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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Private capital raises, business building and increasing consolidation will be the name of the game until the IPO window reopens, CRV General Partner Kristin Baker Spohn told Erin at Axios Pro Insight’s live event Friday. 

The big question: Is digital health in a valuation bubble? 

"I think the pendulum swung a little too far one way, and then swung a little too far back the other way," Baker Spohn says. "Much like we’re seeing the adoption of virtual care, I think we will see a kind of evening-out [of valuations] over the next few quarters."

Many folks speak to the over-hype around telehealth as an example, she acknowledges, adding that the pandemic-driven surge occurred “mostly out of necessity rather than strong desire for telehealth services." 

Still, the COVID environment drastically reduced the “activation energy” for both consumers and clinicians to have their first telehealth visit, Baker Spohn says. 

The big picture: The digital health evolution is not unlike that of mobile banking.

"We are moving to a place where all of the sudden we won’t be thinking about telehealth as a separate industry from health care. It will just be another way that we're interacting with or seeking out diagnostics or treatments for conditions.”

Yes, and: Behavioral health has dominated a lot of digital health activity, a trend Baker Spohn believes will stick, and for good reason.  

“If we want to talk about data, behavioral health disorders are often significant co-morbid conditions with other underlying chronic conditions.”

Between the lines: One factor (among others) that's held back innovation in digital health until recently? Despite figuring out how to get customers, startups often haven't figured out how to get paid for capturing that value, says Baker Spohn.

“Companies have been delivering a lot of value but not necessarily capturing a lot of value," she says.

🎤 1 big thing: Live with CRV's Kristin Baker Spohn 

CRV General Partner Kristin Baker Spohn, right, at Axios Pro Insight’s latest live event. 

Reproductive support startup Noula Health raised $1.4 million in pre-seed funding led by Muse Capital and Precursor Ventures, founder Noelle Acosta tells Erin exclusively.

Why it's the BFD: Women entrepreneurs in charge of women's health-focused startups are garnering increased attention from investors and the wider public in recent years, after centuries of inequity.  

After nearly two years leading business development at buzzy fertility startup Maven Clinic, Acosta has now delivered her own venture. 

Women of color have faced even deeper institutional inequality compared with white women, and the round makes Acosta one of fewer than 100 Latina founders to have raised more than $1 million, according to a 2020 report from ProjectDiane.

"The people who usually come to me about a women’s digital health startup are white men," says Shereese Maynard, a health tech strategist who focuses on women's health. "So my first thought was, 'Good job, maybe we’re moving the needle a little bit.’"

Details: In addition to Muse and Precursor, other Noula investors include Crista Galli Ventures, Visible Hands VC, and angel backers Jill Koziol, the founder and CEO of Motherly, and Alex Cohen, the director of product at hybrid primary care clinic Carbon Health.

How it'll work: Due this spring, Noula will offer users a $99 monthly subscription for its services, which will be available in English and Spanish.

Those services include a virtual care platform, home diagnostics for hormones and vitamin levels, access to health coaches, and personalized nutrition and lifestyle advice.

Nutrition recommendations will take into account users' cultural backgrounds, Acosta tells Erin; home test results will be reviewed by physicians through Noula's lab kit partner.

"We see ourselves as a pioneer in culturally competent health care at home," says Acosta.

What they're saying: Investors and industry observers see potential in Noula to boost access to information about women's health and partner with other companies in the sector, such as pregnancy startup Hey Mami, for example.

Acosta "comes from Maven and has that consumer health care background — that was our strongest conviction point," says Maria De Santis, principal at Muse Capital.

De Santis' investment is also somewhat rare for the firm, which doesn't often invest in pre-seed rounds. "We do that when we find an incredible founder addressing a large unaddressed market," DeSantis adds.

"Noula's convenience is definitely a plus," says Maynard. "Innovation should be seamless and not require extra effort."

Context: Acosta tells Erin that despite experience working at "great companies with great insurance," she encountered multiple barriers to getting the care she needed — particularly when it came to reproductive and women's health issues.

"Every provider I saw was dismissive," says Acosta. "I spent months trying to self-diagnose."

Noula is designed to help women and birthing parents in a proactive, rather than reactive, way, Acosta adds. "We want to be that personalized partner in your reproductive health journey."

2. The BFD: Noula Health readies to deliver

Illustration of a stork carrying a bag of money.

Jio Health, a Vietnam-based health care startup, completed a $20m Series B investment led by Singapore's Heritas Capital. Fuchsia Venture Capital (CVC of Muang Thai Group Holdings), Kasikorn Bank Group, and existing investor and Monk’s Hill Ventures also joined in the round. http://axios.link/vW45 

Varsity Healthcare Partners completed its majority stake sale of Probo Medical, a provider of refurbished medical equipment and parts services, to Avista Capital Partners. 

The deal's enterprise value is approximately $450m, sources told Axios in mid-February. 

Probo generated $30m-plus in 2022 EBITDA, sources said.

Cain Brothers and Houlihan Lokey advised Varsity, which is reinvesting a minority stake with the deal.

Argosy Healthcare Partners recapitalized Specialty Care Management, a Bucks County, Pa., provider of health care cost containment and claims management services for the self-insured market.

SCM marks the first investment for Argosy since its January 2021 founding. Argosy backs founder-led health care services companies generating $1-$3m of EBITDA. 

Signify Health (NYSE: SFGY) bought Caravan Health, a Kansas City-based accountable care organization manager, for $250m from VSS Capital Partners. www.caravanhealth.com

Read Axios' exclusive coverage on the deal in early February. 

Omega Healthcare acquired Reventics, a Denver-based clinical documentation improvement and RCM solutions company. https://reventics.com/

3. Deals o' the day

Collective Health named Ari Hoffman chief clinical officer and VP of population health and Jennifer Danielson chief growth officer. Hoffman was previously medical director of St. Mary's Hospital Medicine while Danielson was SVP of public affairs at Cambia Health Solutions.

Clever Care Health Plan Inc. named Unmesh Srivastava and Nishant Shukla as CTO and VP of marketing, respectively. Srivastava was previously CTO at P3 Health Partners Nevada, while Shukla was marketing director at Nature's Way.

CommonSpirit Health named John Chelico chief medical information officer from Northwell Health, where he spent 11 years, most recently as VP and Chief Informatics and Innovation Officer.

4. It's Personnel

Situational awareness: Jury selection has begun in the trial of Ramesh "Sunny" Balwani, former Theranos COO and ex-boyfriend to former CEO Elizabeth Holmes. 

It's taking place in the same San Jose, California, federal courtroom where Holmes was tried.

🍿 Erin started watching the Theranos docuseries "The Dropout" last night and is surprisingly into it — even after reporting on it herself, reading "Bad Blood" and listening to every podcast about it ever made.

✔️ Thanks for reading Axios Pro Health Tech! Please ask your friends, colleagues and TV crew to sign up.

March 09, 2022

🎤 1 big thing: Live with CRV's Kristin Baker Spohn