The 9 digital health startups to watch that are changing healthcare in 2021

  • VC funding for healthcare startups hit record levels in 2020, according to from CB Insights.
  • Many healthcare startups may have been able to raise funding more than once in less than a year.
  • Nine digital health startups achieved the $1 billion valuation milestone in 2020 and 2021, according to Pitchbook data.
  • For more stories like this, sign up here for Business Insider’s daily healthcare newsletter.

After a record-breaking year of VC funding, some healthcare startups hit 2021 with healthy balance sheets and shiny new valuations.

According to Pitchbook data provided exclusively to Insider, nine digital health startups earned unicorn status in 2020 and early 2021 with valuations at or above $1 billion. Digital health startups made up eight of the 15 newly minted unicorns in 2020.

Equity funding eclipsed $80 billion in 2020, an all-time high for healthcare startups, according to CB Insights.

Read more: Meet the 35 healthcare startups VCs say will take off in 2021

Many investors attribute the funding boom to increased attention on the shortcomings of America’s healthcare system during the coronavirus pandemic. Some startups quickly worked to apply their technology to the newly attention-grabbing problems, while others were beneficiaries of being in the right place at the right time with the right solution. 

The pandemic also accelerated what many investors said was a slow-moving technological revolution within healthcare. Hospitals, clinics, and patients may be more willing to try new technology during a crisis, investors and founders predicted. A boom in telemedicine services, virtual therapy, and direct-mail pharmaceuticals followed.

Here are the nine digital health startups that achieved $1 billion valuations or higher in 2020 and early 2021.

This story was initially published in January and has been updated with funding information for DispatchHealth,  Cedar, Cityblock Health, Virta Health, and Ro. It was also updated to remove MDLive following the completion of its acquisition by Cigna and add information about Grand Rounds’ intent to merge with Doctor on Demand.

Cityblock Health – $1 billion

Cityblock Health wants to improve healthcare outcomes for low-income patients through its social support services for what investors call social determinants of health in addition to its virtual care service. These factors, which include access to public transportation, affordable and reliable housing, and nutritious food, operate outside the four walls of a clinic or doctor’s office but have massive implications on patients’ long-term health.

Cityblock Health raised $192 million in Series C extension funding on March 29, topping off its $160 million in Series C funding on December 14 that catapulted the three-year-old startup to the unicorn club. Investors in December told Insider that startups like Cityblock could be poised to rise even further in 2021 as the pandemic continues and the inequities in care remain at the forefront of the nation’s response.

Whoop – $1.2 billion

Whoop makes a health and fitness tracking strap that has won over everyone from Lebron James to Eli Manning to Kevin Durant. The strap, which functions similar to existing watch fitness trackers, allegedly helped PGA Tour golfer Nick Watney detect early COVID-19 symptoms by picking up on his elevated respiratory rate, in addition to integrating with popular fitness app Strava. The strap itself costs nothing and is included with a membership for $30 a month or $288 for one year.

The 8-year-old startup was founded by 31-year-old founder and CEO Will Ahmed. On October 28, Whoop announced that it had raised $100 million in Series E funding at a $1.2 billion valuation. 

Grand Rounds – $1.3 billion

Grand Rounds works with companies like Walmart and Home Depot to offer an on-demand healthcare virtual assistant to employees as an employer-provided benefit. The company previously focused on large self-insured companies like the aforementioned, but have recently started selling to medium-sized companies as the pandemic left many employers scrambling to offer relevant benefits while maintaining low costs.

In September, Grand Rounds raised $175 million from private equity firm Carlyle Group that launched its valuation to $1.3 billion, according to Pitchbook data. It recently announced its intent to merge with Doctor on Demand, another telehealth provider.

“As COVID hit and these employers, to take care of digital and work-from-home workforces across the country, they all had unique situations and needs pop up,” Carlyle Group investor and Grand Rounds board member Robert Schmidt told Insider in September.

