Hannes Schobinger on LinkedIn: Q4 2022: How did the Swiss valuation performing companies, the valuation premium is much higher. This may involve platforms for career development, benefits, and inspiring company culture and values. These investments in people, processes, and protocols are one of the reasons why best-in-class healthcare companies tend to have lower gross margins than their software counterparts. New "How to Value a SaaS Company" Framework for 2022 - SaaS Capital With all these forces compounded, several hospitals across the U.S. recorded losses of over one billion dollars in 2022. In particular, you should not enter into any investment before you have read the corresponding fund agreement or legal prospectus, the annual and semi-annual reports, the articles of association (as far as they are applicable), as well as all other documents, as required in accordance with local legislation or the regulations applied in the legal jurisdictions or countries in which the corresponding investment fund has been licensed or approved for public offer or sale to the public.rlich sind. The multiple has been sliced over the last year. But spring is on the horizon. A mandatory rule is that the represented . Well, is digital health in a bubble or not? | Rock Health In order to determine whether the investment in shares of a certain investment fund meets your specific requirements and matches your envisaged risks, we recommend that you contact an independent financial adviser. The list below shows some common equity multiples used in valuation analyses. 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. Not only did 2022s annual funding total come in at just over half of 2021s $29.3B2, but it also just squeaked past 2020s $14.7B sum. Privacy policy. Moreover, pure-play telehealth and mental health companies have underperformed not just the market, but also the peer group (see the chart below). The image above is an example of Comparable Company Valuation Multiples from CFI's Business Valuation Course. We also share information about your use of our website with our social media, advertising and analytics partners. While this may sound like a hefty cohort, it pales in comparison to the volume of mega-rounds raised in 2021 (88) and even 2020 (43). Revenue valuations have come in. In short, we do not have the answers. Coming out of 2021's breakthrough year, digital health funding slowed in the first quarter, signaling potentially choppy waters ahead for investors in 2022. 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. Disruptive Healthcare Valuation Multiples in Today's Bear Market All things considered, we believe the outlook for the 2022 investment year is extremely attractive. The multiple has been sliced over the last year. Information on valuation, funding, cap tables, investors, and executives for UCM Digital Health. Later Stage VC: 22-Dec-2022: $2M: 00.00: Completed: Generating Revenue: 4. Investors and . What does this mean for startups? The biggest M&A deal of the year was Data to Decision AG acquisition of MEDIQON GmbHa software company providing data analysis solutions to generate insights capable of driving healthcare sector decisionsfor $30bn. Investors aggressively fundraise into the downturn. 3. 4 paragraph 3-5 and Art. Digital health funding slowed in Q1 2022, Rock Health reports 2022s total funding among US-based digital health startups amounted to $15.3B across 572 deals, with an average deal size of $27M. 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. We need better integration of clinical models to enable the treatment of comorbid conditions, such as Diabetes and Major Depressive Disorder. 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. The numerator is going to be a measure of value, such as equity value or enterprise value, whereas the denominator will be a financial (or operating) metric. The swiss agent is IPConcept (Schweiz) AG, In Gassen 6, PO Box, CH-8022 Zurich. Oops! Pascal Winkler on LinkedIn: Q4 2022: How did the Swiss valuation 10 paragraph 3 and 3ter CISA in conjunction with Art. HealthTech 2022 Valuation Multiples. For example, our portfolio company US Health Partners is assisting cardiologists in breaking free from the traditional hospital structure to run independent practices as they transition to digital and value-based care. We need to find ways to help health systems reduce admin burden and free up clinician time. Specifically, Teladoc Health(NYSE: TDOC) and Lifestance Health Group (NASDAQ: LFST) have underperformed the broader underperforming peer group. In late 2021 and early 2022, what went up started to come down. Austria: Paying and information agent: Zeidler Legal Process Outsourcing Ltd., SouthPoint, Herbert House, Harmony Row, Grand Canal Dock, Dublin 2, Ireland. Emerging new platforms and tools are helping clinicians become more independent and run successful businesses by enabling flexible hours, additional revenue streams, or owning their audience. Enterprise value = Market value of equity + Market value of debt - Cash . Digital health is being consolidated, and that may be good for you - CNBC 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. Disclosed value also surged from $15.1 billion to $38.1 billion. We first saw this shift from a business case to a wellness case in mental health, caregiving, and maternal health. Pharma and biotech M&A will continue to focus on oncology and immunology, but other areas such as central nervous system and cardiovascular diseases as well as vaccines will see interest. Analysis: 2022 Semi-Annual Health IT Market Review - HIT Consultant Disruptive Healthcare Valuations Decline. A few months ago, it was detrimental for a digital health startup to say it was profitableit implied the company wasnt growing fast enough. Lyra hit unicorn status in 2020 in a pandemic-fueled funding round, and Modern Health, BetterUp and Ginger . Funding for digital health ventures reached an all-time high in 2020 with a total of $23.3 billion and the first half of 2021 is already nearing last year'stotal, with $21.5 billion invested. Digital health - WHO | World Health Organization Interestingly, the average round size in 3Q20 was $41.2 million, greater than the year-to-date . When we broadly examine what we call the Disruptive Healthcare peer group to get a sense of what is happening in public markets, this may translate into insights about our market, which is at the intersection of digital health and mental health. If I were the CFO of a startup today, I would be preparing to extend my fume date as long as possible and survive what feels like a pending capital access contraction. The median check size for Series A deals reached an all-time high of $15M in 2022, while median deal sizes shrunk across all other later deal stages.4. The EV/Sales multiple of the Bellevue Digital Health fund portfolio is currently under the long-term range of 6-10x, and about 40% lower than it was 12 month ago. Many Digital Health companies are now at a much more advanced stage of business maturity, their business models have been firmly established, and their path to profitability has gained visibility. Health tech grabbed a serious share of the attention. The exact valuation multiples will range overtime but studying multiples over the last five years we see an average of 7.2x, median of 6.3x. The share of HCIT deals held steady at around 15% of overall . 