Venture capitalists are showing an increased interest in startups that offer direct-to-consumer healthcare services as a lower-cost alternative to more traditional services.
Among the top areas gaining traction: diagnostics.
LetsGetChecked, a direct-to-consumer at-home health testing company, recently secured $30 million in a series B funding round led by LTP, a Boston-based growth equity investment firm. Existing investor Qiming Venture Partners also participated in the round.
Health consulting firm Startup Health reports that diagnostic and screening tools, as a subsector of digital health, raised $2.3 billion in funding in 2018.
LetsGetChecked, which launched in 2014, plans to use the funding to continue scaling the company’s consumer brand in diagnostics, as it currently serves the entire U.S., Canada, and Europe. The funding will also fuel development of the core technology platform and expand manufacturing and logistical capabilities throughout North America, company officials said.
LetsGetChecked’s portfolio of testing procedures currently includes wellness testing, such as cholesterol and thyroid lab tests, cancer screening, sexual health testing, fertility testing, genetic testing, and pharmacogenomic testing. The company provides the tests to consumers through its website and through partner retailers, including CVS and Walmart online stores.
LetsGetChecked CEO Peter Foley told FierceHealthcare the company plans to focus on specialist and genetic testing. "This will provide a unique proposition whereby consumers can identify risk factors with genetics and then use screening to monitor an issue should it be identified," he said.
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The company partners with connected health devices such as Apple Health, Fitbit and Garmin to provide consumers access to a range of health data via its health dashboard. By combining lab results with real-time wearable data, consumers can receive risk assessments and scores such as their cardiovascular health to determine the probability of developing a heart attack within a given time frame, according to the company.
The company has shipped 152,700 testing kits to date, Foley said. Convenience is the single biggest driver in the growth of at-home testing services, he said: "Consumers expect everything to be delivered to the home now, with the age of Amazon and other big e-commerce brands. Healthcare and diagnostics are no different."
At-home health testing startup EverlyWell recently raised $50 million in series B financing led by Goodwater Capital and Highland Capital Partners. Austin-based EverlyWell has scaled up from three tests in 2016 to 35 different testing panels ranging from food sensitivity to fertility, according to the company. The testing kits are sold online as well as at retailers CVS and Target.
Another company in this space, Sight Diagnostics, raised $28 million in a series C funding round in December.
Unlike disgraced Silicon Valley startup Theranos, which purported to invent new blood tests that could perform hundreds of tests from a single drop of blood, these digital health companies are direct-to-consumer testing services that collect consumers' blood samples at home and send them to certified labs for testing.
In an article in The Wall Street Journal, Julia Cheek, EverlyWell’s founder and chief executive, said the company has shipped 275,000 kits to date and had more than $20 million in sales in 2018 because it offers an affordable shortcut to the often laborious, expensive process of ordering lab tests.
Digital-health startups have struck a chord with consumers concerned about rising out-of-pocket healthcare costs, Goodwater Capital Managing Director Eric Kim said in the WSJ article.
"As power shifts more to the end consumer, they can become more demanding, and that’s why we are starting to see health products that are designed more with the customer in mind," Kim said.
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Foley said his interest in starting an at-home lab testing company stemmed from his own personal experience. "When I was younger, I had a condition where I benefited from getting screened early. I made a full recovery, but that isn't always the case for people," Foley said in a statement. "Early diagnostics through consumer-led screening can help solve this problem and lead to better clinical outcomes from everyone."
Mark McDade, managing partner at Qiming Venture Partners, said LetsGetChecked's continued growth comes at a time when people want more control over their own health.
Both LetsGetChecked and EverlyWell partner with CLIA-certified reference labs to perform the lab testing services. EverlyWell says its tests are ordered and reviewed by board-certified physicians and are supported by independent, peer-reviewed research. Once the sample is submitted, consumers can access online results with “evidence-based insights,” suggestions, and next steps within a few days’ time, according to the company.
EverlyWell says its tests are not intended to diagnose diseases with the exception of its STD test offerings. The company will print or email a “doctor friendly” version of test results to consumers' physicians.
With LetsGetChecked, patients are connected with in-state board-certified physicians to discuss any abnormal results and determine the best course of action for treatment and care. Patients also receive a nurse call to discuss the results live, which can be accompanied by an e-prescription at no additional cost to the pharmacy of their choice.
The company has integrated with large reference labs and health systems and is building partnerships with a growing number of healthcare insurers for personalized screening and home testing procedures, LetsGetChecked executives said.