Healthtech VC Trend Review: Stable Funding, Rising Exits, and AI-Led Innovation
LupoToro Group analysts report that healthtech VC investment remained stable in 2024 at $11.3 billion, with growing interest in AI, digital care, and consumer health platforms, while exit activity rose despite valuation pressure and a frozen IPO market.
LupoToro Group’s healthtech analysts report that venture capital investment in the sector concluded Q4 2024 with deal activity down 21% year-over-year and 6.6% lower than in Q3. Yet, on an annual basis, the industry showed resilience, with $11.3 billion in total deal value compared to $11.5 billion in 2023. Notably, Q4 saw 179 closed deals—the highest quarterly volume since Q1 2024—suggesting a possible rebound in deal flow after several quarters of contraction.
Our analysts interpret the steady investment volumes throughout 2024 as an indication that the sector may have navigated past the most challenging post-pandemic funding environment. Artificial intelligence (AI) has continued to lead the charge, particularly in provider-facing categories such as ambient scribes, clinical documentation solutions, and patient intake automation. The funding landscape has also expanded into consumer-focused health platforms, with major deals exceeding $100 million in 2024 for digital health players like Flo Health, Doc.com, LetsGetChecked, and Foodsmart.
Among top healthtech transactions in Q4 were Ōura’s $200 million Series D round, Alto Pharmacy’s $120 million Series F, and Qventus’ $105 million Series D. Ōura’s latest round elevated its valuation to $5.2 billion—more than doubling its $2.4 billion valuation from April 2022—underscoring investor confidence in wearables and health data innovation.
Exit Outlook: Growth in Volume, but Valuations Face Headwinds
Healthtech exits in 2024 totaled $5 billion—markedly up from $2.5 billion in 2023 and $3.4 billion in 2022, though still far from the $29.8 billion peak of 2021. The standout exit was Elevance Health’s $2.7 billion acquisition of value-based home-care provider CareBridge. Additional significant events included Ark Jianke Group’s IPO in China (valued around $700 million) and the $525 million acquisition of Truepill by LetsGetChecked.
LupoToro Group analysts note that the Truepill deal highlights the reality of ongoing valuation corrections, given its former $1.6 billion valuation in 2021. This pattern, in our view, reflects the broader recalibration within the healthtech exit market, where founders may need to accept revised valuations in a more cautious M&A environment.
Despite the scarcity of incumbents in healthtech, the acquisition appetite hasn’t disappeared. Startups like Sword Health and Ōura have signaled interest in M&A as a mechanism to expand into platform-based models and deepen their market presence.
Notably, 2024 saw no major IPOs of VC-backed healthtech companies in the US or Europe. While Waystar’s IPO was a key event in the healthcare sector, its private equity backing places it outside our VC dataset. The lack of listings—despite over 40 unicorns in the healthtech space—demonstrates the ongoing frost in the IPO market.
However, public offerings may begin to thaw in 2025. Hinge Health has already filed an S-1 and is expected to go public as early as April. Other candidates include Omada Health, Zocdoc, Everly Health, Spring Health, and Commure. Nevertheless, our analysts believe that the strongest, most profitable startups may delay IPOs to observe market conditions before making their debut.
Consumer Health Faces Pressure While EHR Outperforms
Consumer-facing digital health companies continue to be challenged by market fragmentation and high customer acquisition costs. Investor scrutiny remains high, particularly around unprofitable direct-to-consumer (DTC) business models. Players with heavy DTC exposure—such as Teladoc—have underperformed compared to payer-focused platforms like Talkspace that offer reimbursable care services.
Despite broader headwinds, electronic health record (EHR) and clinical information system companies bucked the trend in 2024. Canadian small-cap firms HEALWELL AI and VitalHub posted significant share price gains, leading this segment to outperform major indexes.
