Issue 032
Digital health research from Brian Dolan

Welcome back to E&O Mondays, the free newsletter from Exits & Outcomes that features health tech puzzles and trivia, (sometimes) funding, paid content teasers and other digital health odds and ends.

 E&O Mondays.

In this issue:

• Heads up: The first post below is for your friends. Could you please forward this issue to one person who would benefit from a paid subscription to E&O? (It’s also a handy set of links to click through if you are a newer paying subscriber…)
• Then a round-up of 10 digital health companies’ TAM (total addressable market) estimates.
• And finally: The long-awaited answer to last week’s Health Tech Puzzle along with the names of a few E&O subscribers who got it right…
• More on this in a minute, but consider becoming a full-fledged, paying subscriber to E&O by clicking right here…

Here’s what paid subscribers to E&O are reading

Here’s a small tasting menu of a few things that E&O’s paying subscribers have read in recent months.

Big employer digital health benefits stacks: Digital health companies love to boast how many Fortune 500 customers they have. Every other Wednesday, E&O digs into a different Fortune 500’s employee benefits to see which digital health companies it works with. So far, in past Wednesdays issues, I’ve written about the digital health benefits stacks of 15 big companies: Walmart, Activision Blizzard, JP Morgan Chase, The Home Depot, Boeing, 3M, Chevron, BorgWarner, Bank of America, UnitedHealth Group, Costco, eBay, McKesson, and Ford. Most recently I wrote about Dell.

Pear SPAC analysis: Last week news broke that prescription digital therapeutics company Pear Therapeutics would go public via SPAC merger. Pear’s a company E&O has tracked closely since 2019. One of my first long-form research reports dug into Pear’s first six years — including its ill-fated (and underreported) attempt to develop a line of DTC digital nutriceuticals with The Vitamin Shoppe. E&O’s analysis of Pear’s SPAC is different from what you’ve read elsewhere — full of scoops and exclusive analysis.

E&O’s 5,800-word Crossover Health report: This long-form research report dug into primary care provider startup Crossover, which counts many big employers as customers. Its first customer was Apple. Could its last be Amazon? Amazon is currently weighing whether it should expand its partnership with Crossover while it is — at the same time — building its own nationwide primary care network. If Amazon doesn’t snap it up, Crossover Health would likely IPO, but how would an Amazon defection look on its books? There’s no denying that Crossover is at a crossroads. This report gets you caught up.

Virta Health pricing and guarantees: Earlier this month I came across a 2021 contract between an employer and Accolade for three of Virta Health’s programs: diabetes reversal, diabetes management, and obesity management. In Issue 014 of E&O Wednesdays, I broke down the parts that I found most interesting: The prices and the three performance-based money-back guarantees.

Price tag for Bright Health’s acquisition of Zipnosis: This one was funny. I dug up some info that pointed me toward the acquisition price of the Bright Health-Zipnosis deal. My estimate ended up at $49 million. To my great surprise, a few hours after I published that number in Issue 013 of E&O Wednesdays, Bright Health filed its S-1 and included more details on the transaction. All in it was a $51 million deal: “…on March 31, 2021, we acquired Zipnosis, Inc., which is a telehealth platform that offers virtual care to health systems around the U.S., for aggregate consideration of $51.4 million, including $33.0 million in Series E preferred stock, or $48.2 million net of cash acquired.”

Secret pandemic launches for pre-FDA digital therapeutics: In Issue 048 of E&O Fridays, I dug into the risks and opportunities of launching an FDA-regulated digital therapeutic pre-FDA clearance via the agency’s waiver for psychiatric digital health devices. While a few companies announced launches under the waiver, a handful of DTx went to market under this enforcement discretion policy very quietly. I tracked down two such launches in Issue 090 and Issue 104 of Fridays.

Salaries of 76 health tech executives: In Issue 099 of E&O Fridays I put together a database of some of the top paid executives in digital health. Since there are so many digital health companies going public, there’s a significant uptick in transparency around executive compensation. From the article:

So, that’s a quick rundown of a few E&O reports from recent months. Click here for full access to E&O’s long-form research reports, paid newsletter archive, and growing library of mini-databases. Or here. Here works too.

Trillions and billions: 10 digital health TAMs

Since there are so many companies going public via SPAC and IPO lately, there’s been an uptick in the number of total addressable market (TAM) estimates floating around. Some of the numbers these companies pick are amusing, but some might be helpful. Here are 10 digital health-related TAM figures from publicly-listed (or soon to be) digital health companies:

$1.265 trillion – 23andMe One of Sir Richard Branson’s SPACs helped take 23andMe public this month. The company sees its TAM as the combination of three massive markets: US telehealth ($250 billion), global prescription drugs ($825 billion), and pharma R&D ($190 billion). More on Page 45 of this presentation.

