TTA’s August-Sept Wrap: how health tech fared in H1 investment, Oracle’s VA EHRM contract $ bump, Verma’s rumors, Cityblock buys Homeward, sensors could save Scots millions, more!

August 28, 2026 | by | No Comments

28 August-early September 2026

It’s the last of the August Doldrums, so it’s a good time to look back, courtesy of SVB, on What Happened in Healthcare Investing this first half. (For once, health tech didn’t take a beating with its best H1 in years.) Oracle just can’t help being in the headlines, this time with a nice (and expected) budget bump in its extended VA EHRM contract, and with its Oracle Health EVP, the well-known Seema Verma, possibly under consideration by PhRMA. The only notable transaction was another acquisition in the General Catalyst family, Cityblock Health and Homeward Health. DEA may get a controlled substances telehealth rule yet. And the Scots have discovered and tested sensor-based facility monitoring that could save millions. Aye! (Will Harry and Meghan’s Cotswolds lair have it? Save on security!)

Please feel free to comment on the articles and pass along this Alert. Let me know if this is worth it to you! Also check out my personal page on Substack.

For Readers: Your Editor will be on publishing leave to mid-September. ‘Best Of’ Alerts will be out 1x weekly on Fridays after this week till then. I’ll be resting up for what may prove to be an epic September-October!

Silicon Valley Bank’s take on H1 investment: among the “have and have nots”, it was “the best half in years” for health tech

News roundup: Verma’s rumors, DEA’s new (?) telemedicine rule goes to OMB for review, Cityblock Health goes rural with Homeward buy, Scottish housing sensor tech could save millions–study

Revealed: Oracle’s extended VA EHRM contract increased by $17B as original ceiling reached this year; VA Indy EHR goes online

Last week’s headlines 

This Week’s Must Reads: how lack of focus dooms startup financing, Commure’s Sea of Red Flags Flapping, and what happens if OpenAI expires? (Doom…DOOM!)

News roundup: UHS-Talkspace $850M buy final, DocGo to buy Hicuity Health for $52M in stock/debt, R1 to buy Humata Health, PointClickCare EHR to integrate Anthropic’s AI

UK’s Alertacall sold to Constellation Software’s Volaris Group (Happily, remaining independent)

Recent Headlines and Must Reads

Why Readers can be assured that TTA is 100% Written by Humans (A handy guide to detecting AI Copy Slop and why it’s not here)

News potpourri: OpenAI sued for practicing unlicensed medicine”, Cleveland Clinic med drone delivery, Solventum separates out health info systems, Unlimited Technology RCM in 3.8M data breach, Samsung Galaxy Buds FDA cleared for hearing assist

VA moves to secure Oracle for its EHR Modernization through mid-2031 (More reasons beyond Captain Obvious)

Breaking report: Oracle drawing up plans to lay off employees in “double digit percentages” by 1 September (We’re waiting for this shoe to drop next month)

Chutes & Ladders, Oracle Edition: Surprise! Project Jupiter data center build overages, “social costs” multiply. Pentagon inks $7B, 10 year deal for software.

This week’s Must Read: the dangerous financing of AI data center buildouts–and how they resemble the 2020 health tech boom (Remember the SPAC boom that cracked and left nearly all companies and billions in the dust?)

A gloomy view on Oracle going forward: debt, cash flow, and dependence on OpenAI

 

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Silicon Valley Bank’s take on H1 investment: among the “have and have nots”, it was “the best half in years” for health tech

August 27, 2026 | by | No Comments

Silicon Valley Bank (SVB), now part of First Citizens Bank, is back with a just-published roundup of 2026’s first half (H1) in healthcare investment in the US and EU. Last year was a year of contractions and skewed investments, what they called “barbells, bookends, and have-nots”, with fewer investors hotly chasing profitability and monetization. This year is considerably sunnier for health tech in terms of total investment, but SVB still calls the overall picture across four sectors: Biopharma, Healthtech, Dx (diagnostics)/Tools, and Device….

“Haves and have-nots. Winners and losers. The top of the heap and everyone else. Pick your metaphor….”

