CVS Health launches $100M digital health investment fund

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CVS Health Ventures will seek to invest in early-stage technology companies working to simplify healthcare for consumers. Along with the funds, startups in its portfolio would stand to benefit from the larger company's guidance within the complex healthcare market. (Jirapong Manustrong/Getty Images)

CVS Health has unveiled a $100 million venture capital fund targeting early-stage health technology companies.

Called CVS Health Ventures, it will be on the lookout for digital health disrupters delivering accessibility, affordability and simplicity to health consumers, the company said in its announcement.

"Consumers deserve a better health experience, one that puts them at the center of cutting-edge, digitally enabled solutions," Karen Lynch, president and CEO of CVS Health, said in a statement. "Forming CVS Health Ventures will build on our successful track record of scaling innovation and driving change in health care."

CVS Health also wants these startups to be a fit with the organization’s larger strategy. Alongside the investment, the company plans to support new partners with strategic expertise and insights as they develop.

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"We will build on this experience by providing capital to our startup and venture partners and helping them scale more rapidly through commercial relationships with our business units,” Josh Flum, executive vice president of enterprise strategy and business development at CVS Health, said in a statement. “This is an exciting opportunity to accelerate innovation and effectively bring new solutions to the consumer health space."

This isn’t the first time CVS Health has opened its checkbook to up-and-coming innovation startups. The company has made more than 20 investments through the CVS and Aetna sides of its business that “have delivered consistently strong returns and partnerships," it said.

Among the highlights in this department are social services technology platform Unite Us (with which Aetna has launched pilot programs) and connected point-of-care diagnostics company LumiraDx.

Digital health companies have been a hotbed for private equity and major healthcare names alike. Last year the sector raised somewhere from $14.1 billion to $21.6 billion depending on who was counting, and so far the first quarter of 2021 is signaling another record breaker.

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With this and the staggering size of the full healthcare industry in mind, CVS’ $100 million fund could be seen as just another drop in the bucket.

“CVS Health is a $100 billion company and investing one-tenth of 1% of their market cap isn’t going to fix healthcare, but it’s a good start,” Andrew Dudum, CEO and co-founder of consumer-facing telehealth brand Hims & Hers, told Fierce Healthcare.

“I'm excited about any large player investing dollars to help the millions of people who are experiencing excruciatingly painful experiences, high costs and bad care. I do hope it moves the needle and inspires other health systems and companies to truly start putting the patient first and making sure their needs are met in all facets of their healthcare experience,” he said.

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CVS Health’s push into health technology investment bears some resemblance to Optum Ventures. UnitedHealth Group’s health services business first launched its digital health investment fund on the back of $250 million in 2017. It’s now grown to $600 million under its management, according to the fund’s website, and also names Unite Us among its 36 portfolio companies.

About a year later, Cigna kicked off a $250 million fund with analytics, digital health and care delivery in its crosshairs. Cigna Ventures today lists MDLive, Ginger, Omada and AristaMD among its investments.

Other recent fund launches within the digital health sphere include Transformation Capital Partners’ second, $500 million fund for commercial-stage digital health companies, as well as a connected diabetes venture capital fund launched by Dexcom during its first quarter earnings calls.