$573 billion – Oscar Health – In March 2021, Oscar Health’s investor prospectus broke down the various TAM estimates relevant to its business: “We currently sell health plans in three markets—Individual, Small Group, and Medicare Advantage—which, in aggregate, serve more than an estimated 50 million Americans and represent an estimated $450 billion in direct policy premiums.” Plus it sees additional opportunities to expand its TAM via these focus areas: “$40 billion in telemedicine, $20 billion in care concierge, $12 billion in claims management, and $51 billion in population health.” More on Page 4 of this prospectus.

$480 billion – Talkspace In 2019, Talkspace wrote that its “Large and Growing Addressable Market” was behavioral health. “More than 70 million Americans suffer from mental illness, spread across all ethnic, socio-economic and age ranges. 17 million adults in the United States have had at least one major depressive episode in the past year. The annual suicide rate in the United States has increased by 30% since 2001. $4.6 billion is spent annually in the United States on unnecessary emergency room visits for mental illness.” Talkspace’s SPAC sponsor “believes the true global total addressable market will increase from approximately $480 billion in 2019 to approximately $588 billion in 2025.” For more head to Page 134 of this filing.

$350 billion – Hims & Hers In its investor presentation, Hims included TAM estimates for the 18-40-year-old market, which it described as its TAM opportunity today. But it also included its growing and cumulative TAM for once it expands into the 40-60-year-old patient population ($400 billion) and then into the 60+ market ($500 billion). More on Page 25 of this presentation.

$270 billion – Clover Health In 2019, Clover claimed its TAM was the overall Medicare Advantage market, which it dubbed “the largest, undisrupted market in healthcare.” Clover foresees Medicare Advantage hitting $590 billion in TAM by 2025, which is when the wider Medicare TAM opportunity hits $1.25 trillion. More on Page 5 in this deck.

$250 billion – Pear Therapeutics In its recent presentation to investors in its SPAC merger, the digital therapeutics company shared estimates for its current serviceable market with its three commercialized DTx ($2 billion), the TAM for its DTx distribution platform ambitions ($15 billion), and its overall TAM for prescription digital therapeutics in the US ($250 billion). Read more on Page 35 here.

$80 billion – One Medical In its investor prospectus, One Medical provided a handful of TAM estimates but it seems to see $80 billion as its immediate TAM: “The U.S. primary care market is estimated to be approximately $260 billion in 2021, including approximately $170 billion for the commercially insured population. We estimate that the 13 markets in which we are physically present represent approximately $38 billion in primary care spend within the commercially insured population under age 65. While our members can access our digital services nationally, we believe we can expand our physical presence across the United States. The 50 largest metropolitan statistical areas in the U.S. represent an estimated market opportunity of approximately $80 billion within the commercially insured population under age 65.” More on Page 1 here.

$60 billion – Science 37 describes its TAM as a “Large Market Opportunity” but goes with the alternative wording for TAM: “Total Available Market”. The company first notes that the annual R&D spend across global pharma is forecasted to hit $195 billion in 2021. The company claims its 2021F Serviceable Available Market is $60 billion. That’s a mix of CRO (50 percent), recruitment and e-clinical (33 percent), and home health (17 percent). More on Page 31 of the company’s deck.

$40 billion – Better Therapeutics In its presentation to investors ahead of its SPAC merger, Better Therapeutics pointed to the annual drug spend on diabetes as its “immediate total addressable market.” By 2030 that spend will top out at $105 billion, according to Better, but if its first digital therapeutic BT-001 receives market authorization that spend will only be $93 billion in 2030. More on page 26 of this deck.

$18.5 billion – Doximity The recently IPO’d physician platform company posted one of the smalled TAM estimates in digital health. “We believe our market opportunity is substantial and growing. We estimate our current total addressable market to be approximately $18.5 billion across our platform solutions today. This comprises a $7.3 billion opportunity in U.S. pharmaceutical marketing to medical professionals, a $6.9 billion opportunity in U.S. health system marketing and staffing, and a $4.3 billion opportunity in U.S. software telehealth.” More on Page 4 here.

Health Tech Rebus Puzzle Answer

Last week E&O offered up another health tech-themed Rebus puzzle (included it at the bottom of today’s newsletter too ICYMI). Once again, it was a hit and I can’t mention everyone who got it right. Here are a few of the quick-witted E&O subscribers who solved it:

• Harsh Vathsangam, CEO, MovingAnalytics
• Alyssa Alsheimer, VP of Marketing, Wellframe
• Daniel Peaceman, Senior Digital Analyst, Medullan
• Alyssa Dietz, PhD, Director, Strategic Planning & Operations Digital Therapeutics, Happify Health

ICYMI: How to play: This kind of puzzle is called a Rebus. Write down or think of the word for what’s pictured in each box as a starting point. Then swap letters (if you see =), or remove letters (when you see -), or add letters (when you see +) at the beginning, middle, or end of the words as noted. Then sound it out.

Hint: If you have ever attended a keynote presentation by a digital health visionary, then you have heard a human being say this sentence out loud.

See last week’s puzzle below if you missed out and want to give it a go… new one coming in two weeks!