Tag: digital health

Lyra Health Raises $235M, Acquires ICAS World

Posted on by Jason Barry

Mental health benefits provider Lyra Health is making a habit out of starting the new year with a ton of momentum.

In January 2021, Lyra closed $187M in Series E funding and entered a partnership with ICAS World to bring its benefits overseas. This week, the company raised another $235M at a $5.58B valuation, while announcing the acquisition of ICAS World as it begins to make international expansion a top priority.

  • Lyra provides a suite of in-person and virtual behavioral health benefits to over 75 large employers, offering accessible treatments for conditions such as depression and anxiety that are often stigmatized in the workplace.
  • The latest raise pushes Lyra’s private funding total to $916M and ranks it among the most well-funded companies in one of the hottest corners of the digital health market. The timing follows Lyra’s September announcement of a trio of new solutions designed to address complex conditions such as alcohol use disorder and suicidality. 
  • ICAS World is a global employee assistance provider with a specialist network that offers “culturally responsive care” and localized support in more than 155 countries and 66 languages. 
  • The acquisition greatly expands Lyra’s worldwide reach, allowing it to provide mental health coaching, therapy, and medication within a single platform to over 10M global members. That’s a big jump from the 2.2M members covered by Lyra prior to the acquisition.

The Takeaway

Lyra’s employer-facing model has quickly gained traction in the US, but mental health challenges are hardly isolated to US-based employees. The WHO estimates that productivity losses due to depression and anxiety cost the global economy $1T annually. Mental healthcare is a global challenge, and the ICAS acquisition is a large step towards making Lyra a global solution.

Rock Health Funding Trends for 2021

Posted on by Jason Barry

Regular Digital Health Wire readers could probably guess that 2021 was a spectacular year for digital health funding, and Rock Health’s latest full-year report confirms that investment in the space topped even the most bullish expectations.

  • Total funding for US digital health startups climbed to $29.1B across 729 investments, nearly doubling 2020’s former record of $14.9B. The growth was shaped by 88 different $100M+ rounds combining for $16.6B, including four of the largest digital health raises of the decade: Noom ($540M), Ro ($500M), Mindbody ($500M), and Commure ($500M). [Chart 1]
  • M&A activity grew at a similarly breakneck pace, with 272 M&A moves easily eclipsing 2020’s total of 146. Last year also saw a record 23 companies go public through either SPAC mergers (15) or IPOs (8), shattering the previous record of 8 exits set in 2020. [Chart 2]
  • The most funded value propositions of the year included R&D catalysts such as decentralized trials ($5.8B) and on-demand healthcare ($4.5B). Healthcare marketplaces were among the fastest growing segments, with 3.2x funding growth driven by D2C marketplaces like Mindbody and caregiver marketplaces like Honor. [Chart 3]
  • Mental healthcare was the most popular clinical indication among investors ($5.1B), raising $3.3B more than any other clinical focus. Outside of the pandemic’s less-than-stellar impact on many people’s mental health, this area has seen a funding frenzy due to the rise of virtual behavioral health platforms such as Lyra Health and NOCD. [Chart 4]

Bubble Watch

Despite last year’s record breaking digital health funding, Rock Health’s view on the market was that it “wasn’t an across-the-board bubble, but it wasn’t placid water either.” Many companies are exceeding pre-pandemic projections by wide margins, and it’s possible that historical digital health benchmarks are too low, as opposed to today’s valuations being too high. If these companies can find a way to sustain their momentum beyond the pandemic, there’s a chance we could see a repeat performance in 2022.

Digital Health Trends to Watch in 2022

Posted on by Jason Barry

Happy New Year, and welcome to the first Digital Health Wire of 2022. The past year was anything but boring for those working in digital health, with the pandemic continuing to expose the strengths and weaknesses of our healthcare system.

As with any new year, 2022 brings its own set of challenges for digital health companies to address, and a new roundup of the trends connecting them together.