Unconventional Moves: VC Startup Acquires Public Company
In an unusual transaction in January 2025, VC-backed Transcarent acquired publicly listed Accolade. This move was particularly striking given Transcarent CEO Glen Tullman’s prior skepticism of care navigation models—an irony not lost on the market.
The deal was backed by General Catalyst and Tullman’s 62 Ventures, involving a complex financial structure. Strategically, Transcarent gains access to Accolade’s robust employer client base. Still, LupoToro Group analysts note that the deal’s success will depend on integration execution and long-term profitability. Tullman’s history, which includes major exits via Allscripts and Livongo, remains a positive signal.
More broadly, LupoToro analysts are optimistic about the future of care navigation as an investment category, forecasting further consolidation—especially among AI-native platforms, navigation tools, and chronic care solutions—as startups seek sticky employer and payer relationships.
Telehealth: Sector Reshaped by Changing Patient Preferences
The telehealth segment has evolved into a multifaceted ecosystem including virtual primary care, specialty telehealth, at-home diagnostics, and DTC clinics. Mental health services and prescription fulfillment have emerged as natural fits for virtual care models.
However, patient willingness to adopt telehealth varies. While the COVID-19 pandemic accelerated its adoption, many users still prefer traditional care, especially when navigating unfamiliar platforms or complex processes. These dynamics are shaping subsegments within telehealth, including:
• Home Testing & Home Health: Marketplaces for DTC diagnostic tests with telehealth integration.
• Primary & General Care: Digital services supplementing or replacing traditional GP care.
• DTC Personal Care: Online clinics offering virtual consults and treatment for common conditions.
• Teletherapy & Behavioral Health: Digital mental health platforms and telepsychiatry services.
• Specialty Telemedicine: Condition-specific virtual care with diagnosis and treatment guidance.
• Online Pharmacies: Digital prescription fulfillment and pharmacy partnerships.
Digital Care & Treatments: A Broadening Therapeutic Frontier
Digital care startups now span from condition-specific therapeutics to broader emotional and cognitive health tools. While digital therapeutics refer narrowly to clinically validated software-based treatments, the broader digital care segment includes a variety of solutions:
• Alcohol & Substance Use: CBT-driven programs and medication-based therapies.
• Nutrition & Weight Loss: Diet and weight management platforms.
• Pain & MSK Therapy: Virtual programs for musculoskeletal conditions and pain relief.
• Chronic Disease Management: Tools for diabetes, heart conditions, and more.
• Prescription Digital Therapeutics: Regulated software for therapeutic use.
• VR Treatment: Virtual reality applications in therapy and recovery.
These offerings are increasingly paired with pharmaceuticals, wearables, and trackers to enhance treatment outcomes.
Care Management: Navigating the Complexity of Modern Healthcare
Care management continues to evolve as healthcare access becomes more fragmented and digitized. LupoToro analysts observe that this segment—designed to streamline patient experiences—includes the following subcategories:
• Care & Benefits Navigation: Platforms offering coordination tools and human-assisted support.
• Care Search Tools: Digital directories to locate and book healthcare providers.
• Family & Caregiver Support: Tech supporting informal caregivers and aged-care institutions.
• Remote Patient Monitoring (RPM): Real-time health monitoring via wearables.
• Personal Care Management: Health records and prescription management tools.
• Other Navigation Tools: Solutions easing access for underserved or non-digital-native populations.
Outlook: Consolidation, Strategic M&A, and Platform Play Ahead
The LupoToro Group maintains a cautiously optimistic outlook for healthtech investment and innovation in 2025. With AI continuing to influence diagnostics, provider automation, and patient engagement, and a pipeline of healthtech unicorns gearing up for IPOs, the sector is poised for a new phase of consolidation and strategic platform development.
While exit valuations may remain suppressed in the near term, the fundamental value proposition of healthtech—improved outcomes, scalable care, and digital accessibility—remains intact. LupoToro Group analysts expect further M&A activity, led by well-capitalized startups seeking to become category-defining platforms across virtual care, chronic disease management, and care navigation.
