Since President Trump declared a national emergency concerning the Novel Coronavirus Disease (COVID-19) outbreak on March 13, 2020, the health care industry has witnessed increased focus by investors on sectors closely tied to combating the disease, assisting people with coping with COVID-19 and delivering health care while abiding by social distancing measures. This article discusses three areas in the industry that are still attracting investment activity amid the COVID-19 pandemic.
While medical care providers are increasing their efforts to combat isolation and loneliness as Americans comply with state “shelter in place” orders, the mental health and behavioral health sectors are seeing increased investment activity including investment in startups along with established companies.
Investment funding for mental health startups hit a record high in the first quarter of 2020 with an emphasis on employer-focused startups that offer mental health services. For example, Lyra Health, a company which offers a mental health platform for employer’s workforce founded on evidence-based treatments, secured a $75 million funding round in March. Likewise, Vida Health, a virtual health care platform for employers that connects people with chronic ailments to professional therapists and coaches, raised $25 million to meet the increased demand for mental health services surrounding the COVID-19 pandemic.
Investors are also increasing investment to established firms that provide behavioral health care services. As one example, in April 2020, LifeStance Health, a leading provider of outpatient behavioral health services in the United States, announced that TPG Capital would be joining its current investors, Summit Partners and Silversmith Capital Partners, to support LifeStance’s expansion of behavioral health services. Additionally, UnitedHealth Group’s Optum Ventures medical provider unit is in talks to purchase AbleTo, a provider of virtual behavioral health care services.
As the pandemic has forced primary care and specialty physicians to adopt virtual care and telehealth to allow patients to continue to receive care while social distancing, firms helping facilitate remote medical care are gaining increased attention from investors amid the COVID-19 pandemic. This year, the U.S. telehealth industry is expected to grow considerably due to the COVID-19 pandemic. Telehealth service areas that are gaining much of investor’s attention include companies that provide behavioral and mental health services and primary care.
Some recent examples of investments in the field include:
In addition to the increased investment attention to the telehealth industry in the U.S., the Canadian government is also investing in telehealth as a way to provide Canadians with more virtual health resources and mental health tools to cope with the effects of the COVID-19 pandemic. On Sunday May 3, 2020, Prime Minister Justin Trudeau pledged $170M to develop digital mental health services in wake of the coronavirus outbreak. The investment funds will be used to develop online platforms and apps to improve access to mental health resources and expand capacity to deliver health care virtually.
Artificial Intelligence (AI) has significant and wide-ranging potential in the health care industry and investment in machine learning and AI is ramping up as investors look to tap into this growing field. According to an Accenture report, growth in the AI health care market is expected to reach $6.6 billion by 2021—a compound annual growth rate of 40%. Accenture also forecasts that AI applications could create $150 billion in annual savings for the U.S. health care economy by 2026.
Areas where the health care industry is seeing more and more use of AI are in the sectors of medical diagnostics, drug discovery, and clinical trials. In addition, medical providers are also looking to AI to help maximize resources as they struggle to treat the influx of patients presenting with COVID-19 symptoms. As an example, Quebec-based AI supercluster, Scale AI, invested $3.4 million into eight projects focused on solutions addressing challenges brought on by the COVID-19 pandemic.
For more information, please contact your Foley relationship partner or the Foley colleagues listed below. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization.
Foley has created a multi-disciplinary and multi-jurisdictional team to respond to COVID 19, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time. To receive this content directly in your inbox, click here and submit the form.