The flash flood of ViVE news is officially here, and one of the biggest stories from the first wave was DarioHealth’s acquisition of mental health digital therapeutics startup Twill for $10M plus another $20M in stock.
Dario got its start in 2011 with a direct-to-consumer diabetes app before expanding to cardiometabolic, musculoskeletal, and behavioral conditions. Although Dario still operates its D2C business, it’s since shifted its primary market to employers and health plans to reach larger patient populations.
- Dario hasn’t shied away from fueling its expansion through M&A, most recently acquiring a trio of companies in 2021 that included wayForward (behavioral health), Upright (MSK), and Physimax Technologies (also MSK).
- Despite the momentum, Dario hasn’t notched a profitable year since going public in 2016, and it’s looking to Twill to help expedite that journey.
Twill provides configurable Sequences that combine its digital therapeutics with partner solutions to address specific clinical needs such as mental health (Happify) and pregnancy (Elevance).
- These Sequences are used by three of the five largest US health plans, over half of the top 20 global pharmaceutical companies, and reportedly cover 18 million lives.
- Twill raised $153M through 2021, so while some quick napkin math probably suggests this wasn’t exactly a glowing exit for investors, the stock-based transaction at least means that there’s some upside if the combined company succeeds.
Outside of the immediate scale achieved through Twill’s customer-base, Dario is banking on its newly consolidated offering striking a chord with employers that are grappling with point solution fatigue and workers in need of mental health support.
- During Dario’s last investor call, it said that it expects to reach breakeven at ~$80M in revenue (about 4x what it currently generates in a year), but Twill should help in this department.
- Since Twill and Dario share minimal customer overlap, joining forces should allow them to cross promote their services, and Dario expects the acquisition to double its revenue this year as a result.
At a time when the market is demanding more value from fewer vendors, Dario’s acquisition of Twill is promising to deliver just that. All eyes will be on the integration of Twill’s platform to see if the expected revenue gains will be realized, but Dario has a track record of successfully folding in acquired companies, so this could end up being one of the first dominoes to fall in a long-awaited chain of consolidation.
Topping off a week packed with women’s health stories was maternity care startup Oula’s close of $28M in Series B funding.
Oula’s modern maternity centers combine obstetrics with midwifery to ensure expectant mothers receive comprehensive support throughout their reproductive journeys.
The philosophy behind Oula is that most pregnancy care takes place between visits, so offering in-home support, better education, and virtual access to providers should create a virtuous cycle for improving outcomes.
- Oula also places a heavy emphasis on inclusive care by working with most major payors and Medicaid, as well as its dedicated support for BIPOC parents and families.
- By finding a middle ground between hypermedicalized and non-medical care, Oula’s pair of New York Clinics have delivered a 26% better C-section rate, a 61% lower preterm birth rate, and a 50% better low birth weight rate compared to the city’s benchmarks.
The funding arrives as maternal deaths continue to climb in the US, which leads all other high income countries with 23.8 deaths per 100k births (and an abysmal 55.3 deaths per 100k births for Black women).
- A large part of these discrepancies appears to be due to a lack of access to midwives, certified medical practitioners with expertise in low-risk pregnancies, which also see far worse reimbursement than physicians.
- Oula makes the case that the US’ lack of proper reimbursement mechanisms for midwives is a key driver of its poor outcomes, and tackling that issue is a core component of its mission.
The Series B will help Oula round out its platform with services like preconception coaching and enhanced miscarriage support, while also allowing it to scale to more markets to rival established players such as Maven Clinic and Progeny Health.
Oula is looking to modernize maternity care not only by wrapping a tech-enabled bubble around traditional obstetrics, but also by catering to the specific needs of the mothers and health plans that it serves. It’ll have its work cut out for it scaling from a few New York clinics to a nationwide platform, but it’s hard to ask for better timing or a greater need.
It was another action-packed week in what’s shaping up to be a busy 2024, with healthcare operations enabler Fabric acquiring conversational AI assistant Gyant.
If the name Fabric doesn’t ring a bell, that’s because the acquisition announcement was also the grand debut of Florence’s rebranding to the new moniker.
Florence – now Fabric – launched last March with $20M in seed funding to address what it views as the most significant constraint in care delivery: clinical capacity.
- The first stop for Fabric, as with a growing number of patients, was the ED. Using Fabric’s mobile platform, patients in the ED can complete intake forms, update clinical information, initiate self-discharge, and schedule follow-ups.
- The idea is that patients get real-time updates, providers get better ED throughput, and everyone goes home happy.
Fabric then went on to pick up Zipnosis off of Bright Health less than two months after closing its seed round, broadening its product suite with asynchronous telehealth and accelerating its roadmap to new sites of care – particularly the home.
