If the Covid era marked a boom time for digital health companies, 2024 was the reckoning. In a year that saw the Nasdaq jump 32%, surpassing 20,000 for the first time, health tech providers largely suffered. Of 39 public digital health companies analyzed by CNBC, roughly two-thirds are down for the year, with some now out of business.
There were some breakout stars, like Hims & Hers Health, buoyed by the success of its weight loss offering and its position in the GLP-1 craze. But that was an exception. According to Scott Schoenhaus, an analyst at KeyBanc Capital Markets, the industry faced challenges in 2024. Business models that seemed promising during the pandemic didn’t all work out as planned, leading companies to refocus on profitability and a more subdued growth environment.
In 2021, digital health startups raised $29.1 billion, setting funding records. Almost two dozen digital health companies went public through IPOs or SPACs, up from the previous year. However, as the demand for new digital health tools waned post-pandemic, the sector faced a rude awakening.
Companies like Progyny, Teladoc Health, and GoodRx saw significant declines in their stock prices. Many companies had to revise their revenue guidance downward throughout the year due to overestimations. Despite challenges, some companies like Hims & Hers and Doximity had successful years, with their stock prices rising significantly.
The digital health sector also saw companies like Cue Health and Better Therapeutics exit the public markets, while others were acquired in multi-billion dollar deals. Analysts believe the sector is still evolving post-pandemic, with companies adapting to new business models that focus on improving healthcare outcomes while reducing costs.
In conclusion, the digital health industry in 2024 faced a period of adjustment and transformation as companies navigated changing market dynamics and investor expectations.
