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Health IT deals were down 35%.
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Hello and welcome to the redesigned InnovationRx! Katie Jennings and Alex Knapp will still be bringing you the same healthcare news in a slightly different format.
This week we’re taking a look at the contraction in healthtech venture capital dealmaking in 2022. The latest data from PitchBook found $5.4 billion went to healthcare IT startups helping hospitals and insurers to make sense of clinical, billing and administrative data in 2022. That was down nearly 35% from the $8.3 billion that went to healthcare IT startups the year before. The biggest drop off was in the fourth quarter, where $450 million in deals marked a 75% decrease from the average quarter in 2021. One major factor? The pain of inflation felt by health systems who are both software customers and VC limited partners.
Given that much of the U.S. healthcare system is still running on paper and faxes – especially when it comes to data sharing among unaffiliated doctors and hospitals – the overall outlook remains bullish. For example, despite medical records being dominated by major incumbents (Epic, Cerner and Meditech) at hospital systems, PitchBook is estimating the electronic health record software market segment will hit $47.1 billion by 2026 – a compound annual growth rate of 11%. All of the other subsegments – revenue cycle, operations, analytics and compliance software – are all expected to grow at rates ranging from 8% to nearly 20%.
Transcarent To Acquire Part Of AI-Powered 98point6 In $100 Million Healthtech Deal
Transcarent cofounder and CEO Glen Tullman.
Transcarent
Transcarent is acquiring part of AI-powered 98point6 Inc. in a healthtech deal valued at up to $100 million. Transcarent CEO Glen Tullman tells Forbes the transaction includes 98point6’s physician group, self-insured employer business and an irrevocable software license. 98point6 has developed an AI chatbot that collects information via a text exchange with the patient and summarizes it for a human doctor who then takes over the chat. “We’re putting AI front and center,” Tullman says.
This means Transcarent will now directly employ more than 150 doctors and clinical support staff. 98point6 CEO Jay Burrell tells Forbes his Seattle-based startup will stop providing care directly to patients and pivot to a “pure play technology company” rebranded as 98point6 Technologies that will license its software to health systems. The deal is expected to close by March 31.
Read more here.
Deals Of The Week
Organ Transplant Tech: Paragonix, which develops technology for organ transplantation, announced that it raised $24 million in series B funding led by Signet Healthcare Partners.
Breast Cancer Treatment: The FDA approved an expanded indication for Lilly’s Verzenio in combination with endocrine therapy for patients with certain high-risk breast cancers, eliminating a requirement that only patients with a certain molecular target were eligible to receive the drug.
Healthcare IT: Advantus announced an agreement with GE Healthcare for the provision of the latter’s healthcare tech management services to Advantus’ clients. The deal is potentially worth up to $760 million over the next 10 years.
Medical Documentation: Abridge, a startup that has developed a generative AI-based app to transcribe and summarize a doctor visit in plain language for more than 200,000 patients, is rolling out its doctor-facing version of the technology through a partnership with the University of Kansas Health System. This AI-based “intelligent copilot” generates a summary of the visit that can be integrated into the electronic health record (including Epic) with the aim of cutting down on admin.
Hospital At Home: Best Buy is partnering with Atrium Health, one of the nation’s largest hospital operators, as the tech retailer pushes into the hospital-at-home and remote patient monitoring space, including deploying its Geek Squad agents for tech support.
Programmable Medicine: With a $50 million commitment, Flagship Pioneering has launched a new company, Ampersand Biomedicines, which it says will aim to develop medicines that only target diseased cells, minimizing side effects and other issues.
30 Under 30 Europe 2023: Building A Healthier Future With Software, Surgery And Solar Energy
Guerin Blask for Forbes
Antibiotic resistant infections kill 1.2 million people each year. Rochelle Niemeijer, wants to help fight the overuse of antibiotics by tackling a common ailment: urinary tract infections. The 28-year-old cofounder and chief scientific officer of Netherlands-based Nostics has raised $7.4 million to develop a portable miniature chemistry lab with AI-powered software to analyze a urine sample in 15 minutes – compare that to the day or longer it can take for a lab to process the results of a urine culture. Her next big hurdle? Working through the regulatory process. “What I find is really important along this journey is to have perseverance and passion,” says Niemeijer. “Especially in science, there’s a lot of failures and there’s a lot of trials. You really need to push through to be able to achieve your goal.”
Niemeijer is just one of the 30 just one of the members of the Forbes 30 Under 30 Europe list in Science & Healthcare innovating to make the world better.
Other Healthcare News
Walgreens is facing calls for boycotts after the pharmacy chain said it won’t sell the abortion drug mifepristone in states where Republican attorneys general told it not to—even if abortion is still legal there.
President Joe Biden has proposed raising the Medicare tax rate for people earning more than $400,000 a year.
Facebook founder Mark Zuckerberg and his wife, pediatrician Priscilla Chan, have committed $250 million over a decade to fund a biomedical research hub in Chicago in collaboration with Northwestern University, the University of Chicago and the University of Illinois at Urbana-Champaign.
Walmart plans to have nearly 80 health clinics operating with its stores across seven states by the end of 2024, as the retail giant looks to compete with Amazon and other rivals buying doctor groups. Meanwhile, Walgreens-backed VillageMD has acquired a big medical group in Connecticut.
Several major manufacturing plants for the asthma drug Albuterol have shut down, which is forcing hospitals to devise alternatives.
Across Forbes
Diesel Giant Cummins Has A $13 Billion Cleantech Goal—Starting With A New Name
Bolt Billionaire Ryan Breslow Hired A Convicted Fraudster To Build His Social Impact DAO
Slap Fighting: What To Know About The Controversial New Combat Sport Trying To Grow As Medical Experts Disapprove
What Else We are Reading
For many congregations, wiping out medical debt has become a popular calling (Religion News)
How one medical school became remarkably diverse — without considering race in admissions (Stat)