 

Olive – $1.5 billion

Olive makes automation technology for healthcare workers. Its artificial intelligence software picks up on keystrokes to learn how a healthcare worker interacts with specific applications and provide suggestions for tasks like prior authorizations or patient verifications. It also has a tool to help automate processes in hospitals’ human resources, finance, and supply chain departments.

Olive raised $106 million in venture funding in September, just months after raising $51 million in March 2020. It is currently valued at $1.5 billion, according to Pitchbook data, and in December acquired Verata Health to further expand its services to insurance companies and hospitals.

DispatchHealth – $1.7 billion

DispatchHealth provides home-based care for more than 300 health plans. For people not on these health plans, Dispatch charges $275 at the time of treatment via credit card. Its healthcare professionals, including emergency medicine-trained physicians, visit people’s homes on-demand and provide medical care ranging from applying stitches to cuts to 30-day supervision following a bout with pneumonia. 

On March 3, Dispatch announced it raised $200 million in Series D financing at a $1.7 billion valuation. The funding came just nine months after its Series C and was a result of the startup’s rapid growth during the coronavirus pandemic.

Virta Health – $2 billion

Virta Health is a Silicon Valley startup that combines virtual care and the trendy ketogenic diet to help patients with diabetes. Virta encourages patients with type 2 diabetes to adopt a low-carb, high-fat diet and matches them with trained professionals to help track and manage their symptoms. In a peer-reviewed study Virta funded, researchers found that these changes to a patient’s diet could ultimately reduce or remove the need for medications like insulin.

Virta raised $133 million in Series D funding on April 19 at a $2 billion valuation, according to a company press release, after raising two rounds in 2020. It raised $93 million in Series C funding in January 2020 before raising another $65 million in Series D funding on December 2. The subsequent round garnered the startup its $1.1 billion valuation, according to a Bloomberg report.

Cedar – $3.2 billion

Cedar is a digital health startup that creates software to help patients manage and track billing and payments for healthcare visits, a process that was historically confusing and relatively opaque for patients. Cedar works with electronic medical record companies including Epic, Athenahealth, and Cerner, to replace the relationship between patients and their doctors when it comes to billing so that patients have one easy-to-understand bill instead of multiple documents from both the doctor’s office and their insurance provider.

On March 9, Cedar announced it raised $200 million in Series D funding led by Tiger Global Management. The funding round valued Cedar at $3.2 billion. In all, the startup has now raised more than $350 million.

The funding will go toward building a set of tools that aim to improve the experience for patients when they go to the doctor in partnership with two health systems, including appointment reminders, software to take down insurance information and provide price estimates, and tools that let patients check in for appointments digitally.

In May, Cedar said that it’s buying rival Ooda Health for $425 million. The goal of the acquisition is to make it easier for patients to pay medical bills. 

Lyra – $4.6 billion

Lyra is a mental health startup that works with companies to provide better benefits to employees. The startup has a network of therapists, coaches, and other care providers that provide virtual care visits to any employee with access to the software at little or no cost.

The service has been booming during the pandemic, according to investors, as remote employees struggle with work-life balance and employers seek to replace the enticing in-office perks with options that benefit more people.

On May 17, The Information reported that Lyra Health raised $200 million from Coatue at a $4.6 billion valuation. It had previously raised $187 million Series E on January 28, earning the five-year-old startup a $2.3 billion valuation.

Investors have been eager to back mental health startups in 2020, and many told Insider they foresee that trend only increasing in 2021. 

Ro – $5 billion

Ro is a direct-to-consumer provider that offers generic medications for conditions such as erectile dysfunction, hair loss, and weight management through the mail. Patients can consult a doctor through Ro’s telemedicine service throughout the course of treatment and are required to pay a cash fee for medication and the visit since Ro doesn’t accept insurance. 

On March 22, the four-year-old company raised $500 million in venture funding at a reported $5 billion valuation. It acquired Workpath, another startup that provides in-home care services, in December as it seeks to expand beyond digital health.

“The only way we as a society invest in technology is to turn luxuries into commodities,” cofounder and CEO Zachariah Reitano told Insider in March. “From the printing press to the iPhone, technology solves scarcity, and high-quality healthcare is scarce.”

 

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