For health tech, it was the best H1 since H1 2022, with $7.2 billion versus $9.1 billion in investment, a tidy increase versus 2025 H1’s $6.7 billion. The major difference is that the number of deals is collapsing, with 203 deals this H1. If you look at 2025’s year total of 598 deals, if this deal track maintains, the 2026 full year number may not break 500. Again, the deal value is disproportionately and increasingly skewed to Series C+ deals, far more so than the past two years. Series B deals contracted and there was another uptick in Series A fundings. (Page 12)

SVB attributes the new health tech prosperity to AI-based technologies: clinical workflow automation, administrative efficiency and data infrastructure. Payviders (remember them?) also had their overdue day powered by AI: Devoted Health in the US with Medicare Advantage, and Alan in Paris (EU and Canada only). In SVB’s terms, “The bar for founders has risen toward durable growth, differentiated technology and a credible path to scale, especially those leveraging AI to address meaningful healthcare challenges.”

Exits, though, are hard to suss. There weren’t many this half for health tech. Kaia Health (Sword) in January, and in provider operations Ostro (Veeva) and Diligent (Serve). Kaia was the only one with a positive multiple on its valuation. Zelis and Virta Health might IPO this year or 2027. Or never. (Page 17). 

Looking at all four sectors, while investment dollars are growing, the number of deals continues to trend downward:

  • H1 2026 healthcare investment at $24.7 billion is slightly below H2 2025 at $25.8 billion. The absolute high water mark was $43 billion set at H1 2021, in the midst of the ‘Throw Money At Anything’ period. But the trend is still one of recovery. 
  • The big difference is that the number of deals continues its downward trend, sharply. H1 2026 had only 618 deals versus 2025’s H1 801 and H2 703. H2 is not projected to pick up this slack, again.
  • 75% of investment is in the US, with EU accounting for 25%; EU is slowly but surely increasing its share.
  • The falling investment sector is Dx (diagnostics)/Tools. Device remains steady and constant. (Health tech Readers should look over at device, since here resides WHOOP and its $575 million Series G for Giant) skewing this sector.

Most concerning is that healthcare VC fundraising has hit new lows, and the money is concentrated in a few across the seed, early, and late stages. Only a few years ago, founders had a wide choice of VC funders with fat wallets. Not nowadays. H1 2026 funding for VCs was only $10 billion. Full year 2025 was $16 billion and 2024 $26 billion. Many large “name” funds ($100 billion plus) closed this year, such as Lux, Santé, Frist Cressey Ventures, and Kleiner Perkins. What’s left in health tech? General Catalyst, Andreesen Horowitz, Redesign, Menlo Ventures. It’s a monotonous roster. Occasionally, there’s a crossover. Especially at early stages, founders have lost leverage in finding a simpatico fund. They have to show that they have a credible path to growth and profitability. (Pages 7-8)

Unlike SVB’s last report for 2025, they did not break out a fifth sector cutting across all four, Longevity and Healthspan. 

SVB will also be changing their name during Q4 2026 to First Citizens Innovation Banking. Preview page for SVB’s Healthcare Industry Trends published 25 August.  Hat tip to Megan Scheffel, head of SVB’s healthcare sector.

Short takes: Bain report on anemic AI ROI, SVB report on women’s health, Ladder Health pedes virtual health raises $7M, an update on the Luigi Mangione trial

June 25, 2026 | by

Bain and Company dug into the Big Question surrounding AI–is there any real ROI there? How can companies get there? Their ‘to date’ results are not exactly stellar.