- The cherry on top of the acquisition was that Zipnosis also brought along 50+ health system customers, giving Fabric a foot in the door to start offering its other services.
Enter Gyant, which fits right into Fabric’s clinical capacity strategy by providing a conversational AI assistant that “empowers patients to self-navigate, connecting to them wherever they prefer to engage.”
- Fabric had an existing integration with Gyant that allowed patients using the symptom checker within Gyant’s assistant to initiate telehealth visits powered by Fabric (courtesy of Zipnosis).
- Just to call a DFD a DFD, Gyant basically helps serve as Fabric’s digital front door.
Fabric’s “optimize capacity, streamline admin” value proposition is reaching provider ears at the right time. Since kicking off operations not too long ago, Fabric’s added 70 health systems to its client roster, and has apparently climbed from zero to eight-figures in ARR.
Through its acquisition of Zipnosis last year, the company then known as Florence made it clear that it was looking to become an end-to-end healthcare operations enablement platform through any path necessary, including M&A. Now with the addition of Gyant, Fabric is walking the talk.
Healthcare pricing looks like it’s on its way to becoming more transparent, with Turquoise Health landing $30M in Series B funding to shine an AI-powered light through the fog of medical costs.
Since launching in 2020 prior to hospital and payor transparency regulations, Turquoise has built a comprehensive database of negotiated prices for healthcare services, allowing patients to understand costs beforehand… similar to pretty much every other industry.
- While that information is publically available through Turquoise’s website, payors and providers use the Turquoise platform to ensure they’re well-armed at the negotiating table and compliant with current regulations.
- Turquoise also recently expanded its platform to include Clear Contracts, a tool that leverages AI to streamline the direct contracting process and uncover relevant insights from its dataset.
Over 160 partners already work with Turquoise, ranging from payors and providers to employers and device manufacturers looking to understand their markets. The latest funding will help onboard these recently-added clients into Turquoise’s growing product suite.
- The funding will also accelerate the introduction of new AI features aimed at making Turquoise’s data as intuitive to use as possible, such as by allowing hospitals to upload their contract documents before asking the AI how certain terms compare.
- Although transparency compliance has been heading in the right direction, Turquoise is also gearing up to help more organizations meet new reporting requirements that are just around the corner (which it did a great job outlining here).
Now that Turquoise seems to have cracked the code on compiling negotiated rates, it’s setting its sights on moving past data toward an integrated platform centered on administrative efficiency. New AI tools are almost purpose-built to wade through the PDFs where pricing policies hide, and Turquoise won’t be wasting any time incorporating those tools into its platform.
Price transparency data has come a long way since 2021, and it’s safe to say that AI has come just as far. With transparency requirements only set to become more stringent, demand for platforms using AI to transmute that data into operational gold will only continue to grow, and Turquoise now has $30M to help ensure it’s healthcare’s alchemist of choice.
Major inefficiencies are often caused by pixel-sized pain points that are hard to see one at a time, so Artisight just closed $42M in Series B funding to help hospitals combine those pixels into high resolution images of their operations.
To unlock new efficiency gains, Artisight is turning to new methods. Its Smart Hospital Platform consists of ambient IoT sensors coupled with two-way audio and video, improving the coordination of people and processes so that clinicians can focus on caring for patients.
- In patient rooms, that looks like using cameras and microphones to support tasks such as fall prevention and pressure ulcer prevention, as well as more robust use cases like virtual nursing (popular among current partners like WellSpan).
- In the OR, the same platform is used to automate documentation, enhance communication, and provide data for real-time decision making.
- All of that data then feeds into Artisight’s platform to glean insights into process improvement and train its task-specific algorithms.
Although patients probably don’t jump at the idea of having a camera pointed at them during some of the most vulnerable situations of their lives, it’s also safe to say that many of them would prefer a camera over having their health deteriorate due to a preventable cause.
- The same goes for providers, where the tension of having an observer is offset by the fact that the same observer is helping monitor patients, coordinate supplies, and reduce administrative burden.
The Series B is going toward scaling the Smart Hospital Platform across more organizations, as well as deeper into the 11 systems where it’s already deployed.
- Artisight is also looking to expand the number of workflows that can be improved or automated using its algorithms, and $42M should go a long way toward making that happen through new health system partnerships.
- The partnership component is key, given that Artisight trains its algorithms locally to address specific issues at each site – an approach that seems to be resonating with the partner health systems that participated in the round.
While Artisight’s quest to redefine hospital efficiency involves the unenviable task of introducing cameras into delicate situations, it believes that improving the outcomes of those situations is worth the effort, and it has a roster of strategic investors who seem to share that belief.
Rock Health’s industry analysis is a frequent feature in our top stories, but it’s tough to stay away with reports as consistently solid as last week’s 2023 Digital Health Startup Benchmarking Survey.
