As the economy slowly reopens pretty much everyone is wondering what the new “normal” will look like. About the only thing that’s certain is life won’t go back to the way it was before COVID. Just as new procedures were put in place after 9/11 to protect our safety, new procedures will be put in place to protect our health. As we have become used to the procedures put in place after 9/11, we too will learn to accept procedures being implemented due to COVID.
The question we have will the increased use of digital health – remote monitoring and telemedicine driven by COVID continue as states loosen social distancing restrictions. Will patients head back to their doctor’s office or will virtual visits become the norm? Now that patients have begun to use the toys in the toy chest will they continue to play with them, or will they go back to their old way of doing things?
No one really knows the answers as it’s still very early in the process. Our guess and it’s only a guess is that the answers will not be clear cut rather a mixed bag. Yet some interesting trends are emerging that may offer some clues.
According to a post on the HealthCareDrive website;
“Telehealth visits that exploded in recent months are starting to plateau and in some cases decline in popularity as doctor’s offices reschedule backlogged patients for more in-person appointments, according new data from The Commonwealth Fund. Telemedicine visits accounted for about 14% of all total visits the week of April 19, according to the report, but that number dropped to 13% the next week and 12% the week after that. Telehealth visits held at 12% for the first two weeks of May.”
This comes just when activity in the digital health is heating up;
Telehealth giant Amwell raised $194 million in funding
Omada Health bought digital health company Physera for a reported $30 million.
Hinge Health raised $90 Million in Series C funding.
As noted many times Livongo has seen an incredible rise in value now carrying a market cap of nearly $6 BILLION.
This scenario makes us wonder if we are approaching a bubble, are these digital health players becoming over-valued. Are investors overplaying the surge in digital health, a sector which was already on fire before COVID. Are these investors ignoring longer term issues about how, when and to what extent the economy recovers? Issues that directly impact the performance of companies like Livongo. Is this the classic buy on promise, sell on performance scenario?
Our other question specifically related to Livongo is now with a market cap nearing $6 Billion, making an acquisition unlikely, why haven’t they themselves added to their portfolio. Given the recently announced deals and having almost $370 million in cash the company could afford bolt on acquisitions which would round out their portfolio.
It is possible Livongo WAS looking around yet felt they already had what they needed. Just as it is possible they did not want to overpay for these companies who have now either raised more capital or been acquired. Livongo may be taking full advantage of COVID however they like everyone else could not have foreseen the impact COVID would have on digital health. Talk about throwing gas on a fire.
Having been around the block more than once to us this has all the signs of bubble getting ready to burst. We cannot say for certain that all the air has gone into the balloon just yet but better to get out with a profit now before that profit disappears when the balloon does burst. As hot as digital health is today it can go cold in an instant.