9 Industries and $100 Billion: Who’s Competing for the 50+ Set?
As an investor or entrepreneur, what should you know about the longevity economy and its implications for digital health?
To start with, it’s big. $7.6 trillion big, and that is in the US alone. A defined the longevity economy as “the sum of all economic activity driven by the needs of Americans aged 50 and older, including both the products and services they purchase directly and the further economic activity this spending generates.”
This could mean everything from apps to manage medication, to fitness trackers, to grocery delivery services to ride sharing — common digital solutions that could have huge implications for the 50+ and therefore substantial financial opportunities in the marketplace.
If you’re a tech entrepreneur or investor and you’re ignoring the longevity economy, you’re almost certainly leaving money on the table. As Jody Holtzman, senior vice president of market innovation at AARP, often says: “Why would you leave money on the table by ignoring the only humongous growth-market that exists?!” So the question for entrepreneurs and VCs is simply this: What is your 50+ strategy?
In this report, we break out our coverage into 9 different “health frontiers”: sectors where untapped market opportunities reach into the billions.
- Behavioral Health: $2.9 billion
- Care Guidance: $6.1 billion
- Diet & Nutrition: $5.8 billion
- Medication Management: $1.7 billion
- New Care Delivery: $25.2 billion
- Physical Fitness: $39 billion
- Safe Living: $6.7 billion
- Smart Aging: $10.3 billion
- Social Engagement: $4.8 billion
Below we give you a snapshot of each of these frontiers and companies who are leading the charge to take advantage of this huge and growing market potential.
Market opportunity for products and services serving the 50+ population: $2.9 billion
Mental health issues are a quiet drain on everything from healthcare dollars to workplace productivity.
Yet compared to many other digital health sectors, products addressing behavioral or mental health lagged behind in sophistication and investor interest until recently. According to an August 2017 analysis by CB Insights, the past two years have seen an increasing number of Series A, B and even C investment deals for mental health platforms. At least three deals since 2015 hit $35 million or more (Quartet Health: $40M; Headspace: $37M; Lyra Health: $35M). With a total market valuation of $2.9 billion, the sector is coming of age.
These mental health and well-being products tackle everything from provider access to wearable sensors or cell phone algorithms tracking stress indicators to chatbots providing some of the first clinically validated counseling. Among the companies garnering the most interest in this space are:
AbleTo provides a nationwide network of over 300 highly trained, clinically supervised therapists (LCSWs) and behavioral coaches, available for next-day access to therapy sessions hosted by phone or secure video chat. They secured a $36.6M series D round in August 2017 to expand their market reach and clinician network.
Woebot is a chatbot designed by a team of Stanford psychologists and AI experts to support text-based therapy via Facebook Messenger. Its method of routine social engagement, including simple conversations and word games, utilizes the principles of cognitive behavioral therapy (CBT), the most rigorously studied therapeutic approach across diagnoses. The AI-powered chatbot can track mood and energy levels and even offer suggestions on how to alleviate bad moods or negative thinking. Woebot came out of stealth mode in June 2017 and has already acquired over 8 million users. They have yet to announce any external funding.
Mindstrong is a mobile app that utilizes powerful algorithms to passively collect what they call “digital biomarkers” from users’ phones. The app learns to recognize patterns in locations and frequency of texts and calls, reaction speeds and word usage. The goal is to predict mental health episodes, for example, bouts of depression, anxiety or schizophrenia. The company secured a $14 million Series A round of funding in June 2017.
Market opportunity for products and services serving the 50+ population: $4.8 billion
Loneliness and social isolation among older adults have been getting more and more press as researchers gain a better understanding of the massive public health consequences. Loneliness–which many experts believe has reached epidemic proportions among the elderly–leads to poor and worsening health outcomes, and in turn, a ripe opportunity for entrepreneurs. This category of innovation spans an unusual breadth of approaches, many of which are specifically aiming to allow seniors to “age in place” by providing, for example, novel housing or transportation solutions or harnessing the power of voice-activated assistants as companions. Some companies addressing this $4.8B market include:
Nesterly seems well positioned to capture an emerging housing trend: millennials renting from baby boomers at a reduced cost in exchange for helping out with household chores.