The survey broke down responses from 87 early-stage digital health startups to provide performance benchmarks for customer acquisition cost, lifetime value, expenses, and more [Chart: Company Breakdown by Stage / Segment].
Series B is a tipping point for growth, but not (yet) margins.
- [Chart: Revenue by Funding Stage] While Series A startups are generally building an MVP and testing product-market fit, no Series B respondents were still pre-revenue (vs. 25% of Series A). That revenue is going straight to growth, with just 12% of Series B startups reporting positive margins (a small increase from 9% of Series A).
CAC and LTV calculations are challenging for early-stage startups.
- [Chart: CAC by Customer Segment][Chart: LTV by Customer Segment] Both CAC and LTV vary widely by customer type, but both charts illustrate that “you get out what you put in.” It cost respondents an average of $58k to sign a payor, but the average lifetime value was $5.1M. That compares to a CAC of $170 and an LTV of $1.7k for consumers.
Engagement metrics are the first step to robust outcomes.
- On average, each company reported tracking two engagement outcome metrics, two clinical outcome metrics, and one economic outcome metric. “For startups balancing speed-to-outcomes and quality-of-outcomes, an ‘engagement first, clinical/economic later’ approach might help to toe the line.”
Navigating product versus marketing costs is a balancing act.
- [Chart: Company Product vs. Marketing Costs] The amount of revenue the startups devote to product versus business development and marketing evolves alongside scale. Pre-seed respondents allocated 75% of revenue to product and 11% to marketing, while Series B respondents allocated 36% of revenue to product and 22% to marketing.
We’re lucky to be in a golden age of startup transparency, and between this Rock Health survey and the latest State of CareOps report, there’s no shortage of great information out there for founders to use as guideposts in their pursuit of scale.
Nobody thinks about their patients and clinical workflows more than actual care teams, but many of these teams are still using a mix of spreadsheets and Google Docs to track their processes because they haven’t had any better tools. Awell just raised $5M in seed funding to give them those tools.
Awell is a low-code editor that lets providers design clinical workflows and patient journeys that embed into their existing tech stack. Picture drag-and-drop building blocks tied together with if-this-then-that logic that you can use to create your ideal workflow. Those blocks could be:
- Care Pathways – PROMs, risk scores, engagement, etc.
- Triage – Questionnaires, calculations, messages
- Onboarding – Eligibility checks, symptom assessments, reminders
By using a single platform for a variety of tasks, Awell prevents providers from having to combine multiple tools or stitch different solutions together with custom code.
- Virtual-first providers use the platform to automate their workflows while retaining control of the end-user experience, with Awell’s APIs doing the heavy lifting on the back end.
- Traditional providers and tech-enabled services companies use the platform for a similar reason, to swap their PDFs and text-based guidelines for dynamic workflows.
Although the self-service route has its drawbacks (providers have a lot on their plates and even no-code development might be intimidating), Awell makes a strong case that healthcare could be about to witness its own version of the DevOps transformation that redefined the software industry.
- This shift, aptly coined as CareOps, involves introducing the same agile development framework that trades fragmented teams and lengthy deployment cycles for integrated dev/care teams and quicker software releases. (Plenty more on CareOps here).
- The promise of that methodology goes hand-in-hand with Awell’s mission: break down the silos between clinicians and engineers so that everyone can participate in the creation of care processes that ultimately deliver better patient outcomes.
It’s hard to imagine that the software industry ever managed to get itself tangled in more fragmented practices and inefficiencies than healthcare, but if improving workflows was the cure, a no-code automation platform seems like a great place to start. Awell now has $5M to help kick off the CareOps movement, and it just might make it happen if it can convince enough providers to roll up their sleeves and automate some manual work.
The link between the human microbiome and overall health has been an increasingly hot topic for both researchers and founders alike, and Viome Life Sciences just landed $86.5M of Series C funding to be the first company to bring gut tests to the masses.
Viome’s at-home testing kits analyze the microbial composition of stool and saliva samples through RNA sequencing to inform personalized lifestyle recommendations and supplements, which it provides directly to consumers.
- Using “modern AI and bioinformatics methods,” Viome can reportedly assess the genetic expression of an individual to identify which supplements will have the greatest positive impact on their health – a claim that’s unsurprisingly drawn a bit of pushback.
- These diagnostics can also screen for certain cancers, and Viome recently received FDA Breakthrough Device Designation “for its ability to detect early-stage cancer in the mouth and throat using saliva with 95% specificity and over 90% sensitivity.”
A major distribution deal with CVS was announced alongside the funding, making Viome’s $149 Gut Intelligence Test the first gut test to be offered at 200 CVS locations and through its website.
- These tests are provided for “close to cost” to CVS customers, with the true value lying in the data that flows into Viome’s gene expression data pool – apparently the largest of its kind – and the downstream D2C revenue.
