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Forecasting HealthTech Investment Trends in 2024

HealthInvestor gathered perspectives from industry experts such as Paul Tomasic, Houlihan Lokey, Molly Gilmartin, AlbionVC, Michelle Tempest, Candesic, Neil Mitchell, Rickitt Mitchell and Lloyd Price, Nelson Advisors.

They delve into the triumphs and hurdles within the #healthtech investment space. The result is a comprehensive outlook, forecasting anticipated trends and opportunities for 2024!

Original Source::

Forecasting HealthTech Investment Trends in 2024

This year has posed significant challenges for founders, chief executives, and management teams. Previously instructed to prioritise growth, they now find themselves shifting focus to emphasising on  Annual Recurring Revenue (ARR), EBITDA, and overall profitability. Notable instances, like Babylon's insolvency, highlight the consequences of this shift, especially for companies listed on the stock market, whose fortunes are dictated more by market sentiment and share prices.

Looking ahead, a more challenging funding landscape is anticipated for the NHS. However, optimism arises for increased investment in digital health and the broader health sector in the second half of the year. Entering the summer and anticipating the final phase of a UK and US election cycle, the second half of the year is poised for heightened activity in digital health and health investment. There will be a market division between winners and losers, with successful companies continuing to grow, while struggling ones face a lack of investor confidence.

The correction in 2023 is evident in the realm of digital health and health tech investments, with valuations undergoing adjustments and the time required to build healthcare companies becoming longer. The focus is predicted to shift from early-stage to later-stage investments, as private equity and venture capital seek tangible returns in a market that has experienced a 40 to 50% decline in investment over the last two years.

The prospect of IPOs, particularly from well-established companies like Doctolib and Kaia Health, which have garnered substantial funding over the past decade, looms on the horizon.

Valuations now are projected to pick up, paving the way for increased consolidation and roll-up deals in the market. A trend is emerging here, where investors weigh options to either inject more capital, divest, or merge with larger entities, driven by the notion of "stronger together".

Within sub-sectors, digital therapeutics and software with SAS-driven models will remain resilient, while digital health apps may experience a relative downturn. Recognising the growing significance of integrators - I call them "bridges and tunnels" - in the healthcare industry's middle layer points to a shift in focus towards the critical infrastructure that underpins the sector.

Last, there will be an uptick in evidence requirements, the integration of data and infrastructure in healthcare is deemed increasingly vital. The involvement of big tech in healthcare is expected to increase, and the evolving role of generative AI, transitioning from early adoption to mass market acceptance, raises questions about its potential applications in healthcare in the coming year.

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