Taking the temp on healthtech: Deals and valuations stay resilient
Healthcare-focused companies, particularly those in digital health, continue to attract investor interest at a robust pace compared to other verticals. Healthtech startups have raised more than $26 billion in VC investment across 1,413 deals through Nov. 29, according to PitchBook data. However, that dealmaking is below last year’s record of $34.5 billion across 1,865 deals, a 25% and 24% drop, respectively.
Healthtech is proving to be more resilient on a deal value basis than many other verticals tracked by PitchBook, such as SaaS, FinTech, and AI and machine learning.
What’s more, the valuations of healthtech companies continued to garner strong valuations. The median deal in the vertical fetched a valuation of more than $45 million, which is nearly 33% higher than the 2021 median of $33.9 million.
“There’s certainly a lot of activity in healthcare right now,” said Micah Rosenbloom, a co-founding partner at Founder Collective. “Founders have always seen it as a big piece of GDP, and it’s [an area] that is backwards in many ways. In general, healthcare is recession-proof, but recession touches everything.”
Investors also say that healthtech is not immune from macroeconomic pressures.
Several digital health companies had significant layoffs this year, including weight loss app specialist Noom and telehealth infrastructure provider Truepill. Health system automation provider Olive, has lost a number of key customers and is in the process of selling some of its products and services, Axios reported.
Some VCs are saying that they are seeing higher-quality deals as weaker companies choose not to seek funding.
Some of the larger healthtech deals of the year include Somatus, a dialysis provider that raised $325 million at a valuation of $2.56 billion, and an in-home nursing care provider DispatchHealth, which raised $330 million, as well as Maven, a family health clinic that grabbed $90 million at a $1.35 billion valuation.
One persistent headwind to healthcare startups has been the shortage of healthcare professionals, which has worsened significantly since the start of the pandemic. If the US enters a recession, one silver lining for such startups could be an easier hiring market.
In the meantime, startups like Incredible Health, a tech-enabled marketplace for nurses, which in August raised an $80 million Series B at a valuation of $1.65 billion, have been helping to solve the staffing challenges.
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