Popular ridesharing platforms Uber and Lyft both launched services in 2016 to cater to seniors. Their main strategy has been to partner with healthcare providers to help seniors who can no longer drive to doctor’s appointments, leaving a large swath of unmet social transportation needs.
Enter GoGoGrandparent (winner of AARP’s 2017 Innovation@50+ LivePitch competition), a “senior concierge service” that allows older adults to access transportation services like Uber or Lyft without a smartphone. The startup has built in some extra safeguards and assistance to provide safe, affordable transportation for a senior’s social calendar. In August 2016, GoGoGrandparent raised $120k in seed capital and has managed to build a customer base to be net revenue positive in 2017.
Orbita, Inc. has developed a new “skill” for the Amazon Echo that enables not only more coordinated care, but also provides companionship to seniors aging at home, according to home health care provider Libertana who has been engaged in a pilot this year. For example, Alexa might offer kind words on a senior’s birthday, or remind them how much they’re loved by their family. Orbita has raised $3.2M to date, including a $1.5M seed round in May 2017.
HealthUnlocked aims to solve a deceptively simple pain point: people dealing with a medical condition seek—and often don’t know how to find—someone going through the same thing in a secure environment. Recently, their success in the UK and newly developed AI-powered algorithms has led them to offer the app globally. They have raised £5M to date, including a Series A round in November 2016.
Market opportunity for products and services serving the 50+ population: $1.7 billion
Medication non-adherence (or non-compliance) costs hundred of billions of dollars each year in the US, due to unnecessary hospital readmissions and other complications. Costs are particularly high for patients managing chronic conditions, and the possibility of disrupting even a sliver of this enormous market has proven very appealing to entrepreneurs and investors. But as the space becomes increasingly crowded, it has also become increasingly clear that medication nonadherence is anything but simple. The reasons people fail to take prescribed meds are multilayered and complex. The various digital solutions out there right now, in turn, show tremendous innovation but also–for the moment at least–grapple with just one or two of these contributing factors, looking to crack the code on this $1.7B market opportunity.
PreCheck MyScript starts at the beginning by providing price transparency at the point of care. Because one of the top reasons for medication non-adherence is the cost of the drugs–especially among those with chronic conditions–UnitedHealthcare and DrFirst partnered to design an application that integrates with all major electronic health records (EHR) platforms. Providers can use it to run an immediate check on the patient’s insurance coverage for a particular medication, allowing them to seek alternative medication options right away if these costs are prohibitive. [**Full disclosure: UnitedHealthcare is a sponsor of The Longevity Network. However, this sponsorship played no part in the decision to include PreCheck MyScript.]
NowRx is one of many startups addressing the next point where adherence can break down: picking up the prescription. On-demand pharmacies that provide free, same-day delivery to the patient’s home are popping up in cities across the country, each with their own twist and marketing strategy. NowRx started with the Bay Area and raised its first $2M in seed funding in June 2017.
Round Health picks up the baton with a solution to remind patients to take their medications at home, and to take them correctly. Their proprietary pill bottle that lights up at the correct time and a mobile app tracks adherence. PillDrill is another example, which instead uses a proprietary piece of hardware and special pill bottles with sensors, so patients need only wave their bottle near the sensor and the information is tracked in an app and sent to caregivers as well. Round Health was acquired by Alto Pharmacy for undisclosed terms in August 2017 and PillDrill raised a $3M seed round in November 2016.
Proteus Digital Health has gone further still, looking to ensure a patient has in fact ingested their medication. Their “smartpill” sends a signal back to a sensor on the abdomen when the pill hits the digestive system. An early darling of digital health, Proteus has raised over $422M in twelve funding rounds since its founding in 2001, including a $172M Series G in 2014 and a $40M private equity round in 2016.
