78 Health Unicorns downgraded in our mark-to-market valuation scenario. From a $335B valuation herd, down to $181B.

No longer all rainbows and unicorns for fast-growth Health Tech startups

Health Intelligence Unit

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March 30, 2023

200 Health startups have achieved Unicorn status in the last 10 years. 53 escaped the herd and have exited (43 via IPO/SPAC), leaving 147 behind. HolonIQ’s Q2 2023 mark-to-market scenario values 78 of those 147 companies at less than $1B in today’s market, leaving just 69 above threshold. 73% of the 43 IPO Exits are trading below 50% of IPO Valuation with 40% trading below 20% of IPO Valuation.

As of 27 March 2023 there are 147 Health Unicorns around the world who were collectively valued at $335B at the time of their last funding round. As a cohort, these Unicorns represent some of the sector’s most exciting enterprises, providing beacons of hope for the future direction of innovation in the health market. 

As we brace for further impact from the global economy, post-pandemic normalization and cross-border turbulence, maintaining the momentum built by these pioneering organizations will be crucial to the sector but there must also be a re-evaluation of the status of the Health Tech Unicorn cohort as the market adjusts to changing circumstances.      

In HolonIQ’s Q2 2023 Outlook, our Health Intelligence Unit stress tested the 147 Health Unicorns against a mark-to-market valuation scenario (M2M). The M2M scenario considered public and private valuations across both time and model/category to ensure that the re-valuation scenario was sensitive to market timing and model/category multiples.

Figure 1. Health Unicorn Valuation - Mark-to-Market Scenario Impacts

The left hand chart in Figure 1 shows the total count of Health Unicorns today, segmented by their home category on HolonIQ’s Open-Source Global Healthcare Landscape. The colored count shows the total number of companies in that category that had a valuation at or greater than $1B USD, the Unicorn threshold. The hatched count on top of the colored segment, shows the total number of companies that have completed a funding round valuing the company at or greater than $1B USD, but in HolonIQ’s M2M scenario, reflected a mark-to-market valuation less than $1B USD. Of the total 147 companies, 69 remained above the $1B threshold in the M2M scenario (represented in colored bars) and 78 fell below the threshold (hatched bars).

The right hand chart in Figure 1 shows the total valuation of Health Unicorns today, again segmented by the Global Healthcare Taxonomy and whether or not the companies represented in the colored and hatched sub-totals reached the threshold valuation in the M2M scenario. The total 147 companies were collectively valued at their last respective funding rounds at $335B, however the total drops to $181B for all 147 companies in the M2M scenario.

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The 147 strong Health Unicorn herd spreads right across the open-source Global Health Landscape taxonomy

While 147 organizations are currently anointed as Health Tech Unicorns, understanding the true picture of the Unicorn landscape requires a much closer analysis of the types of startups that have achieved this milestone. By mapping the Health Tech Unicorns to the Global Healthcare Landscape taxonomy we are able to break down the cohort by sub sector and by cluster.

Figure 2. Health Unicorn Evolution - Founded, Unicorn Crown and Exits

Mapped to the Global Healthcare Landscape, we can see that Research is the biggest sub sector for Health Unicorns; emphasizing the high-risk, high-reward nature of clusters such as Health Discovery, Precision Medicine and Genomics. After Research the next most prominent Sub Sector is Systems. This area of the market captures the organizations aiming to tackle the sizable inefficiencies and productivity challenges across global healthcare. At a cluster level it is perhaps unsurprising that Telehealth represents nearly 10% of the list, given the explosion in the use of ‘virtual first’ care during the Covid-19 crisis. On the public markets the largest telehealth companies are trading at a fraction of 2021 valuations and in many cases - but not all - telehealth Unicorns are feeling the pain as hybrid models of care replace virtual only provision, margins are squeezed and increased competition pushes up the cost of customer acquisition. 

Figure 3. Valuation Patterns of 147 Health Unicorns, by Valuation and by Year each Company became a Unicorn

To qualify for Unicorn status, organizations must be a private company with a valuation over $1B. Unicorns are ‘startups’, i.e they do not include post-exit, acquired or listed companies, nor do they include ‘mature’ incumbents. By most metrics, 2021 represented a high watermark for startup valuations - particularly for organizations with technology-led solutions. Of the 147 Unicorns, 84% became Unicorns since the pandemic. So far in 2023, only Kindbody has joined the Unicorn club.

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73% of the 43 IPO Exits are trading below 50% of IPO Valuation with 40% trading below 20% of IPO Valuation.

By viewing the 147 Health unicorns by their ‘Unicorn year’ - the point at which a private funding round valued the organization in excess of $1B - we can see once again the extraordinary impact of the pandemic on the volume and valuations of Health Unicorns. Just over half of the existing Unicorn herd achieved this status in 2021, when cheap capital and the rapid growth of virtual first care models converged to supercharge the market. 

Figure 3. Unicorns by Valuation and Valuation Age

The public markets are also an accurate indicator of the extent to which valuations have shifted. The IPO window was wide open during 2021 and competition to trade high-growth health organizations on the public markets was key to the uplift of valuations across the market and the subsequent expansion of the Unicorn herd. When we consider the current trading value of a cohort of health companies that listed during this period we can see collectively they are valued at a 0.69 discount to the price they entered the public markets at.    

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