What Happened to the Digital Health Unicorns of 2020-2022?

Disclaimer: I’m an investor in several companies in this cohort, including Cityblock, Kindbody, Omada Health, Everly Health, and Viz.ai.

2020-2022 were exceptional years for venture funding, with healthcare founders raising at generous valuations. During this period, often referred to as ZIRP (zero-interest rate period, which was technically from March 2020 to March 2022), cash was both cheap and abundant due to historically low interest rates. The number of deals, the valuations, and the amount raised all skyrocketed.

In fact, so many digital health companies fundraised in these three years that over 76% of all the digital health “unicorns” (companies valued at over $1 billion) tracked since 2016 are from this three-year period. 

But what goes up must come down—or, in the case of interest rates, must go up again. VC appetite waned in 2023 as the era of easy money came to an end. Digital health funding plummeted to $10.7 billion in 2023, less than half of 2021's $29.2 billion peak. Simply put, there was less follow-on funding available.

So, what happened to all those companies that reached unicorn status during the ZIRP era? I looked at 64 digital health companies that hit $1B+ valuations in 2020-2022. Here’s the TL;DR:

• 91% are still operating today

• 33% have managed to raise additional funding in 2023-2024, despite the tougher market

• Two have filed to go public

• Four companies were acquired or merged (two of which were meaningful acquisitions)

• Two companies have shut down

Let's dig deeper.

A quick note on startup valuations:

Before diving into the findings, it’s helpful to understand how startup valuations work.

A company's valuation is established by the market during a financial event—whether that's a venture capital investment, an acquisition, or an IPO. Between these events, companies do conduct annual valuations (known as 409A valuations) to price employee stock options, but these aren't usually public information. While some companies proudly announce their valuations at financing, especially when they're high, others raise venture funding quietly without disclosing amounts or valuations at all.

My analysis relies on publicly available information and likely doesn't tell the complete story. Still, the data reveals some interesting patterns about how these ZIRP-era unicorns have fared.

If you want to learn more about how VCs value startups, check out Venture Math: How VCs Value Startups.

Most of this cohort keeps on truckin’

Most of the companies in this cohort are alive, if not well. Few have shuttered or sold for a loss; this could be because they raised enough to “figure it out,” or it’s just too early to tell.

I’m actually quite impressed that a third of this cohort secured additional capital since 2022. It’s normal for a Series C or D round of funding to be the last round of funding for a company before an exit. An analysis by CB Insights found that only about 15% of companies raise a 4th round of funding, and only 9% raise a fifth round. So this group is outperforming historical averages, even in a tough market.

Companies in this cohort include:

• Devoted Health, which offers Medicare Advantage plans, went on to raise a $287 million Series E. Their revenue hit $1.9 billion in 2023 but have not yet reached profitability.

• Sword Health, which offers virtual physical therapy, raised $130 million and is now valued at $3 billion. They recently began replacing their physical therapists with AI.

• Aledade, which provides value-based care solutions for independent primary care practices, raised $250 million a Series F. It’s now valued at $3.5 billion.

• Maven Clinic, the world's largest virtual clinic for women's and family health, raised $125 million in Series F funding.

• Transcarent, which connects employers with a suite of medical services, raised $125 million in Series D funding, bringing its valuation up to $2.1 billion.

• Athelas and Commure merged to create a $6 billion healthcare infrastructure company.

Not to mention ConcertAI, Included Health, Evidation Health, Alto Pharmacy, Spring Health, Viz.ai, Honor, Datavant, Medable, Noom, and Sidecar Health (you can download the full list here)

Two big acquisitions (so far)

This cohort has had two pretty sizable exits.

CareBridge, which became a unicorn in 2022 after raising $140 million, was acquired by Elevance Health in a deal reportedly worth $2.7 billion. This is a massive acquisition, now tied for the second-largest acquisition of a private digital health company ever. It’s also impressive because the company is just four years old. CareBridge provides value-based home care for Medicaid recipients. While their target population represents just 3% of Medicaid members, they account for 20% of total Medicaid costs.

In January 2020, ClassPass raised $285 million in Series E funding, which valued the company at $1 billion. Just a year later, ClassPass was acquired by Mindbody in an all-stock deal. The combined entity is worth $3 billion and is supposedly getting ready to IPO next year. ClassPass is a subscription-based fitness marketplace, and Mindbody is like OpenTable for fitness studios.

Two are ready to go public

Two companies from our ZIRP-era unicorn cohort—Hinge Health and Omada Health—are quietly filing to go public, despite the near freeze in digital health IPOs since 2022. While there were 34 digital health IPOs in 2021, there have only been five since then.

Both Hinge and Omada sit at the intersection of virtual care and chronic condition management, suggesting the public markets may have an appetite for digital health companies with proven clinical outcomes and clear paths to profitability. While we don't yet know their proposed valuations or how public investors will receive them, these filings signal confidence in their business fundamentals despite the broader market reset.

My guess on who might be next? Maven Clinic, Ro, Devoted Health, SonderMind, and Noom are all on my bingo card.

Some have faced struggles

While most of the cohort is still operating, the path hasn't been smooth for everyone.

• Carbon Health laid off more than 500 employees, closed nearly a dozen clinics, ceased operations in multiple states, and sold two of its acquired companies. The co-founder & CEO left the company to return to his previous startup.

• Freenome, despite securing additional capital, recently had its CEO resign and cut 100 employees in a restructuring.