  • Data Dominance – EHRs, wearables, and telehealth solutions are among the long list of technologies ushering in a new era of healthcare data collection, and leveraging this data to improve outcomes will be a centerpiece of digital health strategies in 2022 and beyond. As more data is able to be collected, more impactful insights will be able to be distilled, and Oracle’s recent acquisition of Cerner is likely a sign of more action to come in the pursuit of patient data.
  • Hospital at Home – Over the past year, the remote care space has gained a lot of momentum, with organizations like Moving Health Home beginning to advocate for policies that enable home-based clinical care. At the same time, remote care providers like DispatchHealth and Current Health have seen a surge in utilization, which will help to generate data demonstrating the effectiveness of home-care models and could accelerate regulatory support.
  • Less Tuck-In Acquisitions – Last year saw record digital health M&A activity by nearly every metric, but the rising valuations of private startups could start to have a negative impact on the total number of acquisitions. Tuck-in acquisitions, where larger businesses acquire companies for their talent or technology, might begin to see a slowdown if younger startups continue to command higher multiples earlier in their life cycles.
  • More Mergers – Although it’s possible that investor enthusiasm is making smaller companies less attractive as acquisition targets, it is also creating a landscape of well-funded startups that will be looking at consolidation as a way to combine strengths, such as with the recent merger of Ginger and Headspace.
  • Behavioral Health Spotlight – Behavioral health is among the fastest growing segments of digital health, with a stress-inducing pandemic simultaneously lowering the stigma surrounding mental illness while increasing mental health literacy. These circumstances have created a large disconnect between the supply of mental health providers and the demand from patients, and the companies tackling this problem will continue to attract a lot of attention from consumers and investors alike.

It’s hard to say which, if any, of these trends will be the top story of the next 12 months, but it seems likely that we’re heading into another year with more innovation than can fit into a five-bullet roundup. Wishing you the best in 2022, Digital Health Wire readers!

Oracle Acquires Cerner for $28.3B

Posted on by Jason Barry

Sometimes when there’s smoke, there’s fire, and that was definitely the case with last week’s rumor that Oracle was in talks to acquire Cerner in one of the largest healthcare M&A moves of the year.

Database and cloud infrastructure provider Oracle is acquiring Cerner for $28.3B in a transaction expected to close in early 2022. Upon closing, Cerner will be organized as its own dedicated business unit, serving as Oracle’s “anchor asset” to expand deeper into the healthcare sector.

What does Oracle gain from the merger?

Cerner marks Oracle’s largest acquisition ever, with several key benefits justifying the move.

  • Oracle and Cerner share a large overlap in end users. Cerner has access to an existing customer base in a giant market, potentially expediting Oracle’s pivot toward the cloud by leveraging these established relationships.
  • Cerner is expected to be a source of durable revenue growth, with Oracle anticipating a positive earnings impact in the first year that is likely to accelerate as it expands Cerner’s services into new regions.
  • As Oracle looks to push into healthcare, access to patient data will be a deciding factor of success, and Cerner’s EHR data helps eliminate its reliance on third party data providers.

What does Cerner gain from the merger?

Cerner was valued at close to $23B heading into the merger (vs. Oracle’s $280B valuation), and it will be looking to pursue ways to use its newfound scale to help it move past the EHR business that’s been slowly losing ground to competitors like Epic.

  • Oracle’s resources, infrastructure, and cloud capabilities will accelerate Cerner’s pace of technology development, while its global footprint could also allow Cerner to reach new geographies faster than if it was a standalone company.
  • Oracle’s hands-free Voice Digital Assistant will become the primary interface for Cerner’s clinical systems, reducing time spent typing and creating more time to care for patients.
  • Cerner will move to Oracle’s Gen2 cloud with the goal of achieving “zero unplanned downtime in the medical environment,” a migration that should happen quickly because of previous integrations between the two companies. 

Industry Impact

If this strategy sounds familiar, it’s right from Microsoft’s playbook, with the tech giant acquiring Nuance for nearly $20B to add more clinical speech recognition tools while gaining a foothold in healthcare.

Cerner has been in the process of shifting its focus beyond its core EHR business, under the helm of David Feinberg, who left Google to become the company’s chief executive in October. 

Feinberg has stated that improving usability and data analytics would be a critical component of Cerner’s strategy going forward, and the combination of Oracle’s Voice Digital Assistant and cloud computing capabilities could go a long way toward making this strategy a reality.

Cerebral Raises $300M for Digital Mental Health

Posted on by Jason Barry

Online mental healthcare provider Cerebral announced the close of its $300M Series C round, raising the company’s valuation to $4.8B within two years of its launch.

