Editor’s note: This story is Part three of our series spotlighting late-stage startups that not only raised big funds recently but doubled their valuations as well. Read Part One on the future of work, Part Two on the Web3 space and Part Four on cybersecurity, and Part Five on e-commerce.—Special Projects Editor Christine Kilpatrick
Health care has not been immune to the recent economic downturn.
Startups that filed for initial public offerings at an accelerated pace during the pandemic saw their valuations take a nosedive in recent months. Late-stage companies are either holding off on fundraising (lest they lose pandemic-era valuations) or looking for creative ways to extend funding rounds.
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However, per Crunchbase data, a handful of late-stage health care startups have managed to increase their valuations by more than 100% since 2022’s second quarter. These startups represent promising niches in the sector involving clinical research, electronic health records and smart devices.
Overhauling clinical trials
Clinical trial platform Reify Health raised $220 million in late April, following a Series C round of $220 million in August 2021. The company’s valuation jumped by 118% to $4.8 billion.
Clinical trials, the long and arduous process of testing medical products for safety and efficacy, got a massive makeover in 2020. They have long suffered diversity problems for decades that made it difficult for people of color, lower-income individuals or those with mobility barriers to access testing sites. This in turn made it difficult to truly understand how safe new drugs are for different sectors of the population.
These problems exacerbated during the pandemic when testing sites were hard to access due to strict quarantining guidelines. In March, the Food and Drug Administration released new clinical trial guidance that included conducting them virtually.
Since then, clinical research startups experienced massive waves of investment. Venture funding spiked 111.7% in 2021 at over $2 billion, according to Crunchbase data. Companies such as MedVector introduced plug-and-play devices that made it possible to conduct clinical trials from a physician’s office instead of a testing site. Others, like Topography, make it easier to find the right patients to participate in clinical trials. The Los Angeles-based company raised $21.5 million in January.
Removing bottlenecks from the clinical trial process may also translate into more money for pharmaceutical companies, which often have 20 years before their drug patents expire and generics enter the market.
Reducing friction in health care
Patient booking platform NexHealth is part of an emerging class of EHR technology. EHR, which stands for electronic health records, aims to update antiquated administrative systems in hospitals and clinician offices.
Lags in booking patients, billing insurance companies and sharing health records between a primary care physician and a specialist cause friction in doctors’ offices. This often leads to long patient wait times and physician burnout at a time of high demand for care.
This class of companies raised $1.7 billion during the pandemic, per Crunchbase data. One startup, Abridge, raised $12.5 million in August to help doctors create patient notes that can automatically be billed to insurance companies.
EHR technology that organizes patient data and relieves administrative burdens improves the quality of care and leads to healthier patients, according to 75% of the physicians surveyed by GlobalData. Productive doctor visits that lead to healthier patients also reduces the need for expensive, reactionary care.
Data is king
About a year after Ōura raised $100 million in Series C funding, the company raised an undisclosed venture round with only three investors in April. The company’s valuation went from $800 million to $2.6 billion.
Ōura, which makes a wearable smart ring that tracks biometric data and lifestyle patterns in activity and sleep, is part of a genre of wellness and fitness startups that made it big during the pandemic.
The Ōura valuation upstep could be a harbinger for a much more impactful trend.
Wearables startups saw $1.7 billion in venture funding in 2021, but it wasn’t driven purely by health and fitness fanatics. Wearables provide a trove of data and a better snapshot of one’s health than a regular checkup at a doctor’s office.
At the height of the pandemic, when the number of beds at hospitals fell drastically short of demand, remote patient monitoring technology spiked.
This kind of technology will have decades of impact as the U.S. braces for a public health crisis: Boomers, billed as the largest and longest-living aging population, is likely to usurp the vast majority of health care resources and will require technology to help them age in place.
This hasn’t been lost on investors.
Check back for Part Four in our series, which features high-valuation startups in the cybersecurity sector.
Illustration: Dom Guzman
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