Weekly News: The HIMs/Novo breakup, digital health reimbursements and new funding rounds

There is so much going on around us, and so many places these days to digest information. So I figured I’d start a regular news digest, not just about what happened but why it matters.

So here’s what happened in our industry in the past few weeks, and what you should takeaway from it!

What’s been reported: Hims & Hers stock took a nose dive after it was announced that the relationship was ending with Novo Nordisk over its partnership to bolster sales for its blockbuster obesity drug Wegovy. The two companies forged the deal only a month ago. Novo has been building relationships with telehealth companies almost certainly as a way to improve market share and assauge stockholders as they deal with competitive pressure from Eli Lilly and potential oral GLP mediations on the horizon. Meanwhile, Congress and the federal government are putting pressure on telehealth companies to stop marketing prescription drugs, particularly following a Super Bowl ad promoting compounded GLP-1s back in February.

What Novo said: The company issued a statement claiming that Hims & Hers continued to sell “knock off,” i.e. compounded versions of Wegovy that were not approved by the U.S. Food & Drug Administration, and that it was putting patients at risk.

What Hims & Hers said: The company’s CEO Andrew Dudum posted on X that Novo’s commercial team was pressuring them to prescribe Wegovy to patients, even if it wasn’t the best option for them clinically.

Reading between the lines: This situation was unlikely to succeed from the start. It’s hard to imagine Novo Nordisk being satisfied with a telehealth business that prescribed a mix of compounded medications and brand name medications. Compounding remains a murky part of the market, opening up a ton of questions about balancing affordability with patient safety standards, as well as intellectual property.

An experts’ POV: None of my biotech and pharma expert friends wanted to weigh in on the record, but I did get some hot takes. Here’s one that an industry expert agreed I could share anonymously: “My best guess on this is that Novo was seeking a Direct-to-Consumer channel and premium pricing; Hims & Hers decided working with Novo and against them (i.e. compounding) at the same time was win-win; Novo decided to pull the plug, and learned a lot about telehealth and direct-to-consumer marketing. Meanwhile, Hims & Hers was always going to be in a tougher spot because Novo benefits from patent protection.”

What’s been reported: Politico reported from a Ways and Means Health subcommittee meeting this past week that House Democrats and Republicans have very mixed feelings about how to fund and regulate new digital health technologies, including the use of AI. According to Politico, at the heart of the issue was cost. Democrats aired concerns about proposed Medicaid cuts that could take away health insurance from millions of Americans, while Republicans noted that more spending on health wasn’t improving outcomes.

Why this matters: One of the ideas floated involved raising reimbursement rates for some digital health technologies, which could improve the unit economics and viability for companies that have struggled in the space. Another idea involved tax-advantaged accounts for buying wearables like Whoop or Oura, which would likely mean a huge bump in sales for these devices if passed.

An experts’ POV: A lot of my digital health network has been wondering if RJK Jr. will be an advocate for digital health. The U.S. Secretary for Health & Human Services has signaled strong support for such trends as “food as medicine,” and he seems to love wearables. But if a lot of people lose health insurance, they’re going to have less discretionary income to spend on digital health.

Reading between the lines: Via a friend who’s close with the Trump Administration, also anonymous: “RFK Jr. has all kinds of love with D2C digital health and wellness companies. The limiting factor here is CMS’ ability to do much of anything around reimbursement.”

What’s been reported: Per data from Rock Health, digital health startups raised $3b billion in Q1 2025. That may seem like a hefty sum, but in the height of the pandemic in 2021 (the boom time for the sector), companies raised more than $29 billion. Before the funding boom, companies in the space raised just $8.2 billion. The jury is still out on 2025, but I believe it’ll be a stronger year than the one prior because of the increase in large rounds (see funding roundup below).

An experts’ POV: The Rock Health team looked more closely at the numbers and found that it’s likely down to investors writing smaller checks at the earlier stages. There were fewer big growth rounds last year, as investors took on smaller risks. That may have been down to the lack of exit activity, which propels excitement amongst investors at the later stages. That’s why I believe we’ll see a stronger 2025. We are seeing growth rounds, but mostly at the intersection of health and AI. Healthcare services is still slow for companies that don’t have pristine metrics (profitable, still growing, good margins and so on).

Why this matters: The market seems similar to 2024 with an exception - there are startups raising big growth rounds in hot areas like longevity and AI. But most companies are experiencing much slower fundraising timelines than they would have in 2021. So it’s important to be prepared. That is particularly true for health care services businesses. Founders should react by setting aside a longer timeline for their raise, and building relationships with investors well in advance of the round.

Reading between the lines: My personal view on this is that the Hinge and Omada IPOs were important in the sense that they did generate some liquidity for investors and early teams. But digital health still doesn’t have a company that’s worth more than $10 billion. There have been a lot of solid third base hits for investors, but very few home runs.

What’s been reported: The 23andMe story is so full of twists and turns that it’s hard to keep track. To give you a refresher on the timeline, the company in 2013 seemed doomed to fail after federal regulators ordered it to cease selling its at-home genetic tests. From there, the company rebounded and forged lucrative partnerships with pharmaceutical companies, while continuing to raise money at high valuations. After a tussle with the board, 23andMe declared bankruptcy, and it looked like the assets would sell to Regeneron. But then 23andMe’s CEO Anne Wojcicki regained control of the company after winning the auction by submitting a $305 million purchase price! At its peak, 23andMe was valued at $6 billion.

Why this matters: At this point, the sky is the limit for 23andMe, which still has a vast trove of genetic information. With a board and a big valuation, I wrote that the company could only pursue directions that seemed big enough — meaning the company would be worth enough to return money for its big investors. Now, Wojcicki can do anything she likes with the business! It’s ultimate freedom.

Just a guess: I could see Wojcicki going on an acquisition spree from here, adding a few assets to prop up a new direction for the company. I could see the company going deeper into diagnostic testing and potentially even making a move into the piping hot longevity space.

Abridge is now valued at $5.3 billion after raising a fresh $300 million from the venture firm a16z. In the minds of investors, that makes it one of the most valuable companies in digital health. The big question from here: What could the company do next? The ambient documentation space is hot and getting hotter, but I see big potential in adjacent areas like revenue cycle management.

ForSight Robotics raises $125 million Series B

Another big round for an eye surgical robotics technology company led by the venture firm Eclipse, but with participation from Dr. Fred Moll. Moll is widely considered one of the fathers of robotic surgery, and is a cofounder of Intuitive Surgical. It’s been a tough year for medical devices, but I see huge potential to incorporate AI technology — which ForSight claims it will do. One to watch!

Sword raises $40 million at a $4 billion valuation

According to venture capitalists, Sword is worth more than its biggest competitor Hinge! Hinge went public a few months ago, and currently has a market camp of $3.47 billion. Like Hinge, Sword seems to be betting much of its future growth on AI. Both companies are also looking further afield from MSK, and into areas like behavioral health and women’s health.

SuperDial gets $15m to automate healthcare’s phone calls

SuperDial sells into revenue cycle management companies and providers, making it easier to deal with annoying billing-related phone calls using AI. SignalFire led the round, with participation from Slow Ventures, Box Group and Scrub Capital (the firm where I’m a GP and co-founder).

That’s it for our first digest! If you enjoyed the format, I’d love to hear from you.