Feb 9, 2022 - Health

Thirty Madison joins the health tech consolidation tsunami

Illustration: Aïda Amer/Axios

New York-based Thirty Madison and women's-focused digital health startup Nurx, based in San Francisco, have agreed to merge under the Thirty Madison brand, the company's executives tell Axios.

Why it matters: Digital health consolidation wave? Try tsunami.

  • As public markets tighten their belts on digital health, mergers and acquisitions will rule the months ahead.
  • As part of the stock deal, Nurx chief executive officer Varsha Rao will join the company as head of Nurx.

The big picture: In 2021 alone, there were 574 total M&A deals in the health tech sector, up 44% from 2020, according to a report from CB Insights.

Details: Thirty Madison's deal with Nurx gives the combined company significantly more heft in the digital health sector:

  • More than doubles its number of active patients to 750,000 from 350,000.
  • Boosting its B2B presence by giving Thirty Madison access to Nurx's relationships with pharmacy benefits managers.
  • Adding reproductive and sexual services to its list of available treatments, which currently includes hair loss, migraines, allergies and digestive issues.
  • "We met Rao in the Nurx office and the first three values listed on their wall were the same as ours: Patient first, better every day and one team," says Thirty Madison president Michelle Carnahan. "It was a real values connection."

By the numbers: Thirty Madison was last valued at $1.04 billion, according to PitchBook data.

  • Since it launched in 2017, it's raised over $210 million.
  • Nurx, founded in 2015, has raised $110 million, according to Carnahan, and was last valued at $322.5 million, according to PitchBook.
  • The combined company expects to bring in $325 million in revenue by year's end and have 1 million active patients, says Carnahan.

Reality check: The "house-of-brands" strategy presents some potential challenges in the digital health sector, including long-term leadership issues and difficulties turning a profit, analysts say.

  • Bringing in a company's existing leaders presents the age-old problem of too many cooks in the kitchen. "(Those leaders may eventually) want to take another swing at the entrepreneurial piñata," says Lisa Suennen, a national advisor with Manatt Health.
  • Assembling an army of brands — especially when those companies may not be profitable — may also present difficulties maintaining trust and could risk duplicative efforts, say Suennen and Natalie Schibel, a health care analyst with Forrester.
  • "You can’t add a bunch of unprofitable businesses together and somehow get a profitable one without a lot of focus and some pain," Suennen adds.

What's next: In January, Thirty Madison told Axios Pro it was expanding into two new condition areas — sleep and dermatology — and had hired new leaders for those verticals.

  • Considering that Nurx has a significant dermatology offering, it will be interesting to watch how these plays come together.
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