Will digital health funding boom or bust? 5 experts weigh in

Rock Health CEO Bill Evans was one of five experts interviewed by Health Evolution about whether or not investment in the digital health sector will continue at its current pace over the years to come. In addition to asking about the pace of investment, the experts were asked about the role special purpose acquisition companies (SPACs) played in the current funding surge.

In response to the question of whether the digital health funding boom is a bubble or something more sustainable, Evans was optimistic. “Healthcare is fundamentally so large as a sector of our economy and so underinvested in terms of technology compared to any other industry that the opportunities to transform it and create tremendous value are just fundamentally huge,” he said. “Right now, we’re still in the early and middle innings on transforming healthcare as a society.”

However, he cautioned, there is a likelihood that some of the valuations currently being offered are going to go down. There are typically down rounds after the excitement and run-up in valuations that have been seen over the past year, Evans said, and probably a fair number of digital health companies are going to experience that. “I think that there’s going to be a lot of well-capitalized businesses that come out of this period who will be well positioned to carry that innovation on. The savvy investors and entrepreneurs are going to find each other during this period.”

What does the SPAC trend mean for digital health funding? “I don’t think we know as an industry what SPACs mean for digital health,” Evans said. “The story is really being written right now.”

Evans added that there are more options than ever before in digital health for private companies to seek access to public markets, including reverse mergers, SPAC acquisition, direct listing, and traditional IPOs.

“The bigger sort of story is how you can capitalize as a company, there’s more flexibility than ever before. A few years ago, we went through an 18-month period where there were no IPOs. At the time we said, ‘Given the age of maturity of many of these companies, we don’t expect to see a lot of IPO activity but zero is too low.’ Now, I think the market environment has changed and there are more tools available, more receptivity, and more paths to going public. That certainly changed the dynamic in a big way.”

Read the full article, including comments by Aaron Martin of Providence Ventures, Sukanya Soderland of Blue Cross Blue Shield of Massachusetts, Sean Duffy of Omada Health, and Raj Prabhu of Mercom Capital Group, here.