The COVID-19 pandemic significantly accelerated the demand for digital healthcare alternatives. As a result, private investors are looking for promising digital health startups or companies to financially back. One common problem investors will undoubtedly encounter when assessing opportunities in digital health is that stakeholders are often not speaking the same language. In February 2022, Leavitt Partners published a white paper addressing the need for a standardized language framework in digital health, writing “The absence of a common digital health framework and terms has led to a fragmented orientation for all sorts of opportunities within digital health.”. This standardized framework can be valuable for investors to understand general market trends by simplifying the digital health landscape. Using the standardized language and taxonomy introduced in the white paper, we have tracked private investment market trends in Q1 of 2022.
Based on the data we gathered, there has been a total of $5.0B invested in US-based digital health companies. According to our digital health taxonomy, the top two leading core segments garnering the highest investment are remote care delivery (RCD) and clinical enhancement (CE), with a combined $3.3B in funding. Health data systems were the next leading category with approximately $900M. Precision medicine received $600M and mobile health & wellness received $83M.
It is not surprising to see remote care delivery (RCD) and clinical enhancement (CE) core segments leading the pack. According to a 2022 investment forecast, telehealth, wearable monitoring tech, digital mental health apps, and digital therapeutics (all sub-categories of RCD and CE) were expected to receive attention from investors in 2022. RCD and CE have sub-categories geared toward direct patient care and look to solve the immediate needs of the current healthcare landscape, including telehealth, convenience care platforms, and disease management & therapeutics that promise the highest return. For example, the sub-categories within RCD and CE promise to solve issues around; responsive and sustainable healthcare, disease prevention, improving patient-doctor relationships, and expanding healthcare professionals’ reach. Furthermore, RCD and CE sub-categories have the highest potential for scalability. There is a lot of interest and activity around digital health companies that offer the best solution in telehealth, biometric wearables, convenience care platforms, and disease monument & therapeutics because of the potential for mass consumer adoption.
Both RCD and CE are likely to remain the leading fund receiving categories for the remaining three quarters of 2022, closely followed by health data systems. Precision medicine and mobile health & wellness will likely remain distant. Future blogs will explore the funding gap between the top three and bottom two core segments and explain the potential risk factors and market sentiments leading to the significant variance.
For additional information on the digital health landscape, connect with Leavitt Partner experts and download the framework whitepaper here.i
i Note: Digital health (DH) companies that received funding in Q1 of 2022 but have a limited/no U.S. presence are excluded from our presented data. Therefore, the numbers represent funding for U.S.-based or international DH companies with a significant presence.