By Robert Teague, MD – Green Room Technologies Chief Medical Officer
Call It the Great Recalibration – a year in review on how early stage health technologies fared in the financial markets
Despite a tough year in 2022 for health tech early-stage companies and markets in general, the trend that took flight in 2020 and 2021 in funding and uptake of health technologies will continue even if it is a slower pace or if areas of need and interest shift.
Funding in 22Q3 was the slowest in 11 quarters according to Rock Health Funding Declines. Although deals fell only 14% from Q2 to Q3, funding fell 48% indicating that focus shifted from the mega late-stage deals to earlier-stage deals of lower amounts. That’s not all bad for most of us.
Workflow tools are a winner as health organizations race to assist providers with productivity demands and with process automation. While telemedicine continues to decline as a destination of new investment, the focus is shifting to digital therapeutics and complex care management. Future funding activity appears headed toward immersive digital health.
In the public markets, IPO activity declined dramatically in 2022 as did SPAC exits, though merger and acquisition activity continues.
Taking substantial losses in public markets in 2022 were biotech, devices, and digital health. Telemedicine poster child, Teladoc’s (TDOC) stock is down (-) 70% TYD. These results reflect the rapid appreciation of these stocks in response to the pandemic onset and acute phases in 2020-2021 followed by a resultant return to earth as the pandemic has changed to something less acute this year.
It hasn’t been pretty but think of it as the Great Recalibration. We are still in that process now. Health tech markets have been driven by demands and forces never seen in prior markets. As these stresses reach new equilibrium points, the direction of health tech innovation and acceptance will continue but the pace and quantity are likely different.
The health tech engine was already going in 2020 when Covid arrived. There was a massive acceleration of innovation, funding, and acceptance. March 5. We are now returning to speeds we are more used to which sometimes can feel like going backward. We aren’t. The trend is still our friend.