Next Big Wave: Digital Health

Recently, I read up on the growing Digital Health space. Rock Health has shown that venture investment in digital health space has outpaced most sectors such as software, biotech and medtech. Start-ups that help the medical community better manage payments from patients and insurance companies and companies that develop programs to help people purchase health care insurance or find medical professionals and services received hundreds of millions of investments last year.

Credits to RockHealth

As what Wikipedia has described, “Digital health is the convergence of the digital and genetics revolutions with health and healthcare with the goal of reducing inefficiencies in healthcare delivery, improving access, reducing costs, increasing quality, and making medicine more personalized and precise.”  However, the lexicon of Digital Health covers a wide area, not limited to Mobile Health, Wireless Health, Health 2.0, eHealth, Health IT, Big Data, Health Data, Cloud Computing, e-Patients, Quantified Self and Self-tracking, Wearable Computing, Gamification, Telehealth & Telemedicine, Precision and Personalized Medicine, and Connected Health. Interestingly, it is also includes Digital Health Insurance.

Credits to Nuviun

Incumbents in the health insurance market are facing increased competition from new entrants using digital innovations. There are a few start-up companies which are worthy of mentioning:

1)  Oscar Insurance (www.hioscar.com)

Based in NY, the company is focusing on a more “humanized healthcare” B2C system by utilizing technology, design and data. Founded by three HBS alums, they have already raised approximately $70 million from venture capitalists (including Thrive Capital, Founders Fund, General Catalyst, Khosla Ventures, Red Swan and several HBS Professors. Oscar Insurance has very strong negotiation team for investment: Billionaires Jim Breyer (Breyer Capital) and Stanley Druckenmiller, Founders Fund, General Catalyst Partners, Khosla Ventures and Kushner’s own Thrive Capital. Oscar, just a year old, has already more than 16,000 customers who pay an average of $4,500 in annual fees (Revenue at around $72 million) and amassed relationships with more than 83 hospitals. With a valuation of $800 million, investors are putting a frothy 11x sales multiple on the company. Quoted from Scholsser (one of the founders), “Like Google, you can come use Oscar. You can type in your issue and we will help you find the best solution.

2)  Zenefits (www.zenefits.com)

Based in California, the company is brokering health insurance deals for its customers. It has since raised $83.6 million with the most recent Series B round of $66.5 million led by Andreessen Horowitz (June 2014) at a valuation of $500 million. and has grown from 15 employees to 220 since late last year. The company has signed up 2,000 small businesses that employ a combined 50,000 workers in just its first year of operation. Compared with Oscar Insurance, Zenefit is seemingly less aggressive B2B2C business model.

3)  ConnexionsAsia (CXA) (www.cxagroup.com)

Based in Singapore, the company builds a platform and network to transform employer’s healthcare expenditure into a benefits and wellness program for its employees. It is growing aggressively in growing its customer base through acquisition of Pan Group. At a pre-Seed stage, it has already more than 800 clients and generating more than $6 million revenue. Unlike Oscar and Zenefits, CXA is building its presence across Asia with plans to expand to 11 countries in Asia.