  • Nearly 40% of companies that measured AI cost savings landed below 10%. Another 29% achieved 11-20%. Neither are huge savings.
  • Yet 90% of companies are increasing their AI budgets, again. How they’re funding it? 44% of companies are funding it from prior automation savings that have consistently come in below target.
  • The operating reality is far more human, with only 7% of companies running fully autonomous agents in production today.
  • Data access and integration are the number one barriers to AI progress

Despite all this, Bain (of course) states that companies shouldn’t wait, that they need to close the gap between the business case and the operating reality. Their conclusions sound sensible, but to this Editor, they won’t necessarily bend the cost savings curve. And they sound like expensive, time-consuming work, further reducing initial cost savings:

  1. Pay down your workflow debt before deploying AI. Fix that before you automate it because it will be far more difficult afterwards.
  2. Validate the investment case and name a governance owner before programs launch.
  3. Use AI to solve the data problem; don’t wait for the data problem to be solved first. Automate one high-value, repeatable workflow and replace it with AI.
  4. Redesign the operating model, not just the process.
  5. Measure outcomes at the enterprise level, not the program level. Leaders must decide that they have a personal responsibility to create the organizational conditions for AI success. 

Your AI Budget Is Growing. Your Returns Aren’t. Here’s Why.

Our second report is on innovation in the women’s health sector. Silicon Valley Bank (SVB) examines trends in the venture-backed women’s health sector, which has grown into the full spectrum of women’s health needs. The sector is (finally) starting to thrive. Highlights:

  • $2 billion in venture capital was invested in women’s health in 2025. While this marked a dip from 2024’s peak, projections show a rebound in both deal volume and total funding for 2026.
  • $6.2 billion since 2019 has been invested into companies addressing women-specific conditions. 210 new startups dedicated to solving women-specific health challenges were launched from 2019 through 2025. 
  • The median pre-money valuation for AI-enabled women’s health companies is up to $35 million.
  • Women’s health startups using AI to personalize care are commanding valuations triple those of their non-AI counterparts.

The downloadable SVB report is here.

One of those women-founded companies, Ladder Health. announced seed funding of $7 million this week. The seed round was (happily) oversubscribed and led by Nina Capital, with participation from Mairs & Power Venture Capital, South Dakota First Capital, and incubating partner 25madison Health. Other investors in this round include Hatteras Venture Partners, Create Health Ventures, Jumpstart Capital, White Oak Enterprises, Groove Capital, and 7Rock Ventures. (Whew!) Ladder Health delivers speech, occupational, physical and feeding therapy through a virtual-first, AI-enabled platform available evenings and weekends. Their service is targeted to areas where pediatricians and developmental therapies are in short supply, wait lists are long, and to underserved Medicaid beneficiaries. It is currently available in three states, North Carolina, Massachusetts, and Maryland across 80 providers. The additional financing will support expansion in those states and others, as well as investment in the care platform. Ladder is based in NYC. It was developed in conjunction with clinical experts at Boston Children’s Hospital. Release, MedCity News

And lest we forget. Luigi Mangione, the accused murderer of UnitedHealthcare CEO Brian Thompson on the dark morning of 4 December 2024, is still in the preliminaries of his New York State trial for intentional second-degree murder. His defense team from Agnifilo Intrater had filed to use a psychiatric defense based on Mangione suffering from an “extreme emotional disturbance” (EED), but that was withdrawn one day after it had been filed with Manhattan Supreme Court Judge Gregory Carro. It was a surprising development, as the admission could have reduced the charges to manslaughter, though it is tantamount to admitting the crime.

Based on reports, Mangione may be able to introduce EED through his own testimony, or that of the prosecution. Much of the evidence found in his backpack when Mangione was picked up at the Altoona, Pennsylvania, McDonald’s was excluded from the NYS trial, as well as two charges of terrorism and first-degree murder. He has pleaded not guilty to state murder and weapons charges.

Mangione’s trial is scheduled to start on 8 September. He faces additional trials in the Federal Southern District of NY as well as Pennsylvania state charges. Law.com discusses the EED strategy. CNN, Beckers

Rock Health’s sunnier 2025: up 35% due to AI, but a tale of ‘have and have nots’

February 19, 2026 | by

Rock Health’s 2025 digital health roundup, published in January, was upbeat–as usual, and in no way Hemingwayan. Their calculation of US digital health fundings was up 35% versus 2024, rising to $14.2 billion from 2024’s $10.5 billion. This was a higher number and a stark contrast to Silicon Valley Bank’s (SVB) tracking of US and EU healthtech investments as a 1) lower number and 2) flat 5%, growing from 2024’s $13.2 billion to $13.9 billion [TTA 14 Jan].

