With a number of record-breaking investments and deals on the books in a booming two years, the COVID-19-influenced healthtech business surge is finally showing signs of waning. During this period, new technology flooded in to address the multifaceted cracks in the American healthcare system that were laid bare. Last year, the U.S. saw investors dish out just under $30 billion in the digital health space, twice that of 2020’s total – and a stunning $28 billion increase from a decade prior.
Given the flagging interest rates and healthy stock market atmosphere of 2021, the influx of SPACs and new IPOs seemed logical. If NFTs and cryptocurrency could attract large sums, there had to be sense in taking a chance on sizable healthtech investments. Now, as the Federal Reserve begins to increase interest rates, the trend of pouring capital into the sector is accordingly on a downward slope. Research firm CB Insights has clocked 2022’s first quarter investments as the lowest in six quarters, at $10.4 billion. Other spaces, such as fintech, have not experienced quite as precipitous a fall; 36% down from the previous quarter is a clear sign of ebbing interest.
U.S. digital health funding tracker Rock Health found that the performance of those stocks has also seen a drop-off. An index of said stocks compiled by the group fell 38% from July 2021 through March 2022, proving an even more dramatically poor showing than broader market and healthcare benchmarks.