Finally, Velóce Digital is in the process of designing a SmartTab that can be remotely triggered to release medications at a specific moment. Ultimately, the company aims to provide data on absorption rates and effectiveness, bringing us ever closer to personalized medicine. No external funding has yet been announced.
Market opportunity for products and services serving the 50+ population: $10.3 billion
As the 50+ consumer demographic increasingly looks to embrace their older years with full, active lifestyles, there are more and more apps, wearables, products, and services out there to help them take charge of their physical and cognitive health. From affordable and esthetically pleasing hearing aids to brain games to on-demand marketplaces for finding assistance with daily tasks, older adults have many more tools to help them age smartly with an estimated market valuation of $10.3B.
Perhaps one of the biggest developments in smart aging technology is happening with companies developing more stylish and affordable hearing devices–hoping to tap into market of the 48 million Americans with hearing loss, 30% of whom do not yet have a hearing aid. In what has historically been a very heavily regulated industry with just a few approved vendors, Congress is on the verge of dramatically lowering the barrier to entry for companies offering a new generation of hearing aids. If the Over-the-Counter Hearing Aid Act of 2017 passes, any consumer electronics company would be able to sell hearing aids with only minimal regulation by the Food and Drug Administration and without prescriptions.
These devices will be significantly cheaper than their traditional counterparts and will look and sound a lot like the “personal sound amplification devices,” or PSAPs, already on the consumer market. (To avoid this rather awkward moniker, some companies have adopted the new term ‘hearables’ as a play on ‘wearables’.) Two companies positioned to take advantage of this Hearing Aid Act, should it pass, include:
Olive Union has priced its single earbud design at just $100. The Olive pairs with a smartphone to create a do-it-yourself hearing aid. Each user conducts a quick hearing test for their current environment, calibrating each of 32 different frequency bands and creating an individualized “hearing profile”. They wrapped up a wildly successful Indiegogo campaign at the beginning of the year, raising $320k—20 times their goal of $16k.
ReSound announced this year that its Smart 3D app will soon pair with both iOS smartphones and the Apple Watch via Bluetooth, enabling users to change the preset audio profile of their hearing aid with the tap of a button–from say an outdoor concert to a restaurant setting. To date, no external funding has been announced.
With Alzheimer’s affecting 1 in 10 people over the age of 65, accurate cognitive assessment–and when possible, early intervention for maintaining or improving cognitive health–has become another way innovative companies are seeking to improve quality of life for older adults.
Cambridge Cognition’s tablet-based memory test, Cantab Mobile, received FDA clearance this year for its 10-minute, tablet-based memory test that is based on the Pairs Associates Learning or PAL test. It also builds in a test for depression, allowing the test to distinguish between mood disorders and memory impairment. The UK-based company has been active since 2002 and reports no recent fundraising activity.
BrainCheck‘s mobile app helps users understand, by simply playing some games on an iPad, if they or a loved one has suffered a concussion or is struggling with memory loss or cognitive impairment. After competing in AARP’s Innovation@50+ LivePitch event in April, BrainCheck went on to raise $1.5 million in funding from a VC fund focused on women-led companies in the consumer health and sustainability sectors.
NEW CARE DELIVERY
Market opportunity for products and services serving the 50+ population: $25.2 billion
Real-time tracking of vital signs is bringing us ever closer to personalized preventive care. These tools increasingly incorporate machine learning or artificial intelligence to analyze data and in many cases, integrate with other wearables or health trackers. The results are faster treatment, better outcomes, easier communication, and most of all, the power for individuals to take control of their health and for care teams and families to all be kept in the loop in a meaningful way. With a market valuation of $25.2B, this is one of the larger health frontiers ripe for disruption.
With the launch this year of the FDA’s new Digital Health Unit, clearance for mHealth and health and wellness wearables is already picking up steam. This process is only likely to speed up further, as FDA has just launched a pilot program with 9 companies to develop protocols for “pre-certifying” digital health tools. The new pre-certification process would be based on a company’s demonstrated history of quality control and validation rather than on expensive clinical trial results that study specific products.