Let’s do some unpacking:

  • The number of digital health deals went down from 509 to 482, a decline of 5.3%.
  • In terms of current dollars, 2025’s funding of $14.2 billion was, as projected, a snap back to 2020’s $14.4 billion, as 2024 was to 2019. In constant/inflation-adjusted dollars, applying a cumulative inflation of 25%, 2025 is well under 2020 but better than 2019; 2020’s $14.4 billion then is equivalent to $18.3 billion today.
  • Where Rock Health and SVB agree is the ‘barbell’ profile of what gets funded.  
    • Mega funds like General Catalyst and Andreessen Horowitz (a16z) do mega deals: 26 mega deals and 15 newly-minted unicorns (up from six last year), for a funding average by these two in D+ of $266 million, versus Series A of $24.1 million. 
    • The funding also skews towards “AI-enabled” companies and secondarily, wellness
    • Something that made this Editor go ‘hmmm…’:Rock Health’s usual analysis of letter deals across all funders is, unusually, missing in their 2025 report. The only comparison made is from GC and a16z, two mega funders. Inadvertently, Rock Health has drawn a bright line on the contraction of venture and private equity funders not only in available funds, but in sheer numbers. Discussed here intermittently, especially in the context of SVB’s failure and rescue, but at more length here in this 2023 commentary.
  • What they have picked up that SVB didn’t was the continuing significant number of unlabeled, non-letter financings–35% of deals, but down from 44% in 2023. Before 2021, unlabeled financings were fairly rare and in single digits.
  • The other significant pickup was that over 600 companies they track have not raised anything since 2021-2022. That could be a sign of health–that they are profitable and operating successfully on their cash flow–or barely staggering through and cannot get financing. 
  • M&A revived in 2025 with 195 deals in 2025, up 61% from 2024’s crater. Digital health companies were the majority acquirers (66%) with private equity at 10%. Rock Health attributes this to ‘tapestry weaving’ (creating more continuous solutions to flesh out platforms), legacy acquisitions by AI companies (a/k/a smush togethers, something New Mountain Capital excels at), and ‘acqui-hires’ to get top talent and tech.
    • They note of NMC: “Now, they’re weaving the largest “M&A tapestry” in digital health thus far: Matt Holt, NMC’s former managing director and president of private equity, is reportedly leaving to combine five NMC portfolio companies into a $30B holding company called Thoreau.”, a $30 billion deal broken out in a graphic. The five companies are Datavant, Swoop, Machinify, Smarter Technologies (itself a combine of SmarterDx, Thoughtful.ai, and Access Healthcare in RCM), and OfficeAlly. Whether this pending move (December) will actually work or turn into a petite version of Change Healthcare, we can only surmise.
  • IPOs haven’t really revived in digital health. Rock Health counts five IPOs in 2025, but only two are really digital health, Hinge Health and Omada Health, same as 2024. Both were at relatively flat valuations. The other three are more legitimately classified as biotech–Heartflow, Carlsmed, and Profusa. IPOs may improve in 2026, with Doc.com’s filing for a Nasdaq listing earlier this month and Devoted Health now at a post-F financing.
  • There is zero here about bankruptcies and reorganizations. No reference to the utter implosion of 23andMe and its shocking sale back to founder/CEO Anne Wojcicki.

The impact of ACCESS and ELEVATE. There is also a good graphic analysis of two CMS models that may support digital health more comprehensively than previous value-based care models such as ACO shared savings. The first CMMI model, ACCESS, will be debuting in July and is a 10 year voluntary payment model for Original Medicare outcomes in chronic care management. It reduces barriers for digital health to profitably work with CMS because it offers direct patient enrollment and waiving copays. The other from CMS is ELEVATE, launching in September, which funds up to 30 proposals with $100 million over three years to raise health and prevention for Original Medicare beneficiaries.

