How partnerships may also help the survival of digital well being corporations which are targeted on the house

Digital health homecare startups are beginning to figure out which path to take as they adapt to a new investment environment.

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

“One of the interesting things we’re seeing now is more of an understanding by payers and providers that there isn’t one digital health app that can do them all,” Tom Cassels, president and CEO of Rock Health Advisory, told Home Health Care messages. “To actually solve complex problems, these digital health solutions can complement each other.”

Rock Health is a San Francisco-based strategy and consulting provider focused on the digital healthcare market.

As an example, Cassels cited the partnership between SCAN Health Plan and MedArrive.

The two companies partnered in December to provide COVID-19 booster shots and flu shots to seniors in Los Angeles and Orange counties, California.

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

In that regard, Teladoc can now offer same-day drug delivery and home lab pickup.

“It tells you there will always be people, process and technology,” Cassels said. “These types of complementary systems are signs of maturation and understanding of how to work with entry-level digital health.”

As a number of digital health companies are forced to lay off employees after overgrowing too soon, Cassels said others have been able to survive through partnerships with incumbent providers or payers.

There are still slight concerns from insiders about how profitable digital health startups can face economic uncertainty and a slowdown in deals. Cassels expects the second half of 2022 to see more M&A activity than the first half, due in part to the maturity of some of these digital health companies.

“I think what we’re going to see is probably an increase in deals in the second half of the year as people find a true north in terms of their valuation,” he said. “I think there will be a number of private equity firms looking at late-stage companies that don’t go public. If you look at the index of digital health companies, it’s down significantly this year. I think private equity acquiring mature companies in this space is something we are looking at.”

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