Report: Well being tech funding greater than doubles in 2021

Well being tech corporations raised $39.7 billion throughout 1,186 offers in 2021, greater than double 2020’s $18.1 billion, in keeping with Silicon Valley Financial institution’s Healthcare Investments and Exits report.

The hefty quantity from final yr was 4 instances greater than the common annual funding from 2018 and 2019, which clocked in at $11 billion. The report notes 60% of funding got here from 105 “mega-rounds,” offers price a minimum of $100 million. 

Firms providing different care options led the sector’s funding tendencies, receiving 38% of {dollars} in 2021, a thrice improve from 2020. 

“We count on investor concentrate on AC to proceed into 2022 because the healthcare trade faces mounting stress from sufferers to swiftly undertake AC options,” report authors Jonathan Norris, Raysa Bousleiman and Beatriz Atsavapranee wrote. 

The sector additionally noticed an enormous improve in seed and Sequence A fundings, greater than doubling these in 2020. Although median deal sizes have been flat, the common deal worth elevated from $4 million in 2020 to $8 million in 2021.

Supplier operations corporations made up 34% of whole seed and Sequence A fundings, elevating $1.2 billion throughout 194 offers final yr. In 2020, that space introduced in $608 million throughout 73 offers. Scientific trial enablement was additionally a preferred space for early-stage funding, with 4 of the six largest seed and Sequence A offers. 

“With rising demand for healthcare suppliers to digitize their follow, we count on elevated early-stage funding into PO corporations pursuing workflow optimization, together with video consultations and digital chats with suppliers,” the authors wrote.

Within the public markets, the well being tech trade noticed a document 16 IPOs in 2021, in contrast with seven in 2020. Insurtechs Oscar Well being and Vivid Well being have been the 2 largest IPOs final yr.  

Nevertheless, corporations did not are likely to carry out nicely after going public, which the report notes was influenced by excessive valuations and poor-performing mergers with particular goal acquisition corporations.

“The category of 2021’s efficiency stays largely damaging, with a mean post-IPO efficiency of -28%. Oscar Well being (-80%) and Vivid Well being (-81%) are each down considerably,” the report’s authors wrote. “The aggressive valuation premiums we’ve seen within the well being tech non-public market haven’t translated to the general public market.”

In healthcare total, common post-IPO efficiency was -12%, however common de-SPAC efficiency was -32%. It was even worse for the well being tech sector, the place de-SPAC efficiency was -44%.

Merger and acquisition exercise was additionally up final yr, with 122 offers in 2021, in contrast with 76 in 2019, the earlier record-breaking yr. Acquisition costs have been down, with the median deal measurement at $63 million in 2021, in contrast with $84 million in 2020. Nevertheless, deal measurement was greater than 2019’s $40 million. 

Among the largest offers embrace Ginger and Headspace, Cigna’s MDLive acquisition and OneMedical’s buy of Iora Well being.

“The uptick in M&A this yr is additional proof of corporations shifting to both a extra vertical built-in technique to seize extra of a affected person’s continuum of care or a horizontal technique to supply platform options to broader client bases,” the authors wrote.

So what’s subsequent for the well being tech area as 2022 begins? The report predicts “huge consolidation,” whereas funding will nonetheless be strong, however not fairly on the degree seen in 2021.

“This may create many acquisition alternatives as corporations look to reinforce their product choices, broaden their attain to different markets or acqui-hire for expertise and/or clinicians (each of that are in brief provide),” the authors wrote. 

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