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COVID-19 led to a telehealth boom - now investors are betting it's here to stay

Business Insider logo Business Insider 10/13/2021 (Jade Khatib)
a man looking at the camera: People have continued to use telehealth services as physicians' offices have reopened. JPC-PROD/Shutterstock © Provided by Business Insider People have continued to use telehealth services as physicians' offices have reopened. JPC-PROD/Shutterstock
  • Telehealth investment grew for the fourth quarter in a row, CB Insights found.
  • The fastest-growing subsector was teletherapy, coaching, and care management.
  • The market is stabilizing and maturing, and telehealth use remains above its pre-pandemic norm.

Investment in telehealth has reached new heights.

Telehealth companies raised $5 billion in the second quarter - the fourth quarter in a row in which telehealth investments rose, according to a recent CB Insights report on telehealth trends.

The report found that global telehealth investment grew by 17% in the second quarter of this year and by 169% since the second quarter of 2020.

General Catalyst, Optum Ventures, Oak HC/FT, Khosla Ventures, and Founders Fund have been the most active venture-capital investors in telehealth over the past three years, CB Insights said. These investors and others are increasingly interested in teletherapy services.

Investing in online mental-health care

As physicians' offices reopen and the pandemic's effects on people's mental health linger, investors have prioritized teletherapy investment. CB Insights defined telemedicine as companies that offer online access to physicians, and teletherapy as companies offering access to therapists, health coaches, and other professionals.

In the second quarter, deals in teletherapy, coaching, and care management made up 37% of telehealth deals, bringing in $1.8 billion. That was almost double the 19% of deals in telemedicine and up from 26% in the previous quarter.

Within this sector, the biggest and most notable deals were for Noom, a behavior-focused weight-loss app ($628 million); Lyra, a mental-health platform for employees ($671 million); and Healogics, a platform that helps hospitals provide wound care ($640 million).

The telehealth market is maturing

The CB Insights report suggests the telehealth sector is stabilizing and showing signs that it'll stick around as a way that people get medical care.

The share of early-stage telehealth deals through the first half of 2021 is down to 44%. That's down from 2016, when early-stage deals made up 75% of investments in telehealth.

CB Insights' analysts said telehealth made up 4.9% of medical claims in April. That was down from 13% in April 2020 but up from 0.2% in January 2020, before the coronavirus pandemic led to lockdowns in the US.

"We're seeing continued sustainability of virtual care solutions which, as you may know, peaked during the height of the pandemic, have declined some, but are still probably 10x where they were pre-pandemic," Wyatt Decker, the CEO of OptumHealth, told CB Insights.

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