  • Cerebral is a “one-stop shop” for comprehensive digital mental healthcare and wellness, offering support for depression, anxiety, and post-traumatic stress disorder among other illnesses.
  • Monthly subscription plans give members access to Cerebral’s team of over 2,000 clinicians, lowering barriers to care through its virtual platform combining therapy and medication management for full-service support in the home setting.
  • The funding will be invested in new services such as schizophrenia management expected to launch in 2022, as well as strategic partnerships and international expansion.
  • Advancing partnerships with employers and payors is another priority for the funds, with Cerebral’s new Chief Impact Officer, Simone Biles, enrolling to help on this front after withdrawing from the Tokyo Olympics to focus on her own mental health.

Industry Impact

In-person mental health facilities were heavily impacted by the pandemic, experiencing capacity constraints that frequently led to month-long wait times to see a provider. This created a window for digital providers to address the care gap, with Cerebral reporting that the wait times for its  “instant live” visits are now just over five minutes.

Large amounts of capital continue to be directed towards the mental health space, and more M&A announcements from its well-funded startups are likely to follow as companies like Cerebral aggressively compete for contracts with employers.

CVS and Microsoft Partner on Digital-First Care

Posted on by Jason Barry

CVS Health is wasting little time with its transformation into an “integrated health solutions company.” Less than a month after unveiling its omnichannel strategy, CVS announced a new five-year strategic partnership with Microsoft focused on digital health and personalized care.

The partnership is centered on leveraging Microsoft’s computing capabilities to unlock value from CVS’ treasure trove of patient and consumer data. CVS is in a unique position to know a patient’s provider choices (through its Aetna payor arm), medication history (through CVS pharmacy), and even shopping habits (through its retail stores).

Now, the company has enlisted Microsoft to tie it all together, with key goals of:

  • Customizing care by combining information from across the company to deliver customized health recommendations while scaling loyalty and personalization programs.
  • Enabling front line workers through the use of Microsoft Teams and Office products, allowing retail employees to quickly consume information and solve customer needs.
  • Digitizing operations through Azure’s cognitive services like computer vision and text analytics to automate tasks such as pharmacy intake.
  • Expanding cloud services by migrating applications currently running on on-site servers to Azure, giving CVS access to over 1,500 new business apps.

The Takeaway

The partnership announcement adds color to the picture of what CVS’ transformation from a local pharmacy to a healthcare destination might look like.

Microsoft’s cloud infrastructure enables CVS to take a more proactive approach to its services, including preventative health recommendations, like when a patient is due for a screening, or automated reminders to pick up sunscreen if a customer has an increased risk of melanoma.

CVS has millions of customers between its retail operations and health plan enrollees, and this partnership allows it to use this data to reach people ”with the right services, through the right channels, at the right time.”

SWORD Raises $163M for Virtual MSK Platform

Posted on by Jason Barry

Digital musculoskeletal (MSK) care provider SWORD Health raised a $189m Series D round, making the startup the latest digital health “unicorn” by lifting its valuation to $1.8b.

Based on SWORD’s fundraising pace, it’s safe to say the pandemic has been a boom for virtual MSK solutions. The company closed a $25m Series B in January, followed by an $85m Series C in June, and the recent funding pushed its outside capital total to over $324m.

SWORD offers a suite of personalized MSK solutions that includes:

  • ASK a PT – 24/7 remote access to physical therapists for general questions
  • Digital Guardian – Applies wearables and video monitors to guide safe workouts
  • The Academy – Customized educational content

The virtual-first approach is designed to reduce preventable surgeries for patients while driving value for risk-taking customers such as payors, employers, and health systems.

SWORD CEO Virgilio Bento founded the company in 2015 after seeing first-hand the “challenges that families face when they have to recover a loved one.” The WHO estimates that close to 2 billion people suffer from MSK conditions globally, creating a lot of room for multiple companies to emerge as leaders.

Digital MSK startups have attracted significant investor attention in recent months, with Hinge Health securing $600m to expand its online MSK platform, and Kaia Health raising $75m for its no-hardware-needed rehabilitation programs.

The Takeaway

SWORD prides itself on being “the industry’s only end-to-end digital MSK solution” (but then again, so does Hinge), and it will need to demonstrate that its hybrid approach offers a superior return on investment than competing strategies. If it can accomplish this, then the new funding should give it strong positioning within an MSK market that is quickly establishing itself as one of the top telehealth use cases.

AppliedVR Raises $36M for VR Pain Management

Posted on by Jason Barry

Virtual reality (VR) therapeutics developer AppliedVR raised a $36m Series B round ($71m total funding) to fuel growth as it awaits a decision from the FDA on its first de-novo submission for pain management.

