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July 27, 2022 | News

How Partnerships Can Help Home-Focused Digital Health Companies Survive

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Home Health Care News

Home-based care startups in the digital health space are starting to figure out what lane they should be driving in as they adapt to a new investment environment.

Despite some troubling figures from investments made in digital health, insiders with Rock Health Advisory say that a shift in strategy, and a willingness to partner with other like-minded companies, is helping those companies survive.

“One of the interesting things that we’re seeing now is more of an understanding from the payer and provider that there’s no one digital health app to rule them all,” Tom Cassels, president and CEO of Rock Health Advisory, told Home Health Care News. “To actually solve complex problems, these digital health solutions can complement one another.”

Rock Health is a San Francisco-based strategy and guidance provider that focuses on the digital health market.

Cassels pointed to the partnership between SCAN Health Plan and MedArrive as an example.

The two companies teamed up in December to provide COVID-19 booster and flu shots to homebound seniors throughout California’s Los Angeles and Orange counties.

Cassels also mentioned the partnership between virtual care company Teladoc Health Inc. (NYSE: TDOC), the digital pharmacy company Capsule and Scarlet Health, a division of BioReference Laboratories.

In that relationship, Teladoc can now offer same-day medication delivery and at-home lab collection.

“What that tells you is there are always going to be people, processes and technology,” Cassels said. “Those types of complementary systems are signs of maturing and understanding how to work with digital health at an entry level.”

As a number of digital health companies are being forced to lay off staffers after growing too much, too soon, Cassels said that others have been able to survive by partnering with established providers or payers.

There are still slight concerns from insiders on just how profitable digital health startups can be given economic uncertainty and a cool down on deals. Cassels believes the second half of 2022 will see more M&A activity than the first half, partly because of the maturity shown by some of these digital health companies.

“I think what we’ll see is likely a pickup in deals in the second half of the year as people find a true north with respect to their valuation,” he said. “I think there are going to be a number of private equity firms looking at late-stage companies who are not going into the public markets. If you look at the index of digital health companies, it’s down significantly this year. I think acquisition in that space of mature companies by private equity is something that we are taking a look at.”

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