With 25% of adults over 65 managing diabetes, many new companies have launched with the intention of providing a new kind of care that will bring down the astronomical costs associated with the chronic condition. Already this year, FDA has approved several diabetes management tools for monitoring blood glucose and making insulin dose recommendations, including:
Dexcom announced partnerships for its continuous glucose monitoring (CGM) to integrate with Apple Watch and Fitbit’s recently-released Ionic smartwatch. Dexcom went public in April 2005 and in May of 2017, announced new funding in the form of a $350 million post-IPO debt.
Solera Health is tackling the massive diabetes management market in a different way, with a platform to connect community organizations like Weight Watchers, Jenny Craig or the Black Women’s Health Imperative with digital chronic disease prevention programs such as the CDC’s National Diabetes Prevention Program (DPP). In July 2017, they raised an $18.3M Series B round of funding.
And newcomer Virta Health–started by Trulia co-founder Sami Inkinen–combines telehealth, nutrition advice and a lifestyle coach in an app that aims to fight type 2 diabetes with food and lifestyle changes, not meds. The company launched its product earlier this year with $37 million already raised.
SPR Therapeutics, meanwhile, is gaining attention for its non-invasive pain management wearable that is not yet commercially available. Its proprietary Sprint Peripheral Nerve Stimulation (PNS) System targets nerve fibers to relieve pain and for many patients, eliminates the need for permanent implants, invasive surgery, tissue destruction, or opioid prescription. FDA approved the latest iteration of their smartphone app, allowing users to control directly their pain management system, in November 2016. The company reports having raised $23 million thus far in “non-dilutive funding from the US Department of Defense, National Institutes of Health, and others, and in September 2017, they raised a $25M Series C round.
Market opportunity for products and services serving the 50+ population: $6.1 billion
76% of healthcare consumers don’t have a strong understanding of how the fragmented US healthcare system works, but innovative apps, “smart concierge” services, and other solutions are changing that. 50+ consumers and caregivers want to be engaged in their care, and these new tools allow them to coordinate, manage, and plan non-clinical aspects of the care experience. Some companies gaining traction in the space include:
Wellframe offers patient engagement tools, two-way messaging with the care team, and a customizable care plan. They recently raised a $15 million Series B round of funding after releasing promising data on cost savings for pilot partner Blue Cross Blue Shield.
PatientPing has found success in developing a patient engagement platform that ‘pings’ care providers every time one of their patients receive care. By receiving real-time information about a patient’s medical history, care teams can provide a more cohesive type of care, and prevent duplication of services and unnecessary hospital readmissions. In October 2017, the company announced a new partnership with North Carolina Hospital Association, a provider system that serves the entire state of NC. PatientPing last raised funding in December 2016, securing a $31.6M Series B, bringing total funds raised to $41.2M.
Kiio offers a patient engagement platform that provides care guidance in the user’s home, at work or anywhere. Kiio has similarly launched a new partnership with Wisconsin-based insurer WEA Trust to bring remote care options to Wisconsin’s many state employees, among others. The company has raised nearly $3M in seed capital from unknown sources and has taken on nearly $5M in debt financing in 2017.
Market opportunity for products and services serving the 50+ population: $6.7 billion
Research shows that 90% of seniors living at home wish to remain there as long as possible, maintaining their routine and sense of independence. But as AARP has identified, the US will reach a “caregiving cliff” in the next 20 to 25 years–that impending moment when the number of older adults needing some level of care will become perilously close to the number of able-bodied adults who can provide that care. In 2010, there were 7 able adults for every 1 needing care. By 2030, the ratio will be just 4 to 1, and by 2050, it will fall to 3 to 1.
Countries like Japan and China are already facing these challenges, particularly in more rural areas, so the race is on to find the tools and design elements necessary to enable older adults to “age-in-place” safely and comfortably while also protecting their privacy and dignity.
