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Digital health Q1 2023: Funding bounces back, incumbents expand primary care presence

Key takeaways

  • In Q1 2023, the US digital health sector closed with USD 3.5 billion across 232 rounds, with an average deal size of USD 15 million, implying around 26% growth from Q4 2022. 
  • Our analysis of these 232 rounds reveals the following: 1) Silver Economy startups got the most funding (USD 441 million), mainly due to a significant USD 375 million raised by in-home kidney care provider Monogram Health; 2) Preventive Healthcare came in next (USD 313 million), led by two direct primary care providers (Vytalize Health and Carbon Health); and 3) the Telehealth and Mental Health hubs recorded many smaller rounds.  
  • Out of 48 partnerships recorded for the quarter, 15 involved incumbents, including Alphabet (Google), Microsoft, and Accenture.
  • As for acquisitions, the digital health space initiated or closed 15 acquisition agreements in total during the quarter, of which four were from incumbents that mainly focused on primary care. Notable acquisitions include 1) CVS Health acquiring Oak Street Health (USD 10.6 billion) and Signify Health (USD 8 billion) and 2) Amazon acquiring One Medical (USD 3.9 billion).
  • During the quarter, 11 new digital health products were launched, while there were four product updates to existing product offerings. The majority of these came from Telehealth and Mental Health Tech providers.
  • Q1 was a busy time for regulators, who had to find ways and new initiatives to tackle the impact of the expiry of the Covid-19 public health emergency (PHE) on May 11, 2023. In addition, Elon Musk’s Neuralink reportedly faced rejection from the FDA in March; however, subsequently (in mid-May), it received FDA approval to conduct human clinical trials.

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