The COVID-19 pandemic has spurred funding in telehealth and digital well being corporations, pushing the healthcare as a sector as a complete to boost greater than $14 billion in preliminary public choices on this 12 months’s third quarter, in keeping with a brand new report.
Healthcare corporations raised a cumulative $13.44 billion in IPOs through the third quarter. In complete, healthcare corporations have raised roughly $29.45 billion from IPO exercise to date this 12 months—greater than full-year IPO funding raised for every of the previous 5 years, respectively, in keeping with the report from S&P World Market Intelligence.
GoodRx’s $944.3 million IPO and Amwell’s $853.3 million IPO in September topped the third quarter exercise, in keeping with the report from S&P World Market Intelligence. Amwell on the similar time entered right into a inventory buy settlement with Google, beneath which Google invested $100 million into the corporate.
These corporations and others are capitalizing on current momentum as telemedicine and digital care use has soared amid the COVID-19 pandemic.
“While you take a step again, throughout the house there is a little bit of an arms race taking place,” RBC Capital analyst Sean Dodge informed S&P Global Market Intelligence. There (are) a number of small Teladoc and Livongo look-alikes out proper now elevating cash as quick as they’ll to broaden their platforms and scale-up.”
Teladoc Well being, which went public in 2015, in August unveiled plans to merge with Livongo, a digital well being firm that helps customers handle continual circumstances, in a $18.5 billion deal. The newly mixed firm will function beneath the identify Teladoc Well being, keep Teladoc’s headquarters in Buy, N.Y., and primarily be led by Teladoc’s management staff.
Livongo’s CEO Zane Burke and President Dr. Jennifer Schneider, amongst different executives, will go away the mixed firm after the transaction closes, in keeping with an announcement Teladoc filed with the Securities and Change Fee.
Final 12 months Well being Catalyst, Livongo and Phreesia started public buying and selling inside every week of each other in July, ending a nearly three-year drought for the reason that final IPO of a digital well being firm. To date in 2020, GoodRx is already the sixth digital well being firm to go public, in keeping with a report from Rock Well being, an early-stage enterprise fund targeted on digital well being.
The variety of telehealth corporations going public might proceed to development all year long.
SOC Telemed, a telemedicine firm previously often called Specialists On Name, in July introduced plans to go public through a merger with Healthcare Merger Corp., a particular function acquisition firm. SOC Telemed on Friday stated Bon Secours Mercy Well being plans to make a private investment into the corporate that can shut concurrently with the proposed merger.
Non-public telehealth corporations have been scooping up investments, too.
Digital well being startups globally raised $4 billion in venture-capital funding through the third quarter, up 100% year-over-year from $2 billion in final 12 months’s third quarter, in keeping with a report from market analysis agency Mercom Capital Group. That features a file $1.4 billion in VC funding that went to telehealth startups.
VC funding into telehealth startups elevated 118% year-over-year, in comparison with simply $653 million raised throughout the identical interval in 2019.
“Digital well being and particularly telehealth, has taken off amid COVID-19,” Raj Prabhu, CEO of Mercom Capital Group, stated in a statement. “This stage of exercise might not be sustainable as we come out of the pandemic,” he added, noting telehealth visits have dropped in current months.
Current analysis has indicated telehealth visits are declining as hospitals reopen; nonetheless, telehealth utilization in the summertime nonetheless sat at a notably greater price than earlier than the pandemic.
To date this 12 months, healthcare is the third-highest business when it comes to IPOs, following the commercial and expertise sectors, in keeping with a report from Ernst & Younger.