• Caris Life Sciences had to pay over $2.8 million to resolve allegations that it violated the False Claims Act in an alleged nationwide scheme to improperly bill Medicare for laboratory tests.

• MindMaze sold for $21 million—an enormous discount from their peak valuation.

The most well-known struggle was at Cerebral, where nurse practitioners alleged they were pressured to unnecessarily prescribe ADHD medications, and a former executive filed a lawsuit claiming the company prioritized profits over safety. The tragic death of a 21-year-old who obtained ADHD medication from Cerebral without a previous diagnosis amplified concerns about its prescribing practices. The U.S. Drug Enforcement Administration (DEA) launched an investigation, and the company agreed to pay over $3.65 million in connection with business practices that “encouraged the unauthorized distribution of controlled substances.”

But it didn’t end there. Separately, the FTC filed a proposed order for the company to pay over $7 million for allegedly disclosing consumers’ sensitive personal health information to third parties and failing to honor its easy cancellation promises. The company ultimately stopped prescribing most controlled substances, and the founder / CEO was removed. The founder later told reporters that his investors pushed the company to prescribe more stimulants, then used him as a "scapegoat" when investigators caught on.

Two have shut down

The shutdowns in this cohort—Forward and Olive AI—give us a surprisingly low failure rate so far (this will likely change as more companies reach the end of their runway).

Forward raised over $650 million from tech investors like Khosla Ventures, Softbank, and Salesforce's Marc Benioff for a no-insurance, subscription-based model for primary care. Their "autonomous doctor's office" aimed to use AI to provide care plans and diagnostic tools in self-service CarePods around the city. According to BusinessInsider, the reality proved more challenging. Forward faced technical difficulties with the CarePod roll-out, from malfunctioning self-service blood draws to patients getting stuck inside the large metal boxes.

Listen to my interview with Founder & CEO Adrian Aoun on the Heart of Healthcare podcast last year.

Olive AI's shutdown in October 2023 was far more dramatic. The healthcare automation company reached a $4 billion valuation in July 2021 and raised a total of $852 million—the most venture capital funding ever for a health IT company. Despite rapid growth and numerous acquisitions (including Verata Health and Empiric Health), Olive faced enormous challenges by mid-2022. The company underwent multiple rounds of layoffs, lost key executives, and began divesting assets. After losing health system clients and facing a lawsuit from JobsOhio over missed hiring goals, Olive ultimately shut down on October 31, 2023, selling its various business units to companies including Waystar and Humata.

Founders are adapting and restructuring

The tension between growth and cash conservation has always existed in startups, but the end of ZIRP brought this balance into focus. Many founders I've talked to have since pivoted to prioritize runway extension and profitability over pure growth metrics—a huge shift from when cheap capital encouraged rapid expansion above all else.

You could say that this cohort that raised during the ZIRP era was fortunate in their timing—they secured substantial capital at a cheap price just before the market turned, allowing them to "weather the storm" and adapt their strategies before it was too late. One founder referred to it as a “hibernation strategy.”

Here's how these companies have adapted to the new reality:

• Layoffs: To extend runways and/or pursue new strategies, many companies have gone through painful but necessary restructuring. DispatchHealth, Commure, Intelycare, Cityblock, Elemy, Carbon Health Color all conducted reductions in force (RIFs). While layoffs are hard for everyone involved, they can be necessary to right-size operations.

• Unlabeled rounds: Unlabeled rounds tend to spike during periods of transition between market conditions when startups need access to capital but don’t meet benchmarks for their next labeled raise and/or are trying to delay tough conversations on topics like valuation. Rock Health found that 44% of 2023’s digital health deals (and 40% of H1 2024) were unlabeled. Comparatively, just 22% of deals were unlabeled in 2022, 19% in 2021, 7% in 2020, and 4% in 2019.

• Down rounds: Many digital health startups are cutting their valuations to “live another day.” For example, K Health from this cohort raised additional funding in July as a down round.

• Roll-ups: A "roll-up" is the strategy of acquiring and merging multiple smaller companies in the same market into a larger entity. For example, Truepill was acquired by another startup in this cohort, LetsGetChecked, for $25 million cash plus equity.

Market dynamics are driving many of these adjustments. But overall, the data suggests that founders are adapting well. They're making the necessary adjustments to build sustainable businesses.

🦄 What's next for these unicorns?

Looking ahead, I’m excited to follow this cohort in 2025 and beyond, and not just because a few are portfolio companies of mine.

For those who haven’t yet become profitable (which is most of them), they will need to exit or raise additional capital as their ZIRP-era funding runs out. Those who haven’t grown into their generous ZIRP valuations will likely face down-rounds. Others will face investor scrutiny over unit economics and paths to profitability—metrics that weren't always a top priority in 2020-2022.

The data suggests we'll likely see:

• More companies accepting unlabeled or down rounds to secure funding

• Additional restructuring and right-sizing efforts

• A continued focus on extending runway and reaching profitability

• A few IPOs

• More exits, though potentially at valuations below peak

Companies from this cohort that survive this period will likely emerge stronger, with more sustainable business models and realistic valuations. The ZIRP era may have created some artificial unicorns, but it also funded many promising companies that are proving their resilience in tougher times.

We're still early in this story. While most of these unicorns are still standing, the real test will come as they need to raise additional capital or seek exits in this new market environment. For now, they're showing impressive adaptation to a post-ZIRP world where capital is neither cheap nor abundant.

Want an updated list with even more data points? Download the List of Digital Health Companies spreadsheet. This includes a list of private and public digital health companies, along with exits.