The EV/Sales multiple of the Bellevue Digital Health fund portfolio is currently under the long-term range of 6-10x, and about 40% lower than it was 12 month ago. In part a response to COVID-19, investors have poured $4.0 billion this past quarter into 97 digital health companies (per Rock Health), suggesting that this sector will likely see more than $12.0 billion invested in 400 companies for the year. In 2022, HR Benefits leaders will feel heightened pressure from their finance departments to demonstrate the value of these point solutions. In order to determine whether the investment in shares of a certain investment fund meets your specific requirements and matches your envisaged risks, we recommend that you contact an independent financial adviser. Weve all been reminded that you cant fight Mother Nature (aka macroeconomic forces), with D2C startups bearing the brunt of the reminder. Navid Farzad, Partner, Frist Cressey Ventures. 2 FinSA, Professional/Institutional investors: according to Art. While diminishing margins have forced big healthcare organizations (especially health systems) to focus on near-term needs, successful players will continue to plant seeds for better seasons. Providers like nurse practitioners, physician assistants, health coaches, nutritionists, counselors, and pharmacists have served as critical providers in the healthcare system given the physician shortage and the high cost of hiring a large physician team. Rated 4.3 by 3 people. As an investor, Im starting to anticipate that great deals will once again be available, at better prices. Digital health companies must rethink incentives to recruit and retain the best clinician talent. For example, Zaya Care uses this model in the maternal health space. Adopting a more conservative mindset, Q4 2022 saw Big Tech players recenter digital health strategies within their tried-and-true operational fields. Adoption of B2B models doesnt necessarily change a D2C companys customer-centricity. Rarely do we find a pure-play public comp that we can compare to a startup. Lyra hit unicorn status in 2020 in a pandemic-fueled funding round, and Modern Health, BetterUp and Ginger . 2022 is the year where IaaS meets digital health, 3. For example, the short supply for full-time clinicians has increased wages for per-diem and travel nursing and Allied Health 3x in 12 months, furthering a negative spiral of nurses quitting full-time jobs to access more flexible hours and higher wages. However, 2022 didnt go as well for D2C digital health players, with only 37% of the digital health companies that raised in 2022 selling directly to consumers, compared to 43% in 2021.5 Not to mention, D2C stocks felt crushing pressure in the public marketsand not just in the healthcare industry. In a tight labor market, employers are keen to attract and retain the best and most diverse workforce and many employees expect certain benefits as part of the compensation package. While the sector was expanding before COVID-19, the pandemic has caused a critical acceleration toward digitalising systems, with HealthTech solutions booming. The Bellevue funds have NOT been licensed for public offer or sale to the public in the United States in accordance with the US Investment Company Act of 1940 or the US Securities Act of 1933, or in Canada, Japan, Taiwan, Malaysia, Hong Kong or Israel in accordance with the laws in force in those countries. Aaron Snyder, founder and CEO of US Health Partners, highlighted, COVID-driven burnout and increased administrative burden will drive hospital-employed clinicians to the private sector in record numbers in the coming years.. Last year we predicted that the commoditization of telemedicine would unlock holistic virtual care. The great resignation poses a breaking point for the supply of clinicians, 5. Interestingly, the average round size in 3Q20 was $41.2 million, greater than the year-to-date . Reinforcing our experience, from pre- . By using the website www.bellevue.ch, you confirm that you have read, understood and accepted the general information provided by the Bellevue Group AG as well as these legal provisions. We have seen first-hand how this has led to a real battle for clinical talent among companies in this subsector. Bottoms-up sales strategies may become the norm as companies evangelize clinicians as their customers and focus on use cases spanning clinician-focused fintech products, retail, healthcare, and online community-building ecosystems. The purpose for a Global Strategy on Digital Health is to promote healthy lives and wellbeing for everyone, everywhere, at all ages. Meta applied its artificial intelligence chops to protein folding, and Apple invested in proving out the clinical fidelity of its wearable devices. Overall, U.S. digital health funding