Rock Health’s 2025 wrapup

2026 remains Anyone’s Guess. It feels better…but….

Editor’s Note: Our Readers know that this Editor considers Rock Health a bit of a cheerleader for Sand Road. They play both sides of the fence as a venture fund/accelerator. There’s nothing wrong in that. SVB, like other financial institutions, funds a broad swath of healthcare and makes no bones about it. That is why their analysis, which also included EU and a bit of Asia, made its broader and tarter take on 2025 even more interesting.

What’s missing is year-to-year consistency in Rock Health’s analyses, notably what digital health sectors were funded and the Series letter breakdown across all funders.

2025 healthcare investment off 12% versus 2024, with AI nearly half: Silicon Valley Bank roundup (updated for Scheffel interview))

January 14, 2026 | by

Silicon Valley Bank (SVB), now part of First Citizens Bank, is back with a roundup of the prior year in healthcare investment in the US and EU. 2025 was a year of contractions and skewed investments, what they called “barbells, bookends, and have-nots”, with fewer investors hotly chasing profitability and monetization. 

SVB broke ‘healthcare’ into four sectors: Biopharma, Healthtech, Dx (diagnostics)/Tools, and Device. This Editor’s analysis will concentrate on an overall look plus a deeper dive into Healthtech. SVB also broke out an area cutting across all four, emerging from side conversations into the spotlight. It’s an area where many of us have been laboring in for years–Longevity and Healthspan. (Surprise, surprise!)

Highlights:

  • 2025 total healthcare investment in US and EU totaled $46.8 billion, down 12% versus 2024’s $53.2 billion. European investment remained flat. 2025 still exceeded the dreary days of 2023 that dipped sharply to $41.6 billion. (page 12) Yet adjusting for inflation between the two years, 2025 fell below 2023, which would be today $48 billion (Bureau of Labor Statistics using the Consumer Price Index). 
  • Deal numbers fell 7% in 2025 to an estimated 2,517, versus 2024’s 2,704.
  • AI investments across all four sectors was $22 billion–46%. (pages 2, 5)
  • After Biopharma, Healthtech investments stayed relatively strong as the second largest category, growing from 2024’s $13.2 billion to $13.9 billion. (Note: SVB tracks only investment deals above $2 million)
  • Investments resembled a canyon–plenty in Series A, cratering for Series B and Cs (the have-nots), rising for mega-deals around AI, redefined from the traditional $100 million+ to $300 million+. The higher definition reflects the big capital investments required for AI companies. The report calls it a ‘barbell’ shape–and the plates at both ends are heavy.
  • There are fewer deals as investors seek companies with nearer-term scalability, strong fundamentals, defensibility, and strength of execution. Topping it–less money is available for investment from fewer VCs.
  • Healthtech dominated AI unicorns with valuations above $1 billion: Abridge, OpenEvidence, Innovaccer, and Cera. (page 11)
  • Healthtech saw only seven private M&As and three IPOs (Hinge Health and Omada in the US, 66nao Brain Training in China), versus 2024’s 14 and two respectively. (page 24)
  • Healthtech investments fell off in H2 from a decent pace in H1. Both Series A and later stage companies had generous rounds, though getting there is harder than ever. Page 15 presents a roundup of both the Series A and later stage deals.
  • Investor money raised fell to a decade low–$7 billion versus 2024’s $23 billion. Yet many name investors such as Venrock and General Catalyst closed $100 million healthcare funds, continuing the concentration on money following scale, fundamentals, and monetization versus story and potential. (page 7) 

A ‘must read’ is SVB’s discussion of the Longevity and Healthspan sector on pages 18-21. Finally, finally, the market is seeing the huge need and potential of therapies treating age-related conditions from ability to disease, growing 2.3x in 2025. The sector further concentrates into three areas:

  • Geroscience: R&D into the biology of aging to reverse or mitigate changes. Companies: NewLimit, Altos, Cambrian, Rubedo, Aspen Neuroscience
  • Consumer Healthspan: products for users that analyze everyday behaviors to stay healthy longer. Companies: Function, Viome, Oura, Whoop
  • Intrinsic Capacity Healthtech: apps and tools extending functional everyday abilities. Companies: Neuralink, Sword Health, Hinge Health, Science

Based on early indications of investments and deals, 2026 looks brighter, but still continuing AI and consolidation.

