Rock Health – special shoutout to Kyle Bryant, Madelyn Knowles, and Adriana Krasniansky

Digital Health

Rock Health 2022 Full-Year Funding Recap

Every quarter, Rock Health gives us the gift of tallying, analyzing, and adding a bit of spin to the biggest trends in digital health funding – and their 2022 recap might be their best gift yet.

As Rock Health describes it, 2022 was a “downhill ride,” with $15.3B in total US digital health funding signaling the tail end of a three year cycle centered around a pandemic investment frenzy that peaked in 2021 ($29.1B total raise).

That $15.3B figure breaks down to 572 investments at an average of $27M, and we weren’t exactly picking up steam toward the end of the year. (Chart: 10-year trend)

• Q4’s $2.7B total was less than half of Q4 2021’s $7.4B raise, and it now looks like the market is winding down from its mania to find a more sustainable long term growth rate. (Chart: quarterly totals)

• Investors’ reluctance to go after late-stage companies and founders’ fears of raising a down round led to only 35 startups raising $100M or more throughout the year. By all means a lot of capital, but well shy of the mega-rounds seen in 2021 (88) and 2020 (43). (Chart: mega-rounds)

• As investors battled over early-stage prospects, median Series A rounds climbed to an all-time high of $15M in 2022, while check sizes shrunk across all later stages. (Chart: round sizes)

• Although “on-demand” care companies led the pack with $2.4B in funding (props to DispatchHealth and Homeward), providers’ front-and-center focus on efficiency kept nonclinical workflow startups close behind with $2.2B raised. (Chart: top value props)

• One of the best charts of the report was tucked away toward the end, highlighting how D2C startups took the biggest hit of any cohort due to rising customer acquisition costs, capital lifelines drying up, and a weakening consumer. (Chart: customer segment focus)

The Takeaway

It’s hard to tell whether we’ve reached the end of this cycle, or if we’re now entering the recession that’ll bring the real pain. Rock Health points to a couple of signals that suggest we might have already seen the worst of it: investors have dry powder stockpiled, and a difficult exit climate could bring late-stage companies back to the fundraising table.

Regardless of when investment starts ramping back up, Rock Health predicts that it’ll be “built up on slow, steady, and maybe even boring strategies.” Sounds like a reasonable prediction, and if 2023 is anywhere near as hectic as many analysts think it will be, “boring” might not be such a bad thing.

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The Wire

• CVS Had a Huge Week: Bloomberg got the scoop on a possible $10B acquisition of Oak Street Health by none other than the world’s most acquisitive pharmacy chain, CVS Health. Already in the midst of an $8B acquisition of Signify, CVS has made it clear that it intends to push its way into primary care by picking up an established player, and Oak Street’s 170 clinics and 159k active patients definitely fits the definition. To top it off, CVS also announced a $100M investment in Carbon Health that will see it begin to pilot Carbon’s operating model and software within several CVS Health locations. There’s a lot of overlap between the Carbon investment and the Oak Street acquisition, so it’ll be interesting to see what actually comes of the rumors.

• Innovaccer + Franciscan Health: 12-hospital system Franciscan Health is moving to the Innovaccer Health Cloud to enhance its risk-based contract performance by creating a unified patient record across its employed physician network and affiliated providers. Franciscan is also leveraging the Innovaccer CRM to reimagine its patient experience strategy and enable its marketing and experience teams to easily orchestrate appointments, monitor communications, and create personalized care paths (e.g. cardiac, diabetes) that drive outreach at the most critical health moments.

• Mental Health App Review: A new JAMA study revealed that many mental health apps only provide basic services. Out of 578 apps included in the analysis, there were only 22 different therapeutic features, with the most common ones being psychoeducation (41%), mindfulness (38%), and goal tracking (38%). The authors highlight a need for deeper feature sets to improve performance, noting low prevalence of features such as acceptance and commitment therapy (2%), dialectical behavioral therapy (2%), and biofeedback (1%).

• Wisdo Series A: Wisdo Health raised an additional $5M in Series A funding (round now closed at $11M) to accelerate the growth of its peer support platform that’s focused on combating social isolation. Wisdo helps users navigate their benefits by mapping life challenges, goals, and obstacles to health, then proactively connects them to peer support groups and other SDOH solutions offered through their health plan.

• Quil Assure Roll Out: Quil announced the commercial availability of its Quil Assure platform that uses ambient sensors placed around a senior’s living space to notify their ‘Care Circle’ of any unusual routine changes, reducing the need for unnecessary check-ins. Alongside the roll out, Quil announced its participation in AARP’s AgeTech Collaborative, a new program helping introduce new products to the growing Age Technology market. 

• December Jobs Report: The December Jobs Report revealed that the healthcare sector added 55k jobs last month, with ambulatory services, hospitals, and residential care facilities leading the job gains (30k,16k, 9k). The healthcare industry’s been surprisingly quick to make up the job losses from the beginning of the pandemic, adding an average of 49k jobs per month in 2022 (vs. 9k per month in 2021), although it’s unclear if the momentum will continue now that the COVID job recovery is in the rear view mirror.

• Castell + Omada: Intermountain Healthcare’s value-based care subsidiary Castell is partnering with Omada Health to offer virtual diabetes care to patients who receive primary care from Intermountain providers in Utah. The alliance will identify and contact eligible patients for the hybrid program that combines connected devices (scales, CGMs, blood glucose meters) with in-person support from licensed health coaches. 

• Onc.AI Scores $25M: Onc.AI raised $25M in Series A funding to develop and obtain regulatory approval for its upcoming digital clinical management solution for immuno-oncology therapies. Onc.AI’s first product will focus on lung cancer, utilizing radiomics and AI to help oncologists with cancer treatment decision-making.

• Overlooked AI Bias: An editorial in STAT News took aim at one of the publication’s favorite topics: medical AI bias. The analysis of 518 FDA-approved AI products found that very few submissions provided data on key sources of bias (devices, patient cohorts, clinical sites, annotators), then urged the FDA to require far more transparency into AI models’ training data and performance with different patient groups, as well as to strengthen its oversight of already-cleared AI models.

• New Teladoc Branding: We accidentally cut off a little bonus for the design buffs in our coverage of Teladoc’s app overhaul: the company unveiled a new brand identity and “Connector” logo that represents “the ongoing connection between customers and the care they need to achieve new levels of health.” It’s easy on the eyes and looks something like if you asked an AI to draw a Fibonacci spiral in the style of Picasso.

• Carallel Closes $8.2M: Carallel secured $8.2M in Series A funding to expand its platform that equips family caregivers with digital tools and peer-to-peer support. Carellel already boasts 400k Medicare Advantage and commercially covered members, providing virtual access to a team of advocates that helps caregivers develop care plans and address their specific challenges.

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