scraped by with $15.3B, underperforming 2021s pot and just beating out 2020s total. Digital technology has the potential to capture huge value in healthcare systems around the world, with the benefit of improving care while also driving down its cost. Not only did 2022s annual funding total come in at just over half of 2021s $29.3B2, but it also just squeaked past 2020s $14.7B sum. That reflects a 70% decrease in the value of revenue within our peer group in an environment in which revenue estimates are rising. This year's winning companies include startups working on interoperability and data integration, home care and monitoring, AR/VR in healthcare, hybrid care, and more. All but one company have rising revenue expectations on the whole across all analysts. EBITDA multiples are one of the most commonly used business valuation indicators that is often used by investors or potential buyers to assess a company's financial performance. Deeper clinical services translate into lower margins and more extensive and expensive clinical apparatus. There are some companies we can point to that are similar in how they generate revenue, who their customers are, as well as their growth rates and margins, but it is almost always impossible to find the perfect pure-play comp. 2022 marks the 13th anniversary of the passage of the HITECH Act which ushered in the digital era in healthcare. As access gaps are filled, quality will become the new focus, said CEO Colleen Nicewicz of Groups Recover Together. Further information on investor rights can be found on the Management Company's website (https://www.universal-investment.com). 2021 will likely go down as one of the biggest years ever for digital health-tech investments and revenue growth. The financial products mentioned on this site are not suitable for all investors. Last year, we talked about the critical role that Advanced Practice and Ancillary Providers (APAPs) would play in clinical teams. peer support groups, events), and care navigation, said Dana Clayton, COO of Folx. higher than Pre-COVID levels. Medly Pharmacy, which operates a full-service digital pharmacy, saw . Whats 2022s takeaways for MAMAA, other Big Tech players (e.g., Netflix, Nvidia, Samsung), and middle children? And clinical workflow software, which earned eighth place in 2022 ($1.5B), moved up from eleventh in 2021. Valuation Multiples Over Last 12 Months The single biggest question facing my business today is what valuation multiple is the right one to use when pricing private financing rounds in this space. The EBITDA multiple will depend on the size of the subject company . Not only did 2022's annual funding total come in at just over half of 2021's $29.3B 2, but it also just squeaked past 2020's $14.7B sum. Let's do the math with a real . That reflects a 70% decrease in the value of revenue within our peer group in an environment in which revenue estimates are rising. We expect to see activity in areas of high expected future growth in 2023. I also believe that this valuation trend is just now beginning to pressure private market valuations. According to the Digital Health Funding and M&A 2021 First Half Report released by Mercom Capital, the first half of 2021 closed with $14.7 billion invested across 372 US digital health deals with a $39.6 million average deal size. If you can't read this PDF, you can view its text here. 2022 edition of Corporate Valuation: Techniques & Applications will be held at Jakarta starting on 13th October. Investment or other decisions should not be made solely on the basis of this document. As an investor, Im starting to anticipate that great deals will once again be available, at better prices. Healthcare IT surged as the digital transformation accelerated across sectors. The next mental health startup to reach a billion dollar valuation was Calm in 2019. A tech-enabled renaissance for the independent clinician, 6. Austria: Paying and information agent: Zeidler Legal Process Outsourcing Ltd., SouthPoint, Herbert House, Harmony Row, Grand Canal Dock, Dublin 2, Ireland. For some D2C players, differentiated tech and/or B2B sales will help to deflect bottom-line impact. Disclosed value also surged from $15.1 billion to $38.1 billion. Revenue valuations have come in. While this may sound like a hefty cohort, it pales in comparison to the volume of mega-rounds raised in 2021 (88) and even 2020 (43). Investors and . As the funds are recognised (ie. The historically low valuation is not only attractive for investors, but also an interesting base for takeovers. To illustrate the slope of change, Q4 2022s $2.7B in funding sits 68% lower than Q2 2021s summit. In short, we do not have the answers. After an astonishing $45 billion poured into new digital health companies in 2020 and 2021, and an early 2021 peak