digital health valuation multiples 2022

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. 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. Teladoc Health is a pure-play tech-enabled disruptive healthcare peer that was recently trading north of 20x forward revenue. 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. 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 multiple has been sliced over the last year. Not to mention, conservative VC activity shortened cash runways. 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. 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. In 2021, we saw a tidal wave of resignations across employment categories, sending shockwaves throughout healthcare. A tech-enabled renaissance for the independent clinician, 6. 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 number of startups in digital health will increase even faster next year as entrepreneurs jump into the fray out of sheer frustration that our pre-existing healthcare system, despite the learnings from COVID, doubles down on old strategic plans and the traditional fee for service system which has proven time and again to neither lower cost nor improve quality, said Ming Jack Po, Founder and CEO of Ansible Health. Thus, the technology that these services are built upon should not be reinvented every time. The answer is valuation. Strong growth momentum and non-cyclical demand put Digital Health stocks in an excellent position to deliver a pleasing performance in 2022. Stephen Hays, Founder of What If Ventures www.whatif.vc a mental health focused venture capital fund and host of the Stigma Podcast. The behavioral health industry is coming off a record number of transactions and as multiples remain high, companies are having to get smarter about . 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. Nothing on this page is intended to be or should be construed or taken as accountancy, investment, tax or any other kind of advice. Prospectus, the key investor information document ("KID"), the management regulations and the semi-annual and annual report are available free of charge in German from Bellevue Asset Management (Deutschland) GmbH, your advisor or intermediary, the paying agents, the relevant custodian bank or from the management company IPConcept (Luxembourg) S.A. (socit anonyme), 4, rue Thomas Edison, L-1445 Luxembourg, Luxembourg, https://www.ipconcept.com. However, we are certainly preparing for any outcome. Ambitious hospitalathome initiatives were launched to free up hospital beds, allow top of license practice, and reimagine care pathways. 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. I was slightly curious regarding whether or not equity research analysts believed that the operating environment would deteriorate over the coming 12 months. 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. Finally, stay up to date with the latest headlines in healthcare technology and Rock Health news by subscribing to the Rock Weekly. Deal Type Date Amount Raised to Date Post-Val Status Stage; 5. Companies like Headway and Alma have proven successful in helping providers, who historically only took cash pay, access insurance coverage and therefore increase their patient census. It is a 2 day event organised by Riverstone Training and will conclude on 14-Oct-2022. 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. But overall, the average revenue multiple of 2.3x to 2.6x is 50% to 60% lower than the revenue multiples of tech companies in 2022. 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. Disruptive Healthcare Valuations Decline. For others, 2023s continued pressures might be a final nail in the coffin, with shuttered doors or acquisitions on the horizon. Jennifer Bellin, VP of Marketing, Artemis Health: The market has seen an influx of healthcare point solutions over the past few years. It is explicitly stated, that alternative fund products are not allowed for public distribution in any country and that they may only and exclusively be solicited to institutional and qualified private investors according to the applicable local laws of each country. As the digital health field becomes more crowded, clinical outcomes will become a key competitive differentiator, 4. Tech, Trends and Valuation. The value of revenue is being re-rated by the markets as the macro capital environment tightens. With all these forces compounded, several hospitals across the U.S. recorded losses of over one billion dollars in 2022. For example, in mental health, the massive uptick in need has driven a huge amount of activity and access, however clinical and financial outcomes remain opaque. Meta applied its artificial intelligence chops to protein folding, and Apple invested in proving out the clinical fidelity of its wearable devices. Digital health startups offering mental healthcare secured the top clinical funding spot in H1 2022, according to the research. Moreover, pure-play telehealth and mental health companies have underperformed not just the market, but also the peer group (see the chart below). 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. 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. Legal entities or natural persons to which such prohibitions apply must not access or use these sites. You can also find us on twitter and LinkedIn. Why does this matter? The purpose for a Global Strategy on Digital Health is to promote healthy lives and wellbeing for everyone, everywhere, at all ages. We recommend individuals and companies seek professional advice on their circumstances and matters. In fact, the group is down 50% versus the S&P 500, which is up 10% during that period. 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. Specifically, Teladoc Health(NYSE: TDOC) and Lifestance Health Group (NASDAQ: LFST) have underperformed the broader underperforming peer group. Rock Healths databases are continuously assessed and updated as new information becomes available. Rock Health Advisory provides guidance on digital health strategy, access to proprietary funding data, and in-depth perspectives on the digital health market. Rated 4.3 by 3 people. 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. Investors are wary of unicorns spells, but theyre on the lookout for strong horses: startups that dont rely on the promise of magical growth but are instead grounded in demonstrated cost savings, clinical workflow improvements, and interest from market buyers. In 2022, there is an opportunity for a new crop of companies to successfully build the connective tissue between the physical and digital worlds. Investment decisions make use of equity multiples especially when investors look to acquire minor positions in companies. 5 paragraph 1 and 3-4 FinSA and Art. 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. We also expect M&A activity to pick up significantly. 2021 was huge for health tech2022 may be bigger. In the second half of 2021, the trailing 12-month median EV/S multiple was 5.6x up from from a 3.6x the previous half-year and around 3x the year prior. However, if capital flows begin to tighten as capital access tightens, we could be in store for a sharp pullback in startup valuations as well. The next mental health startup to reach a billion dollar valuation was Calm in 2019. 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. How much do SaaS companies spend on customer support or marketing? Currently, the Digital Health sector is valued significantly lower than at the beginning of 2021. Finerva is a trading name of Lydford Advisory Limited, a company registered in England and Wales, number 08655612. Prospectus, the key investor information document ("KID"), the management regulations and the semi-annual and annual reports are available free of charge in German from Bellevue Asset Management (Deutschland) GmbH, your advisor or intermediary, the paying agents, the responsible depositary (UBS Europe SE, Bockenheimer Landstrasse 2-4, D-60306 Frankfurt am Main) or from the management company Universal-Investment-Gesellschaft mbH, Theodor-Heuss-Allee 70, D-60486 Frankfurt am Main, https://www.universal-investment.com. UCM Digital Health Valuation & Funding. You can read more about his story here. Whats 2022s takeaways for MAMAA, other Big Tech players (e.g., Netflix, Nvidia, Samsung), and middle children? That number is still much higher than pre-pandemic . Prospectus, Key Investor Information Document (KID), fund contract as well as the annual and semi - annual reports of the Bellevue Fund under Swiss law are available free of charge from: Switzerland : PMG Fonds Management AG, Dammstrasse 23, 6300 Zug or Bellevue Asset Management AG, Seestrasse 16, CH - 8700 Kusnacht. peer support groups, events), and care navigation, said Dana Clayton, COO of Folx. Healthcare IT surged as the digital transformation accelerated across sectors. : For information on opportunities and risks as well as tax information, please refer to the current detailed sales prospectus. Some studies even estimate that 30% of the remaining healthcare workforce are considering leaving their full-time hospital jobs in the next two years. It has been a rough year so far for digital health. In day-to-day SaaS company operations, questions like the above are common. While mental healthcare . Join our community of 3,000 + Founders, Entrepreneurs & Advisors. 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. The European market in particular saw investment levels skyrocket by a whopping 131% from $2.9bn in 2020 to $6.7bn in 2021.