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Healthcare

Market Map: Telehealth startups attract checks in challenging market

Market headwinds have taken their toll on several ecosystems and digital health is no exception, with deal activity reaching a new low in Q2.

Market headwinds have taken their toll on several ecosystems and digital health is no exception. Deal activity for the sector reached a new low in Q2, and new startups have been struggling as the deals completed so far this year have tended to be for companies with existing investors, according to PitchBook analyst Aaron DeGagne. Funding for digital health is not expected to trend upward for the next few quarters.

However, teletherapy has been a rare bright spot amid the gloom as funding momentum has increased in the space, according to PitchBook’s Q2 2023 Digital Health Report.

The market map below explores the telehealth segment and shows which startups are attracting capital. Click on the teal tile to see more information.

 
  
To go deeper, read our Q2 2023 Digital Health Report. PitchBook customers can also explore the full market map with details on more than 900 companies.

Spotlight: Telehealth

The telehealth segment is made of five subsegments:
 
  • General and primary care: Startups that offer virtual general or primary care services, which can either replace or assist physicians.
  • Teletherapy and behavioral health: Companies that offer mental and behavioral health services digitally.
  • Specialty telemedicine: Companies that work in specialized medicine and deal with diagnosis and care for that area digitally.
  • Prescription fulfillment and online clinics: Startups that can offer online clinic care and fill prescriptions for more common conditions. 
  • Home testing and home health: Businesses offering health tests at home and other associated at-home services. 

Trends: Deals and exits

 


Through the first half of 2023, there were 146 digital health VC deals worth $2.1 billion, a continuation of the slowdown that started in the latter half of 2022, according to PitchBook data.

While the number of deals completed in Q2 was the same as in Q1, there was a 25% decline in deal value quarter-over-quarter, from $1.2 billion to $0.9 billion.

Notable deals in Q2 included digital healthcare platform developer Spring Health's $71 million fundraise and Medicare Advantage behavioral healthcare platform provider Author Health's $115 million early-stage VC round.
 
 


Due to the continued IPO bear market and the challenges posed by high interest rates, there were no notable exits in Q2. So far this year there have been nine exits worth $0.1 billion, a far cry from the 40 exits worth $15.6 billion recorded in 2021.

WW International's acquisition of weight loss telehealth provider Weekend Health, also known as Sequence, for $132 million was one of the few meaningful exits this year.

More market maps:
Featured image by Blue Images/Getty Images

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