in market valuations of publicly-traded digital health providers, valuations and multiples have collapsed. Due to the historically low rating, 2022 presents itself with enormous growth potential. How much do SaaS companies spend on customer support or marketing? Fund documents Bellevue Option Premium fund. Surgery Partners' revenue was $707.1 million in the fourth quarter of 2022 and $2.5 billion in the full year 2022, respective increases of 15.9 percent and 14.1 percent year over year. Therefore, particular importance is attached to ensuring that these sites are not intended for legal entities or natural persons, who have their registered office or who reside in such countries, their territories or dependencies or who, on account of their citizenship or similar status, are subject to the law of one of these countries. While the broader markets look to be in the midst of a correction, we are optimistic about the myriad of opportunities for innovation in the largest market in our economy that is still in just the teenage years of its own digital revolution. The re-emergence of the independent clinician also gives rise to a new go-to-market channel: the new D2C or Direct to Clinician. As clinicians have increasingly become consumer-facing during the pandemic while educating the public via social media, they have become an addressable class of customers with specific needs, uncoupled from the four walls of a clinic or hospital. Prospectus, the key investor information document ("KID"), the management regulations and the semi-annual and annual report are available free of charge in German from Bellevue Asset Management (Deutschland) GmbH, your advisor or intermediary, the paying agents, the relevant custodian bank or from the management company IPConcept (Luxembourg) S.A. (socit anonyme), 4, rue Thomas Edison, L-1445 Luxembourg, Luxembourg, https://www.ipconcept.com. But overall, the average revenue multiple of 2.3x to 2.6x is 50% to 60% lower than the revenue multiples of tech companies in 2022. Particularly for health systems, 2022 may be remembered as the year things went upside down. Last years efforts to diversify revenue streams saw Big Tech players building up businesses in data infrastructure, analytics, and finance, not to mention taking on the challenge of healthcare innovation in earnest. We would love to hear from you. 2022s total funding among US-based digital health startups amounted to $15.3B across 572 deals, with an average deal size of $27M. Rarely do we find a pure-play public comp that we can compare to a startup. Currently, valuation multiples on the data center side are high at 20-25x EBITDA. However, if capital flows begin to tighten as capital access tightens, we could be in store for a sharp pullback in startup valuations as well. I also believe that this valuation trend is just now beginning to pressure private market valuations. 1. You can also find us on twitter and LinkedIn. Employers have begun to acknowledge that increasing access to care requires both a refactoring of existing insurance policies, coupled with investments that quantify and deepen LGBTQ+ specialization in provider networks. The indications for the new year are good. These may be subject to change and the use of the site may be restricted or terminated at any time without prior notice. Legal entities or natural persons to which such prohibitions apply must not access or use these sites. Paying agent in Switzerland is DZ PRIVATBANK (Schweiz) AG, Mnsterhof 12, PO Box, CH-8022 Zurich. The value of revenue is being re-rated by the markets as the macro capital environment tightens. After initial successes in automating back-office operations, leaders are now extending automation to the area of care operations all operations involved in the delivery of acute care, including management of discharge planning, or access, system-wide patient flow, and more, as well as processes that connect patient care beyond the hospital., Jonathan Wang, Co-founder and CEO, and Mark Kalinich, Cofounder and CSO, Watershed Informatics: The progression of life sciences digital transformation will drive large investments in computational infrastructure., Joy Liu, Co-founder and CEO, and Joy Patel, Co-founder and CTO, Plenful: Automation and AI will play a growing role in specialty pharmacy operations in 2022, spurred by increases in limited distribution drugs, growing staffing challenges, pressure to differentiate on better patient experience, and novel purpose-built technology for pharmacy operations workflows. Emerging new platforms and tools are helping clinicians become more independent and run successful businesses by enabling flexible hours, additional revenue streams, or owning their audience. ACCESS ROCK HEALTHS 2022 RECAP SLIDES HERE. USA February 28 2023. LGBTQ+ people are a large and growing part of the workforce, with 1 in 5 Gen Z identifying as LGBTQ+. Stephen Hays, Founder of What If Ventures www.whatif.vc a mental health focused venture capital fund and host of the Stigma Podcast. Revenue valuations have come in. Hampleton Partners, an M&A advisory firm specialised in technology companies, has recently published their 2022 Report on the state of HealthTech. Report. Financial or Operating Metric ( EBITDA, EBIT, Revenue, etc.) interest rate hikes that cozied us up to the possibility of recession. If I were the CFO of a startup today, I would be preparing to extend my fume date as long as possible and survive what feels like a pending capital access contraction. Ambitious hospitalathome initiatives were launched to free up hospital beds, allow top of license practice, and reimagine care pathways. For information on opportunities and risks as well as tax information, please refer to the current detailed sales prospectus. Despite . The Digital Health 150 is CB Insights' annual ranking of the 150 most promising digital health startups in the world. It is a 2 day event organised by Riverstone Training and will conclude on 14-Oct-2022. However, these new virtual care clinicians now have multiple options. In part because of hospital-at-home excitement, on-demand healthcare landed the top-funded digital health value proposition spot of 2022 ($2.4B), led by urgent-care-at-home service DispatchHealth ($330M) and startups like Homeward Health, which raised twice in 2022. The days adjusted same-facility revenue in the fourth quarter increased 10.7 percent from that of 2021. Global venture capital funding, including private equity and corporate VC, into digital health was the highest ever in the first quarter 2021 at $7.2 billion, according to Mercom Capital Group. Revenue is increasing, so why are stock prices going down? In 2022, 35 digital health startups raised rounds of $100M or more. Digital-health startups banked $10.3 billion in the first half of 2022, trailing the $14.7 billion the industry raised in the first half of 2021. 2. Notably, 2022s years Q4 $2.7B total was less than half of last years Q4 raise ($7.4B). Take a look at the above chart which shows the average EV/NTM Revenue multiple for the peer group. By accessing this website you state that you agree with the data protection statement. Additionally, startups that once expected to mega-raise their way into the unicorn club were faced with investors who were less willing to take flights of fancy on $1B valuations; as a result, they may have chosen to delay big raises. The digital health industry is still very early in proving itself on this dimension with many of the market leading and even already public companies lacking gold standard evidence of their clinical efficacy, especially when compared to their offline competitors. For growth-stage startups that didnt raise in 2022, limited cash reserves may push once-crowned digital health unicorns back to the fundraising table (possibly at lower valuations) or toward M&A territory. For information on opportunities and risks as well as tax information, please refer to the current detailed sales prospectus. This statement may be updated at any time. You transform that PE ratio into a "multiple" you can use in valuation analyses by multiplying both sides of that simple equation by the business metric to get this new equation: Business Value = Business Metric x the Multiple. In the second half of 2021, the trailing 12-month median EV/S multiple was 5.6x up from from a 3.6x the previous half-year and around 3x the year prior. In Q4 2022, FinTech companies in the SEG Index recorded a median EV/Revenue multiple of 5.4x, less than half compared to pre-pandemic levels. Rock Health Advisory provides guidance on digital health strategy, access to proprietary funding data, and in-depth perspectives on the digital health market. For that reason, I created a Next Twelve Months (NTM) revenue forecast index for each of the companies in our peer group. This represents a 46% increase on 2021 numbers, and a whopping 70% increase on pre-pandemic (2019 . Nothing in this website is intended to be or should be construed or taken as accountancy, investment, tax or any other kind of advice. Heres the invite link. Given the current economic situation, its possible that consumers will spend even more conservatively in the months aheadwhich means that macro headwinds for D2C wont be relenting. The first half of 2020 has seen unprecedented digital health activity: record levels of venture funding of $5.4 billion 1 ; megadeals, such as Teladoc Health's $18.5 billion acquisition of Livongo; and accelerated virtual care delivery, such as telehealth and remote monitoring.
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