Digital Mental Health Investment Down 82% in 2022

With 2022 three-quarters closed, the grip on digital mental health and telehealth in venture capital investment may be starting to wane.

That’s indicated by the data and a report published by Rock Health and Flare Capital Partners that also shows that overall investment in digital health has cooled after a red-hot 2021.

“With $2.2 billion raised across 125 deals, Q3 takes the title of the industry’s smallest funding quarter for all of 2022; in fact, it is the lowest quarter for digital health dollars raised since Q4 2019 ($2.1 billion).” report states “With the third quarter included, 2022 year-to-date funding stands at $12.6 billion across 458 deals, raising doubts that this year’s digital health jackpot will reach even half the $ 29.2 billion last year.”

Mental health remains the best funded clinical indication. In the third quarter, digital mental health companies raised around $400 million. That brings the total amount of mental health funding to $1.7 billion over nine months of 2022. That’s about 82% less than the $3.1 billion raised in the first three quarters of 2021, according to an earlier report from RockHealth. report.

Major Clinical Indications Funded, YTD 2022

Mental health $1.7 billion
Oncology $1.08 billion
Cardiovascular $900 million
Diabetes $900 million
Reproductive/Maternal Health $700 million
primary care $600 million
Source: Q3 2022 Funded Top Clinical Indications via “Digital Health Funding Q3 2022: The Market Isn’t the Same as It Was”

The latest report finds that investment in complex disease states is growing. The second place indication, digital health companies tackling oncology raised $946 million during the first three quarters of the year.

Startups leveraging telemedicine, as the report calls it, retained second place in terms of ranked technology use by total investment ($1.7 billion) where it has held since 2015. It trails non-clinical workflows in the first place. Artificial intelligence is especially prominent in workflow investments, the report states.

  Why does stress cause weight gain?

“[An] The oversupplied market, declining returns from direct-to-consumer advertising, virtual prescribing scrutiny, and the rocky trajectories of public telemedicine leaders like Teladoc have increased investor skepticism toward the crop of drug providers. virtual care from telemedicine, raising just $2 billion so far this year. report states.

The report refers to the Drug Enforcement Administration investigation of digital mental health Cerebral Inc. and Done Global Inc.: Both companies have faced scrutiny for their handling of prescription controlled substances for ADHD treatment.

The report estimates that investment in telemedicine will close the year close to $2.7 billion, representing just over a third of the funds raised in 2021. Waning attention to telemedicine is being replaced by “health technology enablers.” immersive and decentralized”.

Top Value Propositions Funded, YTD 2022

Non-clinical workflows $1.8 billion
medical care on demand $1.7 billion
Investigation and development $1.7 billion
Treatment of the disease $1.6 billion
health market $1.4 billion
Disease follow-up $1.4 billion
Q3 2022 Best Funded Value Propositions via “Q3 2022 Digital Health Financing: The Market Isn’t the Same as It Was”

The digital mental health investment macro environment

The quarter also saw a slowdown in later-stage investments. The third quarter only saw six funding rounds at Series C or later, including a $130 million Series D from digital behavioral health startup Alma, announced in august.

Alma’s deal is also notable due to a relative absence of “mega boosts”. Rock Health only tracked two digital health deals that totaled $100 million or more. The other was for the cardiovascular health app Cleerly, which raised $223 million in Series C in July.

“By comparison, the quarterly average number of mega deals in 2021 was 22, with a total of 88 mega deals during the year,” the report states. “While the 2021 trend of $100+ million raises was somewhat flat through the first quarter of 2022 (18 mega deals), the pace of mega deal funding started to drop in the second quarter (11 mega deals) before falling down in the third trimester.

  बिना ब्रश किए पानी पीना सही है? कहीं सेहत खराब तो नहीं कर देगी ये गंदी आदत

The report also points to another shaky stock market appearance by a digital mental health company: Akili Interactive (Nasdaq: AKLI), a digital therapy focused on cognitive decline, hit the nasdaq in august through a merger of a special purpose acquisition company (SPAC) with Social Capital Suvretta Holdings Corp. I.

The stock peaked at $37.58 in its public stock market debut, but closed at $7.15, according to historical stock price data from Yahoo Finance. As of Tuesday afternoon, Akili Interactive shares are trading at $2.45.

“While Akili might be suffering from the growing pains of going public, it is also worth noting that as of early 2022, the three publicly traded [digital therapeutics] manufacturers, Better Therapeutics, Pear Therapeutics, and Akili, significantly underperformed the Rock Health Digital Health Index (RHDHI),” the report states.

At the start of the third quarter, Better Therapeutics and Pear Therapeutics share prices averaged $1.52, representing an average drop of 74% from their 2022 opening prices. This underperformed the RHDHI by 40 points percentage. The inclusion of Akili Interactive’s listing pushed the average share price up to $2.02, 28 percentage points below the RHDHI at the end of the third quarter.

The report posits that the stock’s underperformance may be related to a so-called “earnings penalty” which the report defines as a hit to stock prices when there are investor concerns about a company’s ability to generate earnings. recurring.

Leave a Comment