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Saturday, July 2, 2022 | 07:41 pm
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Pandemic Health-Tech Boom in U.S. Loses Momentum

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Pandemic Health-Tech Boom in U.S. Loses Momentum

Is the health-tech gold rush ending?
The wild boom in health-tech funding that followed Covid-19 is starting to fade.

The pandemic triggered a record wave of investment in new health-care companies. Doctors were forced to figure out how to practice online almost overnight, and Covid’s devastation exposed the systemic failings of American health care.

Entrepreneurs with thoughts about how to fix them Zoomed into meetings with VCs looking for places to put their money in an economy walloped by Covid. Big checks were written, setting records for investment in digital health. In the U.S., investors put $29 billion into digital health last year, double the level of 2020 and up from about $1 billion a decade earlier.

It made a certain kind of 2021 sense, when interest rates were low and a buoyant stock market welcomed new IPOs and SPACs daily. Why not pour billions into unproven health-tech ventures when eye-popping sums were also flowing to Dogecoin and NFTs?

Now the Fed is tightening, and the frantic pace of health-tech funding is slowing down as well. The $10.4 billion invested globally in digital health companies in the first quarter of 2022 is the lowest in six quarters, according to research firm CB Insights. It’s down 36% from the prior quarter, a steeper drop than in other sectors like financial technology.

Rock Health, which tracks U.S. digital health funding, also recently noted the decline in investment. The performance of digital health stocks has been dismal of late too: An index the group compiled of digital health stocks dropped 38% from July 2021 through the end of March, a worse showing than the broader market and health-care benchmarks.

The last few years, billions of dollars have been bet on the premise that technology can make health care better, cheaper, or both. But health care is, famously, complicated, and aspiring disruptors have fizzled before. (See: Haven.) In the next few years, we’ll see how those bets turn out. — John Tozzi

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