  • AppliedVR combines VR-based cognitive-behavioral therapies with mindfulness exercises to help manage chronic pain, with patients reporting reductions in the daily life interference caused by their pain for up to several months after treatment.
  • EaseVRx is the company’s flagship product awaiting FDA approval, standing out as the first VR prescription therapeutic to receive breakthrough device designation for treatment-resistant fibromyalgia and chronic intractable lower back pain.
  • Research published in JMIR found that EaseVRx produced “clinically meaningful” improvement in pain outcomes, and AppliedVR is investing heavily in building evidence demonstrating its therapeutics as effective for patients, scalable for providers, and viable for reimbursement.
  • The latest funding will be used to prepare for EaseVRx’s full market launch after FDA approval, as well as to build out its product pipeline that includes RelieVRx (for acute postoperative pain) and AnxietyVRx (for generalized anxiety treatment).

Industry Impact

Although other startups such as XRHealth are pursuing the therapeutic VR space, none have AppliedVR’s established client roster (AppliedVR partners with over 200 health systems) or supporting body of research.

Following its Series B, AppliedVR has a lot of momentum in a chronic pain market estimated to negatively impact the economy to the tune of $635b annually. EaseVRx’s FDA approval would provide another tailwind to help the company be among the first to make VR pain management a reality.

Hinge Health Raises $600M for Digital MSK Treatment

Posted on by Jason Barry

In a virtual care landscape where many competitors are looking to address multiple conditions with a single solution, Hinge Health is setting itself apart by taking the opposite approach.

Last week, online musculoskeletal (MSK) clinic Hinge Health raised $600m to help build its team and platform, doubling the fast-growing startup’s valuation to $6.2b. Despite the influx of capital, Hinge is keeping a singular focus on musculoskeletal therapy, and tackling the problem with a deep roster of solutions.

  • Hinge launched in 2015 with a mission to improve MSK treatment by combining wearable sensors and computer vision-assisted physical therapy with a multidisciplinary team of physical therapists, doctors, and health coaches.
  • Several acquisitions have helped fuel Hinge’s growth within the last few months, including both Enso (manufactures devices for electrical stimulation pain relief) and wrnch (digitizes human motion with computer vision).
  • Hinge’s holistic approach covers the complete MSK journey from prevention to post-surgery, using HingeConnect to integrate patients’ external EMR data and ensure continuous coordination with other providers.
  • Over 80% of employers that cover digital MSK solutions choose Hinge’s platform, utilizing it to reduce unnecessary surgeries through preventative interventions. Hinge doubled its customer base to 575 companies over the past year. 

The Takeaway

By keeping MSK treatment as its exclusive focus, Hinge has quickly built one of the most robust solutions on the market while bridging the gap between in-person and digital care. The new funding adds to this momentum, and could lead to more developments for MSK patients seeking accessible care.

23andMe Enters Virtual Care With Lemonaid Health Acquisition

Posted on by Jason Barry

Genetic testing company 23andMe announced plans to acquire Lemonaid Health, a virtual care and pharmacy provider, in a $400m agreement expected to close by the end of 2021.

After going public earlier this year, 23andMe began to see a slowdown in purchases of its direct-to-consumer genetic tests, causing the company to search for new revenue drivers outside of its flagship product.

  • 23andMe is a consumer genetics company with a mission to help people access and benefit from the human genome. It has multiple FDA authorizations for genetic health risk reports, and began working on drug development with GlaxoSmithKline after an investment from the pharmaceutical company in 2018.
  • Lemonaid Health offers same-day telemedicine appointments and prescription drug delivery, leveraging clinical algorithms to assist its medical providers with treatment of a variety of common medical conditions.
  • Following the acquisition, 23andMe will be able to provide genetically-informed primary care, using genetic testing as a foundation for individualized treatment plans and disease management. 23andMe plans to accomplish this in part by using its FDA-approved pharmacogenetics reports, which indicate how efficiently different people metabolize certain drugs.

The Takeaway

Combining 23andMe’s consumer business with Lemonaid Health’s telemedicine and pharmacy services gives the company unique positioning in the increasingly crowded virtual primary care market. Activating a large existing customer base with a promise of personalized healthcare has been a popular strategy with recent digital health moves (Headspace Health, Crossfit Precision Care), and could give 23andMe an advantage over more traditional providers.

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