6a CISO. How are Europe's digital health companies valued? I suspect that as long as investors are seeking yield, then moving further down that risk spectrum into the private markets, valuations in the startup world will not come in. 2022 year-end digital health funding: Lessons at the end of a funding In 2022, there is an opportunity for a new crop of companies to successfully build the connective tissue between the physical and digital worlds. The Digital Health 150 is CB Insights' annual ranking of the 150 most promising digital health startups in the world. Weve all been reminded that you cant fight Mother Nature (aka macroeconomic forces), with D2C startups bearing the brunt of the reminder. Pharmaceutical & life sciences deals outlook. 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. These may be subject to change and the use of the site may be restricted or terminated at any time without prior notice. Revenue multiples for eCommerce businesses tend to be in the range of 0.7-3x. 2022. Other cookies to personalize content and analyze access to our website are only set with your consent. . Hampleton Partners, an M&A advisory firm specialised in technology companies, has recently published their 2022 Report on the state of HealthTech. EBITDA Multiples by Industry | Equidam 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. May 9, 2022 2. It is a 2 day event organised by Riverstone Training and will conclude on 14-Oct-2022. This exodus from traditional healthcare settings can be an opportunity for digital health. MedCity News - Healthcare technology news, life science current events This tells me that analysts believe the operating environment for companies in our space will continue to be at least good, if not improving. Prospectus, the key investor information document ("KID"), the management regulations and the semi-annual and annual reports. If the past two years have demonstrated anything its that healthcare innovation is driven and inspired by patient needs, clinicians, and builders who strive to better the frontlines of care. While we may see some of the valuation gaps between public and private markets narrow in 2022, we continue to be optimistic that the IPO market will remain open and create more opportunities for M&A in our industry. EV/EBITDA Multiple by Sector/Industry 2023 | Siblis Research Digital health startups offering mental healthcare secured the top clinical funding spot in H1 2022, according to the research. Specifically, Teladoc Health(NYSE: TDOC) and Lifestance Health Group (NASDAQ: LFST) have underperformed the broader underperforming peer group. As the digital health field becomes more crowded, clinical outcomes will become a key competitive differentiator, 4. Google returned to its roots and unveiled several medical search initiatives for clinicians and consumers. Digital Health Valuation Trends in 2022 | by Stephen Hays - Medium Interest in media companies is growing. For example, if a startup is showing an annual revenue of $1,000,000, the estimated valuation of this company using revenue multiple valuations by industry will be: Valuation = $1,000,000 * 3.67 = $3,670,000. The information, products, data, services, tools and documents contained or described on this site ("website content") are for information purposes only and constitute neither an advertisement or recommendation nor an offer or solicitation (to buy) or redemption (sell) investment instruments, to effect any transaction or to enter into any legal relations. At-home diagnostics, digital biomarkers, and remote patient monitoring innovation continue to improve the virtual care experience, however, telemedicine isnt a complete replacement for diagnosis or treatment that requires an in-person visit. As detailed in Rock Health's annual year-end report, digital health funding among US-based startups soared to a record $29.1 billion across 729 deals in 2021, nearly doubling the prior year's . We continue to be bullish on clinical models that can integrate and treat comorbidities enabling holistic and longitudinal care. However, these new virtual care clinicians now have multiple options. Pharmaceutical & life sciences: US Deals 2023 outlook - PwC Digital Health: 2022 Annual Report - Lexology Finally, stay up to date with the latest headlines in healthcare technology and Rock Health news by subscribing to the Rock Weekly. However, that field is under some scrutiny. In addition to taking traditional expense reduction efforts and charging new fees, hospital systems evaluated nonclinical and clinical workflow improvements to unlock efficiency gains and reduce provider pain points at work. In day-to-day SaaS company operations, questions like the above are common. 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. Valuation Multiple = Value Measure Value Driver. We use a current run-rate (based off of the most recent quarterly revenue figures) in our valuation calculation because it's readily available, simple to compare across . In fact, the group is down 50% versus the S&P 500, which is up 10% during that period. Our most recent investment, HouseRx, is helping independent physicians in a different way by enabling doctors to run medically integrated dispensing of specialty drugs and helping them connect therapeutics with care journeys, which will ultimately be better for patient adherence and outcomes. The most impactful findings of the "2022 RIA Deal Room" report include: Eye-opening valuations and a flattening curve. Healthcare stakeholders are increasingly joining efforts with HealthTech companies to improve and increase access to remote care. To illustrate the slope of change, Q4 2022s $2.7B in funding sits 68% lower than Q2 2021s summit. Major ASC chains' revenue growth: 11 stats to know Within digital health and in capital markets more broadly, well likely look back on the past several quarters as a macro funding cycle. Pascal Winkler no LinkedIn: Q4 2022: How did the Swiss valuation As a cherry on top, 2021 saw the Fed underestimate percolating inflationary concerns and extend monetary easing measures, inflating asset prices and valuations. McDermott Will & Emery - Amanda Enyeart , Grayson I. DImick , Marshall E. Jackson, Jr. , Lisa Mazur , Dale C. Van . 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. The table below lists the current & historical Enterprise Multiples (EV/EBITDA) by Sector.The multiples are calculated using the 500 largest public U.S. companies.Comparing the current enterprise multiple of a sector/industry to its historical average value can be used to evaluate if the sector is currently undervalued or overvalued.Note: The ratio is not available for the Financials sector as .