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Digital health's winning and losing sectors in Q3, per PitchBook data

Data: PitchBook; Chart: Axios Visuals
Data: PitchBook; Chart: Axios Visuals

Telehealth scored the most venture dollars globally while digital therapeutics got the least in the third quarter of 2023.

Driving the news: Those are some of the highlights of a recent PitchBook report offering a hard look at which segments of the digital health industry over- and underperformed during an ongoing period of market uncertainty.

Details: As a whole, digital health traipsed its way through the third quarter, but the segments that performed well are predicted to continue thriving in the near future, report author and PitchBook health care analyst Aaron DeGagne writes.

Zoom in: In July alone, two large telehealth services closed rare late-stage venture rounds.

  • Halodoc, an Indonesian provider of virtual doctor consults and drug delivery services, raised $100 million in Series D financing.
  • K Health, an NYC-based developer of an AI-powered symptom-checking chatbot, raised $59 million following a 2021 Series E raise of $132 million.

Meanwhile, Akili, a Boston-based provider of digital therapeutics for ADHD, in September laid off 40% of its staff and shifted its model from a prescription basis to an OTC approach.

  • Akili's pivot came five months after Boston-based Pear Therapeutics, which provided digital tools to treat substance use disorders and insomnia via prescription, filed for bankruptcy.
  • Addiction telehealth provider PursueCare acquired Pear's addiction treatment apps last week.

Between the lines: Thrust into the spotlight amid the pandemic, telehealth remains a key component of the health care services landscape.

  • At the same time, slow progress toward reimbursement has blocked prescription-based digital therapeutics from gaining the necessary uptake.

By the numbers: Health tech venture funding "remained in the doldrums" in Q3, attaining just $0.8 billion in total financing via only 60 new deals.

  • Both figures are multiyear lows, per the report.

What they're saying: "Given the lack of meaningful industry drivers and near-term exit opportunities," DeGagne says, "we continue to expect digital health funding to remain at or near its current lows in the coming quarters."

Yes, but: "The open question is whether this is a permanent paradigm shift as virtual platforms fall out of favor, a temporary blip related to market conditions, or a cyclical low," DeGagne adds.

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