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March 07, 2023 | Tom Ballard

VC investments in healthcare IT dropped in 2022

PitchBook reports that opportunities for innovators remain in spite of the headwinds the sector is facing.

Venture capital (VC) and private equity (PE) investment in healthcare information technology (IT) plummeted in Q4 as cost inflation strained health systems, the funding market faltered, and valuations were rocked.

That’s according to the Q4 2022 Launch Report: Healthcare IT from PitchBook which noted that, despite the bumpy road ahead, healthcare IT presents a long-term opportunity to drive delivery efficiencies and care model innovation.

Key takeaways from the report, which can be downloaded here, include:

  • Cumulative VC deal value in healthcare IT fell 61.7 percent in Q4 from the previous quarter to $451.3 million. PE investment in the vertical had a more muted drop-off, with a 46.2 percent decline in deal count compared to Q3 2022.
  • The vertical encountered tough headwinds in 2022 ranging from weakness in the provider end market led to difficult sell cycles, volatility in the VC funding market, and a sluggish exit market tying up LP capital.
  • In spite of those headwinds, opportunities for innovators remain such as interoperability in healthcare data, antiquated technology systems, and shifts in the care paradigm toward patient-centricity as three crucial entry points to watch.

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