A preview of the report is available with registration here. 

Updated 20 Jan: Mobihealthnews interviewed Megan Scheffel, who heads up their healthcare and life sciences practice, outside of JPM last week. She reviewed some of the study findings, such as the ‘barbell’ shape of investment (above). M&As are also reviving, looking “pretty” on the mega/later stage side, but on the smaller side perhaps not the “fantastic outcome” founders and investors wanted, but allowing the technology or founders to live to fight another day. This Q&A was telling:

MHN: Do you see any companies eating up other companies just to bury them?

Scheffel: I don’t know if I would say they’re burying them. I keep saying, like, there’s clearance racks.

For companies, SVB operates on two sides: banking and debt. A strategy, according to Ms. Scheffel, that hasn’t changed since before their near-death experience in 2023. She should know as with them for “a gazillion years” prior to that bad time. “We still really want to help companies, even if they’re not raising $300 million rounds every six months. We still are trying to help find ways to support them and support their causes.”

Her advice to companies to succeed: have good management teams and ideas with a “moat”–innovation, IP, and advantages. For investors, the downturns clear out the dead wood (as this Editor predicted after the 2022-3 shocks). To her, times like now are when good investors can make money from better companies.

 

Signs of life: another view on healthcare investments and exits as of mid-year

August 22, 2024 | by

Silicon Valley Bank and their reports live! Now under the aegis of First Citizens Bank, SVB’s 14th Healthcare Investments & Exits Mid-Year Report for 2024 covers four healthcare areas: biopharma, health tech, DX (diagnosis)/tools, and device. Concentrating on health tech, highlighting their findings which are very different than the other three sectors and mostly in line with H1 findings from Rock Health that this Editor analyzed as possibly a ‘dead cat bounce’:

  • Series A raises are easier than in other sectors, and growing. It is the second-strongest start for Series A health tech investment since 2021. While average valuation sizes are remaining static around $10 million, and deals to date are just under $8 billion.
  • For later-stage companies, their high valuations during the palmy days of 2020-early 2022 created a ‘valuation trap’. The report uses ‘nadir’ to describe it–“now investors (who) are now opening up their coffers for new investments.” (The picture might be less optimistic if one pulled out Transcarent, which is controlled by two investors, General Catalyst and 7wireVentures.) Flat and down rounds are the norm.
  • They term the above ‘price discovery’, defined as the opportunities to extend due diligence, “build conviction” and build the “right syndicate” of investors.(Above all page 14)
  • Investment is accelerating at a rate above the other sectors (page 18). 
  • Exits have cratered at $0.2 billion with only four M&A deals reported. “Companies are preparing themselves to be good public market performers by tuning their cash efficiency and ensuring good unit economics”. Their view is that this may accelerate in H2 2024. (page 21).

SVB is offering the report online as a free preview download. Contact them for the full report.

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

November 10, 2022 | by

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!

Digital health funding’s Q1 hangover from 2021’s bender–and Q2 is a question mark, even for Rock Health

April 6, 2022 | by

Chug the Pedialyte and pickle juice, down those milk thistle caps for the liver. It’s a morning after quarter that we knew was coming. After 2021’s mighty year for health tech investment, doubling 2020’s, capped by a $29.1 billion total across 729 deals [TTA 29 Jan], the slump we knew would arrive, did. Rock Health’s tracking of 2022’s Q1 proved to be a less than stellar $6.0 billion across 183 deals. It mildly lagged 2021’s Q1 but was still 75% more than 2020’s depressed Q1 at the start of the pandemic.