Often, it’s the professional caregivers or family members who initially seek these solutions, to ease work flows or ensure their own peace of mind about their loved one. Add in the shift to value-based care in the US and the corresponding push by insurers to reduce unnecessary ER visits and hospital readmissions, and you end up with a motivated but diverse group of stakeholders facing a complex negotiation on who pays and who benefits in this market valued at $6.7B.
Using technology to facilitate safe living for older adults has moved beyond emergency buttons hung around the user’s neck to “smart homes” equipped with sensors, Internet of Things (IoT) devices with safety features built in, and wearables that detect–and the hope is, eventually anticipate–falls or other health incidents.
Personal Emergency Response Systems (PERS) were one of the first products developed for older adults back in the 80s, but the new generation of PERS is sleeker and utilizes sophisticated sensors to track vital signs. Some companies in the news this year include:
iBeat makes a cardiac-monitoring, stylish watch as well as an app for activating their “Heart Hero network”—professionals and lay people willing to respond when someone suffers a cardiac incident in their vicinity. The watch can alert authorities, loved ones and a whole network of Heart Heroes when an incident occurs. iBeat raised its most recent $3M seed round in July 2017, bringing total funding raised to $4.5M.
Sweden-based startup Aifloo offers an AI-powered wristband that uses cloud-based computing to detect falls as well as deviations in behavior or sleep pattern. The company secured a $6M Series A round in September 2017.
HomeEXCEPT has developed a system of thermal sensors to allow family members to monitor activity, falls or location of their loved ones in their home, providing the security without the intrusiveness of a camera or wearable. In June 2017, they won AARP’s $10k Innovation Champion Award.
DIET & NUTRITION
Market opportunity for products and services serving the 50+ population: $5.8 billion
The 50+ demographic is increasingly informed and engaged on the enormous role diet and nutrition can play in prolonging longevity and maintaining a robust quality of life. Consequently, this health frontier—valued at $5.8B—is one of the few where consumers are willing to pay for apps and wearables themselves as opposed to looking to their health insurance plans for coverage.
Yet true, lasting behavior change remains the holy grail of any kind of health intervention. Take type 2 diabetes, for example. This is largely a lifestyle-induced chronic condition that afflicts fully 25% of the 65+ population and costs the US over $322 billion each year, according to the American Diabetes Association. Providing the necessary support, education and motivation for this population to truly adopt a new lifestyle has proven very challenging, but not a challenge entrepreneurs have shied away from.
According to a research team from Brigham Young University, apps can help patients and consumers choose healthy behaviors if they include four key features:
- A high degree of usability
- Positive reinforcement for healthy behaviors
- Social media and user interactivity (i.e., gaming)
- Provider interactions to encourage clinical improvement
Fruit Street Health is one of several companies focused on delivering a digital version of a Diabetes Prevention Program (DPP), as DPPs are currently the only chronic disease prevention program reimbursable through Medicare. The telemedicine platform allows providers to monitor patient data collected from several connected health devices including wireless scales, Fitbits, blood pressure cuffs, and glucometers. They also offer a mobile app for taking pictures of food that the company describes as “Instagram-like”. In August 2017, Fruit Street raised a $3M Series B, bringing total funds raised to $8.3M.
Bitesnap represents a new generation of calorie-tracking apps. It uses machine learning to determine what ingredients are in a user’s latest food photo, how many calories the dish contains, and a pie chart of the carbohydrate, protein, and fat profile. The app can also set or adjust targets to help someone achieve fitness or weight goals. No external funding has been announced yet.
**Note: We’ve separated diet and nutrition products from those addressing physical fitness but the two are so closely related that companies profiled here often overlap this boundary.
