13 takeaways from the 2023 J.P. Morgan Healthcare Conference
January 14, 2023
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PitchBook's healthcare team was on the ground in San Francisco as the industry's premier event returned in person.
Our full conference recap will publish on Tuesday. For now, here's our TL;DR of key announcements, market sentiment, emerging trends, and predictions for 2023 and beyond:
Deals and announcements
1. Element of surprise: Element Biosciences announced a $200 genome as the genomic sequencing war heats up. Lower sequencing costs will accelerate innovation in genome-based research and diagnostics.
2. Chess pieces keep moving in the primary care game. News leaked that CVS is in talks to acquire Oak Street Health for north of $10 billion, which would create a powerful rival to Humana's CenterWell and Conviva Care Centers and constitute a defensive play against Walmart.
3. The conference spotlighted gene editing, which holds promise of advanced treatment for AIDS, cancer, and cystic fibrosis. Genetic medicine delivery startup ReCode Therapeutics stood out by announcing new partnerships with the Cystic Fibrosis Foundation and Bayer's AskBio.
4. Significant fundraises for Carbon, Monogram, Array Behavioral Care, Holmusk, and ReCode demonstrate that healthcare corporate venture arms are still putting capital to work for late-stage companies with a proven ability to bend the cost curve.
Market conditions
5. PE dry powder is still plentiful, and the sell-side pipeline is strong, especially in the lower middle market. The challenge for 2022 will be aligning buyer and seller pricing expectations.
6. Despite enormous headwinds in the provider end market, healthcare IT companies that are providing essential digital infrastructure are continuing to see rapid growth.
Trends to watch
7. Overheard: "Information from blood is unprecedented." Circulating DNA and RNA contains previously inaccessible health information. Caris detailed plans to launch a broad cancer monitoring blood test and aims to build universal blood-based diagnostic tests for diseases beyond cancer.
8. As the Medicare Advantage space grows increasingly crowded, presentations from Cityblock, UniteUs, and Equality Health demonstrated that Medicaid-focused provider and coordination models are increasingly scalable.
9. FDA commissioner Robert Carliff fielded questions on the controversial approval of Biogen's Aduhem, a treatment for Alzheimer's-related cognitive decline, and expressed ethical concerns around offshore clinical trials for products intended for the US market.
10. Hybrid care models look increasingly attractive, including for telehealth first providers. Virtual MSK startup Hinge announced an in-person home health pilot.
Predictions for 2023 and beyond
11. We foresee an acceleration of joint ventures and partnerships between value-based care enablers and health systems in the next one to two years. This will allow the enablers to scale more quickly while providing a path to increased risk (and increased revenue) for financially strained health systems.
12. Behavioral health M&A will heat up this year, driven by consolidation and/or take-privates of struggling tele-mental health providers and the need for value-based care delivery companies to integrate behavioral health services.
13. The employer self-insured market will increasingly participate in the shift to value—but only insofar as third-party brokers and care navigators can enable point solution consolidation and total cost of care reduction.
For more healthcare coverage, check out our recent research:
Our full conference recap will publish on Tuesday. For now, here's our TL;DR of key announcements, market sentiment, emerging trends, and predictions for 2023 and beyond:
Deals and announcements
1. Element of surprise: Element Biosciences announced a $200 genome as the genomic sequencing war heats up. Lower sequencing costs will accelerate innovation in genome-based research and diagnostics.
2. Chess pieces keep moving in the primary care game. News leaked that CVS is in talks to acquire Oak Street Health for north of $10 billion, which would create a powerful rival to Humana's CenterWell and Conviva Care Centers and constitute a defensive play against Walmart.
3. The conference spotlighted gene editing, which holds promise of advanced treatment for AIDS, cancer, and cystic fibrosis. Genetic medicine delivery startup ReCode Therapeutics stood out by announcing new partnerships with the Cystic Fibrosis Foundation and Bayer's AskBio.
4. Significant fundraises for Carbon, Monogram, Array Behavioral Care, Holmusk, and ReCode demonstrate that healthcare corporate venture arms are still putting capital to work for late-stage companies with a proven ability to bend the cost curve.
Market conditions
5. PE dry powder is still plentiful, and the sell-side pipeline is strong, especially in the lower middle market. The challenge for 2022 will be aligning buyer and seller pricing expectations.
6. Despite enormous headwinds in the provider end market, healthcare IT companies that are providing essential digital infrastructure are continuing to see rapid growth.
Trends to watch
7. Overheard: "Information from blood is unprecedented." Circulating DNA and RNA contains previously inaccessible health information. Caris detailed plans to launch a broad cancer monitoring blood test and aims to build universal blood-based diagnostic tests for diseases beyond cancer.
8. As the Medicare Advantage space grows increasingly crowded, presentations from Cityblock, UniteUs, and Equality Health demonstrated that Medicaid-focused provider and coordination models are increasingly scalable.
9. FDA commissioner Robert Carliff fielded questions on the controversial approval of Biogen's Aduhem, a treatment for Alzheimer's-related cognitive decline, and expressed ethical concerns around offshore clinical trials for products intended for the US market.
10. Hybrid care models look increasingly attractive, including for telehealth first providers. Virtual MSK startup Hinge announced an in-person home health pilot.
Predictions for 2023 and beyond
11. We foresee an acceleration of joint ventures and partnerships between value-based care enablers and health systems in the next one to two years. This will allow the enablers to scale more quickly while providing a path to increased risk (and increased revenue) for financially strained health systems.
12. Behavioral health M&A will heat up this year, driven by consolidation and/or take-privates of struggling tele-mental health providers and the need for value-based care delivery companies to integrate behavioral health services.
13. The employer self-insured market will increasingly participate in the shift to value—but only insofar as third-party brokers and care navigators can enable point solution consolidation and total cost of care reduction.
For more healthcare coverage, check out our recent research:
Best,
Rebecca Springer, Ph.D., Senior Analyst, Healthcare Lead
Aaron DeGagne, CFA, Emerging Technology Analyst
Rebecca Springer, Ph.D., Senior Analyst, Healthcare Lead
Aaron DeGagne, CFA, Emerging Technology Analyst
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