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Hims, Doximity, and Health Tech’s Defining Decade
February 13, 2025
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Together with
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“Like Netflix, advertising is far more lucrative for digital health companies than other business models. Doximity – ‘basically an advertising platform for pharma’ – is the only one that is decently profitable.”
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UNC Professor of Medicine Spencer Dorn
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We’re using today’s top story to circle back on Define Venture’s report on “Health Tech’s Defining Decade,” which included too many highlights to squeeze into last week’s update.
The analysis dives into the performance of venture-backed health tech startups that went on to go public, with a sprinkle of survivorship bias given that it doesn’t include companies that have been delisted.
Although still an emerging sector, 18 health tech companies have exited for over $1 billion since 2020, including 13 via the public markets and 7 through M&A.
Here’s a look at those “Wave 1” companies and how Define Ventures segments the market.
These Wave 1 companies aren’t exactly known for their stock performance, but it was still surprising to see that only two have managed to increase their market caps since their IPO:
- Hims & Hers, which went public at a $1.6B valuation via a 2021 SPAC, and has grown its market cap to $10.1B after shrugging off recent Super Bowl ad drama.
- Doximity, which had a strong 2021 IPO at a ~$4B valuation, and is now valued at $14B after its latest financial results sent shares skyrocketing 25% on strong engagement from its new AI tools.
Define Ventures took these successes as a sign that SaaS and Hybrid models will drive future healthcare innovation, but UNC Professor Spencer Dorn shared a more sobering view of the mixed performances.
- “Like Netflix, advertising is far more lucrative for digital health companies than other business models. Doximity – ‘basically an advertising platform for pharma’ – is the only one that is decently profitable.”
What will Wave 2 look like? Define Ventures tallied up ~20 companies that are growing quickly and “could seek liquidity events” even bigger than their Wave 1 predecessors.
- While Wave 1 companies had to build each component of their offerings from scratch, Wave 2 companies had the perks of a more mature industry to weave throughout their offerings (ex. better data integration, AI, plug-and-play capabilities).
- This could result in Wave 2 companies having 2-3X the revenue at exit, and it’s hard to argue with the shortlist of IPO predictions.
The Takeaway
These reports catch a lot of flack for overweighting the successes of the firms that put them together, and while Define Ventures didn’t shy away from patting itself on the back for some good investments, it also delivered a great analysis of past (and possibly future) publicly traded health tech companies.
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- Super Bowl Backlash: D2C telehealth company Hims & Hers Health is facing a tsunami of backlash for its Super Bowl ad that called out the weight loss industry for “feeding on our failure” while positioning its compounded GLP-1s as the solution to the obesity epidemic. Outside of kicking off an “improving access vs. false advertising” debate, the ad prompted Novo Nordisk to issue a statement on the risks of compounded versions of its brand-name drugs, and a pair of senators are now urging the FDA to close a loophole on advertising non-approved medications.
- Chronic Conditions in the Workplace: Over half of American workers are managing chronic health conditions, and 76% of those workers have spent time on-the-clock caring for those conditions in the past year. That’s according to a Harvard poll of 1,010 employees, which showed that 58% have at least one physical chronic health condition, and that only a fraction of that group (40%) has disclosed the illness to their employer. Most reported staying quiet because their health is private and doesn’t impact work, but 18% said they’re worried they’d be passed over for promotions.
- Playback + Life Link III: Ambient AI is taking to the skies, with Playback Health and critical care air medical transport provider Life Link III forging a new partnership to overhaul clinical documentation in the air medical industry. Air medical transport is as challenging of an environment as they come, with added hazards and noises from flight, as well as clinicians that are rarely able to spare attention for documentation – all areas that are now being tackled by Playback’s Ambient AI.
- Capital Rx Unveils Judi Health: Capital Rx took the lid off its Judi Health unified claim processing platform, capable of administrating pharmacy and medical claims for employers, health systems, and health plans on a single interface. Judi allows all stakeholders to see a clear diagnosis associated with a prescription fill request, which seems like an obvious way to eliminate the constant confusion at the pharmacy counter. Capital Rx has reportedly added over 80 new clients this year, a majority of which were displacements from Caremark, Optum, and Express Scripts.
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- History of U.S. Healthcare: For anyone new to the industry or looking to brush up on their fundamentals, Lukas Steinbock at The Takeoff put out an opus on the history of U.S. healthcare that somehow manages to be as approachable as it is comprehensive. The full article will take a good hour to get through, but you’ll walk away having a decent grasp of how we got from lay healers during the 1800s Thomsonian movement to the industrial juggernaut that’s our current system.
- Paragon Denali Adoption: Four new community hospitals are implementing Altera Digital Health’s cloud-native EHR platform Paragon Denali, which is purpose-built to meet the needs of rural, critical access, and community organizations. Through its combination of the cloud and containerized services, Paragon Denali allows health systems with limited resources to implement upgrades more efficiently, minimize downtime, and scale the system as needed without unnecessary costs or constraints.
- ECGs Shaken, Not Stirred: Results from the DRAI MARTINI study in Nature Medicine showcased AI’s potential to help parse the vast amounts of ECG data that currently need to be interpreted by human technicians. Beat-by-beat annotation of 14,606 ambulatory ECG recordings was performed by 167 certified techs and an ensemble model called DeepRhythmAI. The AI model identified critical arrhythmias with a sensitivity of 98.6% (vs. 80.3% for the techs), and the relative risk of a missed diagnosis was 14.1 times higher for the technicians (although they also had fewer false positives).
- Sword Mental Health: Virtual MSK company Sword Health teased a move into mental healthcare during an interview with STAT. CEO Virgílio Bento revealed that Sword is rebranding as an “AI-first” care delivery company, and plans to broaden the reach of its AI agent Phoenix well beyond physical therapy. Phoenix guides users through sessions while providing live feedback, analytics for clinicians, and care plan suggestions – all features that are relevant in therapeutic areas outside of MSK.
- TRAIN Leaves the Station: A JAMA viewpoint provided the first look at the Trustworthy and Responsible AI Network – TRAIN – since the organization was established almost a year ago. TRAIN was founded by five health systems (Vanderbilt, Duke, Advocate, UT Southwestern, Northwestern) and a very major tech provider (Microsoft) to serve as a network of AI adopters conducting “natural experiments” to aid in developing real-world evidence and understanding responsible health AI use. The infographic in the abstract is a great overview of where TRAIN fits into the wider AI ecosystem.
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