Figuring out the future for health tech after 2022’s realignments: new SVB study

As Readers who subscribe to our Saturday Alerts (repeated on Wednesday) have seen, this Editor has dubbed this season Realignment Autumn. From the fever pitch of funding, hiring, inflated valuations, SPAC funny money, and unrealistic expectations that started in 2020 and peaked in 2021, we in the industry are now fretting that we can’t get back to 2019 or 2020. Part of the new reality is that telehealth and health tech are far beyond that point in tech integration, ease of use, and takeup by enterprises, but has entered an uncertain business period more than a bit overextended and overexpecting. Unprofitable lines and side businesses, however promising, are being dropped or sold. Talented people who helped to start them are gone. The trend toward consolidation, which started last year, is accelerating.

For a more financial and data-oriented view, Silicon Valley Bank’s latest, “The Future of Healthtech 2022”, does not disappoint. This is a far deeper dive than served up by Rock Health, StartUp Health, and (unless you are a subscriber) CB Insights. This is a US and EU (including UK) view of how investment patterns have shifted, and a look at where investment may be going next year.

So far in 2022 they have seen:

• Lower valuations and plummeting share value of public companies
• A shift from ‘growth at all costs’ to a clear value proposition and creation: improving health outcomes, access or affordability.
• Investments are more modest and at earlier stages–no more blockbuster Series Ds and Es (40% decline in mega-rounds of $100 million+)
• No IPOs so far
• Only 18 unicorns formed this year
• M&A still rising at the right price
• Companies have to deliver measurable value to continue driving innovation

Through 30 September, SVB tracked investment at $23 billion. Where it’s going:

1. Provider operations: $7.0 billion–defined as technology that improves efficiency and accuracy of provider-provider, provider-patient interactions
2. Clinical trial enablement: $6.8 billion
3. Alternative Care (includes telehealth and mental health): $5.6 billion
4. Wellness and education: $1.3 billion
5. Healthcare navigation: $1.3 billion
6. Medication management: $833 million
7. Insurance: $117 million

Sections drill down on these sectors and subsectors such as mental health and women’s health, including an analysis of female-founded health tech companies, investors by sector, and a historical view of unicorns. Grab a cuppa and take your time with this one!