Axios Pro: Health Tech Deals

February 07, 2022

Axios Pro Exclusive Content

❄️ Happy Monday! Read to the end for an update on the not-pow covering the Olympic trails.

This just in: Indiana’s Press Ganey, which measures patient and employee satisfaction across the health care ecosystem, is buying Forsta, a U.K. provider of so-called human experience technology. The sellers are EQT and Verdane.

  • 👀 Coincidence? EQT is also the former owner of Press Ganey, having sold the patient experience company in mid-2019 to a consortium led by Leonard Green & Partners and Ares Management in a $4.2 billion-plus deal, sources told Sarah at the time. Stay tuned for more!

1 big thing: Omada's not-so-quiet period

Illustration: Annelise Capossela/Axios

What virtual care company has been around since 2011, collected nearly $260 million, and hasn't raised any cash since 2020? San Francisco-based Omada Health.

The big question: With investors tossing around $100 million-plus funding rounds for the past year, why is it that an established digital health player with offerings in diabetes, hypertension and physical therapy has stayed so quiet?

State of play: Although rumors of a potential Omada IPO have circulated for years, the company is presently focused on becoming employers' preferred — and only — partner for health benefits, co-founder and CEO Sean Duffy tells Erin.

  • To do that, it's slowly expanded from a diabetes-specific program to a platform with tools for overlapping conditions.
  • "We put all our chips in this vision of, if you can find a partner for all of this, isn't that better than having all these point solutions and your care happening in an uncoordinated way?" Duffy says.
  • That means when it comes to M&A activity, Omada is narrowly focused on "staying in disease areas where you can deliver all the components of care virtually," he adds.

Between the lines: Companies like Omada are being pushed in a more expansive direction as employers demand singular solutions and today's tough public market encourages M&A-driven consolidation.

By the numbers: In Q4 2021, 47% of the deals Omada closed with payers involved more than one of its offerings, says Duffy.

Context: Virtually every other Omada-like company has been far more financially active lately, based on data from PitchBook.

  • Virta Health, another SF-based diabetes-focused virtual care platform, raised nearly $133 million in April 2021, tipping its valuation to $2.1 billion.
  • Vida Health, also in San Francisco, raised $127 million in March 2021, bringing its valuation to $497 million.
  • Carbon Health, an SF-based hybrid care company, acquired digital diabetes clinic Steady Health in June 2021 and is now valued at $3 billion.

💭 Our thought bubble: Expect to see more and more virtual care companies put off IPOs in favor of merging and acquiring smaller point solutions that give them more breadth and depth.

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