Even in January, the 2022 projections were iffy. Silicon Valley Bank projected, based on anemic post-IPO performance, that there would be ‘massive consolidation’ and even acquiring companies to hire talent [TTA 14 Jan]. Rock Health and Silicon Valley Bank noted the waning of SPACs as an easy way to IPO for a variety of reasons, including SEC scrutiny. A combination of both was SOC Telemed. which IPO’d via a SPAC at $10, and was taken private seven months later at $3 per share–after trading at $0.64. SOC was not an outlier–larger telehealth brothers Amwell and Teladoc had taken major share price kicks in the head at 50% and more by February [TTA 8 Feb].

The rest of the story is mixed as the economy continues to open up with the pandemic over, but the stock market is wobbly, inflation soars as does a Russia-Ukraine war. 

  • Average deal size was $32.8 million, again below 2021
  • January was a cheerier month than the following two, with companies raising $3.0 billion. Some of this was carryover from 2021 deals that didn’t quite make it past the post. February slumped to $1.4 billion while March ticked up to $1.6 billion, not a good trend going into Q2.
  • Rock Health’s Digital Health Index (RHDHI), a composite of publicly traded digital health securities, fell 38%, far below the S&P 500’s 5% dip over that same time period.
  • SPACs tumbled along with the market, continuing their fall since 2021. Deals were canceled, taken private (SOC Telemed), and companies sued for misleading investors (Talkspace).
  • Late stage deals continued to roll: mega Series D+ deals in Q1 2022 included TigerConnect ($300M), Lyra ($235M), Alto Pharmacy ($200M), Omada Health ($192M), and Ro ($150M). D and above deal size fell by $16 million. But average deal size fell off at every Series, less so for B and C.
  • Lead clinical investment areas were mental health continuing far in the lead, followed by oncology, cardiovascular, and diabetes. Oncology rose from the fifth spot in 2021 to #2 in Q1, displacing cardio. In value proposition, the top three were on-demand healthcare, R&D, and clinical workflow–this up from the 11th spot.

A weak start for 2022, but only compared to 2021. Q2 and maybe even Q3 will be the test in this mid-term election year. Rock Health Q1 report

US/EU 2021 healthcare VC funding soared 65%, but health tech performance slumped 28%–and 2022 surprises

January 14, 2022 | by

This isn’t the usual Rock Health report of puppies and unicorns. Silicon Valley Bank is a source new to this Editor, but even in topline, the report is pretty bracing. Their coverage is broad and detailed–biopharma, health tech, dx (diagnostic)/tools, and device–on US and European venture capital (VC) funding from 2019 to 2021. There are some warning flags for the health tech sector through their report (summary page; report available for free download here).

What you’d expect: total health care soared in 2021 to over $86 billion–a 65% increase over 2020 (not 30%!). This was led by biopharma at $36.3 billion, then health tech at $28.2 billion. Dx/tools and devices had far more modest funding gains. 

For health tech: 

  • Funding was up 157% versus 2020–42 new ‘unicorns’, four times 2020
  • Provider operations companies comprised a record 35% of total seed/series A funding, up from 20% in 2020. The other hot areas were clinical trial enablement and alternative care. Surprisingly, healthcare navigation was next to last, perhaps indicating that these companies are further along in maturity.
  • Investors were numerous, but high frequency investors were Tiger Global, Andreesen Horowitz, General Catalyst, Casdin, and Gaingels.
  • SPACs slowed in 2021, trying to find the right match before their two-year window to complete a merger and reflecting greater SEC scrutiny of blank checks. Of those who ‘de-SPAC’ed in 2021, Talkspace and Owlet led in market losses, 80% and 73% respectively.
  • Post-IPO performance dropped 28%, led by insurtechs Oscar, Bright Health, and Alignment Health
  • There were 122 M&A deals. The $63 million median value was down 25% from 2020. marking a shift to vertical integrations in care continuums or horizontal to capture consumer bases.

2022 The Year of M&A and Acquire-to-Hire? The end of the report sounds a cautionary note to health tech ‘bulls’. Expect “massive” consolidation. Healthy investment will continue, but the opportunities will be for companies seeking expand product offerings, expand to other markets, or acquire to hire talent (!)–the latter something quite new.

Also FierceHealthcare