Credit Suisse https://www.credit-suisse.com, has published their digital health industry primer as well as the companion slide deck. The Primer Healthcare Digital Transformation is Here to Stay: Identifying LT Winners is the Key, provides a detailed discussion of 13 high growth digital health verticals across healthcare services.
The high growth digital health verticals across healthcare services include 1) telehealth/virtual care, 2) acute care telemedicine, 3) virtual mental health, 4) chronic care management/RPM, 5) digital pharmacies, 6) niche telehealth/Rx, 7) prescription discount cards, 8) tech-enabled primary care, 9) employee engagement/navigation, 10) expert/second opinion, 11) tech-enabled insurers, 12) women’s health, and 13) health wellness, and other point solutions. Other key topics discussed in the Primer includes consolidation in digital health, digital health formularies and the healthcare focus from big tech.
Digital health at a high level, is a broad multidisciplinary concept that consists of the intersection between technology and healthcare. Simplistically, digital health is any process or technology that attempts to improve how healthcare is being accessed, delivered, or consumed. Given the significant and lasting financial burden of rising costs and wasteful spending, there is an increased focus on reducing costs and more often than not, digital health is the answer.
This report provides a deep dive into some of the high growth digital health verticals across healthcare services. Credit Suisse analysts in the report discuss some of the most disruptive entities within healthcare services.
While telehealth received most of the focus during COVID-19, the analysts believe the pandemic also exposed various flaws in the country’s healthcare system and underscored the argument that the status quo is unacceptable. The pandemic blurred the line between traditional healthcare and digital health.
The strain COVID-19 put on the U.S healthcare system and globally, heightened the need for technology and processes to enhance resource capacity. This endeavor caused a spike in the adoption and usage of various digital health platforms. The pandemic reset the way consumers feel, think, and interact with healthcare providers, with expectations of higher levels of personalization and engagement.
Digital health ventures in 2020 saw a year like no other with a thematic shift in liquidity for digital health venture investors, with upswings in both IPO and M&A activity. Driven by the COVID-19 pandemic, funding rose by a remarkable 72% from a record high set in 2018 amounting to $14 billion invested across 440 deals.
The IPO market also accelerated in 2H20. While valuations in the public market have moderated from the peak, the excitement and interest remain high. As a result, there are no signs of any slowdown in digital health funding and IPO/SPAC activity.
However, the volatility in valuations is likely to continue given the lack of history to compare and validate. Further, the increased market attractiveness has resulted in a wave of larger well-funded technology and other conglomerates increasingly looking to compete in the space.
The digital health industry has also witnessed some interesting M&A deals over the past 12 months. The drivers that accelerated healthcare consolidation in 2020 have continued in 2021 and are likely to continue in the near future.
Credit Suisse analysts are relatively more positive on the consolidation among digital health vendors versus an insurer or a provider acquiring a digital health entity. Analysts believe there is more value to be captured when two entities offering different point solutions combine. Either way, the continuing consolidation will enable digital health vendors to obtain the scale and efficiencies required to succeed in the emerging healthcare paradigm.
Credit Suisse analysts have identified 30 publicly traded digital health companies which can be seen as a play on some of the digital health verticals discussed in the report. However, within the analysts’ digital health coverage, TDOC and ACCD remain their top picks.
For more information on the Digital Health Industry Primer or on the Digital Health Primer Companion Slide Deck, have questions, provide feedback, or news, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.