Although Viome has a handful of peer-reviewed studies and some heavyweight investors like Salesforce CEO Marc Benioff, some researchers remain wary of microbiome kit companies due to the lack of evidence-based guidelines for translating the data into clinical practice.
- One of Viome’s former competitors, uBiome, was indicted for defrauding payors and misleading investors over the effectiveness of its microbiome test, a scandal that cast a lingering Theranos-shaped shadow over the category.
Viome is walking an interesting line between alternative medicine startup and AI diagnostics trailblazer, but that same intersection also seems like a natural sweet spot for success with consumers. On top of that, the CVS partnership probably gives Viome more exposure than any microbiome company has ever had, and it isn’t too hard to picture that advantage snowballing into a significant chunk of market share.
K Health is the latest startup to deploy the “battlefield tactic” of raising an unlabeled funding round to help scale its platform, locking in $59M and a new strategic investment from Cedars-Sinai.
K Health’s been moving quickly since rolling out its AI-enabled symptom checker in 2018, raising $330M, expanding to 48 states, and seeing over 10M patients interact with its chatbot.
- CEO Allon Bloch told Forbes that the K Health platform aims to be the antidote to “Dr. Google” by ingesting user symptoms then stacking them up against its database of millions of patient visits to suggest possible diagnoses.
- The chatbot itself doesn’t give medical advice, but gives patients the option of having a human doctor take over the chat after providing them with potential diagnoses and a summary of the conversation. Over 70% of users reportedly opt for a chat-based visit.
That might sound similar to Babylon and Zipnosis, but K Health licensed its original dataset from HMO Maccabi in its native Israel, where patients tend to stick with the same payor most of their lives and thus provide a rare longitudinal view of clinical and outcomes data.
- K Health reportedly did $52M in revenue last year (margins currently still in the red), around 40% of which was direct-to-consumer and the rest was through enterprise contracts.
The next chapter of K Health’s journey is to build up its roster of hospital clients to serve as a “digital practice partner,” starting with its new investor Cedars-Sinai.
- Cedars-Sinai will be using K Health for virtual primary care, and by the end of the year expects to have an app co-developed to triage new patients to the system’s physicians.
One of the more interesting pieces of K Health’s funding announcement was Cedars-Sinai’s input into where K Health fits into its broader digitization strategy. While the health system excels in complex areas such as transplants and neurosurgery, primary care remains difficult to tackle due to physician shortages and burnout. These logistical challenges are the exact problems that K Health looks to address, and they’re also challenges that are far from exclusive to Cedars-Sinai.
Rock Health’s H1 2023 digital health funding report confirmed the writing on the wall. We’re in a new market cycle, so it’s time to buckle up for fewer rounds, lower check sizes, and a smaller cohort of sector investors.
Here’s the first half of the year by the numbers:
- US digital health funding totaled $6.1B across 244 rounds ($24.8M average)
- Q2 contributed only $2.5B across 113 rounds (Q1 saw $3.6B across 131 rounds)
- Unprecedented 41% of H1 rounds weren’t tagged with a series or round label
- 12 mega-rounds over $100M accounted for 37% total funding
If the funding trend makes one thing clear, it’s that H1 2023 began to separate the best from the rest in Startup Land. (Chart: Funding Trend)
- We’re now on pace for the lowest funding year since 2019, and the fact that only 555 investors participated in digital health fundraises in H1 2023 (down from 775 in H1 2022) is another confirmation that we’re in the beginning of a new cycle.
Despite the slowdown, H1 counted 12 mega-rounds comprising 37% of total funding, and the $185M average check size rivaled the $188M seen during 2021’s peak mania (Chart: Mega-Rounds). Investors are now competing to crown the next class of household-name startups, particularly in three transformation areas:
- VBC enablement (Strive Health $166M, Arcadia $125M, Vytalize Health $100M)
- Non-clinical workflows – bonus points for “Shift” in name (Shiftkey $300M, ShiftMed $200M, MedShift $108M)
- At-home care (Author Health $115M, Monogram Health $375M)
The other major story from H1 was the staggering 41% of digital health rounds that were “unlabeled,” the highest share since 2011 (Chart: Unlabeled Raises). Most founders raise unlabeled capital for one of two reasons, both surefire signs of the times:
- To delay haircuts to previously-established valuations
- To avoid bad PR associated with a down round or a smaller-than-expected lettered raise
The new funding cycle naturally brings growing pains, and the stopgap cure for those pains has been the unlabeled rounds that Rock Health referred to as “a battlefield tactic, not a long-term strategy.” When we eventually see the return of lettered funding rounds, Rock Health makes the case that founders should reset their valuations to match truly sustainable profitability and growth targets, which would ultimately position them for better long-term success.