Market opportunity for products and services serving the 50+ population: $39 billion
Activity-tracking wristbands were an early success story for fitness wearables, and Jawbone was its posterchild. But when news broke in July 2017 that the 17-year-old company would be liquidating assets, everyone in the sector sat up and took notice. Rumors are flying that the remnants of the activity tracking wunderkind will be used as the basis of a new medical-grade health wearable company called Jawbone Health, but they have yet to make any official announcement of launch.
Fitbit is similarly in the process of pivoting, from wristband to smartwatch and from fitness to health, including an integrated smart scale, personalized coaching and more and more partnerships with products like Dexcom’s continous glucose monitor (CGM). After a valuation of more than $4 billion for their IPO in June 2015, Fitbit has struggled to meet financial expectations, so their gamble that the future is in health, not merely fitness, will be an important one to watch.
In light of these struggles of giants like Jawbone and Fitbit, the Global Wellness Institute recently conducted a survey to determine whether the digital health fitness market is at or near saturation. Not at all, they found: the report reiterates that the health and fitness market is an established multi-trillion-dollar industry with opportunities for continued growth, particularly in the sub-sectors of remote training and virtual and augmented reality. For the 50+ segment, market valuation is at least $39B, and there are plenty of companies vying for a slice.
8fit fancies itself in a different category than most other fitness or nutrition apps, competing with the likes of Weight Watchers and other stalwarts of the health and weight loss industry. The app offers tailored workouts and meal plan and claims to have 10 million registered users. Their success recently earned the Berlin-based newcomer a successful $7 million Series A round of funding.
Breg is one of several companies offering a remote physical therapy monitoring solution to improve recovery from an orthopedic event and adapt to the bundled payments associated with value-based care. Breg Flex™ is a sensor-enabled device that connects to a mobile app to guide patients through their daily exercise routine following orthopedic surgery. Breg is a nearly 30-year-old company, who is demonstrating an ability to adapt to the changing markets. No recent funding activity is on record.
In 2013, AARP released a report created in conjunction with research and consulting firm Parks Associates to identify and quantify untapped market opportunities in the 50+ market. These opportunities, named Health Frontiers in the 119-page report, were deemed to have “the greatest potential for revenue, adoption and social impact.”
In 2014, AARP updated its analysis of the Health Frontiers and added six Caregiving Frontiers, which covered the untapped market potential of professional and family caregivers taking care of those 50 and over.
These fifteen frontiers informed the structure of this article (as well as that of the Longevity Network website in general, including its news and editorial content).
How AARP & Parks Associates came up with the 9 Health Frontiers
To assess the health and caregiving needs of their target demographic, as well as the existing solutions on the market, Parks Associates took “a holistic view of the individual as he or she ages [and] identified over thirty needs of the 50+ population. All of these needs are common to a significant portion of the population and present at least one, if not many, challenges to the ability of older adults to live a healthy, safe and independent lifestyle.”
This market assessment focuses primarily on consumer‐facing solutions and business models. As such, Parks Associates analysts evaluate solutions and potential innovations that address healthy living but are not medical or diagnostic in nature. Medical‐grade devices and pharmaceuticals do not fall into the scope of this report, nor do those products or solutions that are merely cosmetic in nature.
Within the 30+ categories, “certain commonalities across needs categories emerged as nine broad healthy living challenges for the 50+ community”: The Health Frontiers.
How AARP & Parks Associates Came up with the Market Valuations
The original 2013 AARP report discusses at length how Parks Associates went about determining the market valuation for each of the nine health frontiers.
In Chapter 4.1, entitled “Forecast Methodology and Key Assumptions,” the report states:
Parks Associates developed a scenario‐based revenue forecast model for market opportunities in each of the nine challenge areas. The forecast work was conducted independently using the best available market data from the public domain (e.g. Census/CDC data) and Parks Associates’ own research data (e.g. consumer survey work and industry research).
These forecasts are built upon two major groups of assumptions centered on: 1) identifying the most likely/targetable users, and 2) identifying the most likely revenue models and associated demand elasticity. Together, these assumptions create high and low scenarios for the revenue opportunities for each challenge area.