Initiation Report: Carbon Health

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Summary

The report focuses on Carbon Health – a San Francisco-based hybrid care telehealth startup offering virtual services backed by a physical presence. The company’s growth to a hybrid care pioneer over the last eight years is underscored by its growing patient base, expansive reach, institutional endorsements, and technological ingenuity. With a patient base of 1+ million, supported by 600+ clinicians, and 125+ brick-and-mortar clinics in 13 states, Carbon Health’s growth trajectory has been impressive. This surge signals the company’s resolute commitment to expansion and its ability to capture a growing market share. In an evolving digital health space, Carbon Health’s strategic integration of AI technology propels operational efficiency to unprecedented levels, effectively conferring the platform with a competitive edge.

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Methodology

Our views on Carbon Health are derived from our rigorous research process, involving proprietary channel checks with users, competitors, and industry experts, and synthesizing publicly available information from the company and other reliable sources.

Key Points

• Large and Growing Addressable Market: The pandemic highlighted the effectiveness of virtual health channels, a momentum maintained by growing digitalization, an aging population, 5G adoption, and tech-savvy users. Carbon Health, uniquely positioned with an omnichannel approach, is poised to outperform pure-play virtual care providers. Leveraging a strong physical presence, a robust virtual platform, and media recognition, the company is set for revenue growth.
• Robust Partnerships to Ensure a Steady Revenue Stream: With the ‘Carbon Health Connect’ program, Carbon Health forged a healthcare ecosystem, amplifying patient access and securing revenue growth. The program included partnering with multiple healthcare organizations enabling expansive market penetration without expensive clinic setups.
• Generative AI Integration to Boost Revenue Growth: Carbon Health recently introduced a GPT4-based medical charting tool that is a significant improvement over the conventional charting process, attracting the interest of potential customers as well as investors.
• Penetration into the Virtual Clinical Trials Market to Propel Revenue Growth: With an established capability to conduct virtual clinical trials for COVID-19 and diabetes, Carbon Health is poised to assist virtual clinical trials for various pharmaceutical, biotechnology, and medical device companies, establishing future revenue opportunities.
• Virtual Mental Health Segment to Propel Revenue Growth: With millions of Americans lacking access to mental health care, Carbon Health is well-positioned to capitalize on this underserved market.
• Valuation: Carbon Health was last valued at $1.4 billion in the last Series D-III round when it raised $100 million.  

Executive Summary

Carbon Health has emerged as a formidable player in the telehealth industry, earning unwavering patient trust throughout the challenging COVID era. Notably, prestigious healthcare institutions such as John Muir Health, NorthBay Healthcare, and Prime Healthcare have placed their confidence in Carbon Health’s solutions, affirming the company’s credibility and efficacy. Fueled by a skilled and experienced leadership team, Carbon Health is well-positioned to maintain its influence and drive continuous innovation in the telehealth domain. Boasting a vast patient base exceeding one million, the platform’s credibility stands strong, further bolstered by a set of over 125 brick-and-mortar clinics spanning 13 states. Demonstrating a steadfast commitment to expansion, the company has achieved a 700% growth in clinic volume over the past two years. The recent integration of cutting-edge AI technology has propelled the platform’s efficiency to new heights, providing a distinct competitive advantage over rivals. Notably, Carbon Health claimed an EBITDA margin of approximately 15% in 2021, and its revenue growth between 2020 and 2021 reached over 300%, solidifying the company’s potential as a telehealth startup. Furthermore, the strategic partnership with CVS, a prominent pharmacy chain, ensures a steady and promising future revenue stream for Carbon Health, underpinning its long-term sustainability and success. As the telehealth landscape continues to evolve, Carbon Health is well-equipped to capitalize on this large and growing market.

Company Overview

Carbon Health is a developer of a mobile-based healthcare network with a hybrid care approach. By seamlessly integrating technology and expert care, Carbon Health empowers patients to establish direct relationships with a fully integrated team, effectively manage their health on the go, and gain convenient access to in-person care. Formerly known as MD Collab, this San Francisco-based company offers virtual care backed by physical presence.

Notably, Carbon Health has completed various strategic acquisitions, with startups such as Inofab Health in 2022, and clinic chains such as Southern Arizona Urgent Care, Alertive Healthcare, and Med7 Urgent Care in 2021. These acquisitions have further strengthened their position in the market, solidifying their commitment to growth and innovation.

Carbon Health Timeline

2015: Carbon Health was founded by Eren Bali and Tom Berry in San Francisco.

September 2016: Carbon Health launched its app allowing stronger communication between patients and doctors while integrating telemedicine.

October 2018: Carbon Health merged with Direct Urgent Care, resulting in access to additional urgent care locations in California as well as stronger servers to treat more patients at once. Direct Urgent Care’s founder, Caesar Djavherian joined the company as one of their co-founders.

September 2020: Carbon Health expanded COVID-19 testing beyond their California Bay Area region, opening 100 test clinics in areas including Detroit, Manhattan, and Brooklyn.

September 2016: Carbon Health launched its app allowing stronger communication between patients and doctors while integrating telemedicine.

October 2021: Carbon Health acquired Central Jersey Urgent Care, allowing them to expand their market to New Jersey with immediate access to 10 clinics across the state.

June 2023: Carbon Health launches AI charting, significantly increasing productivity and reducing monotonous tasks needed by physicians.

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Key Differentiators

Carbon Health distinguishes itself through its mini health clinics and on-site services

Virtual Care Reinforced by Physical Presence

Clinics: Carbon Health is a telehealth startup, but it also operates in classic brick-and-mortar locations, ensuring a seamless patient experience.

Mini Health Clinics: As a unique feature exclusive to Carbon Health, the company establishes and manages small-scale care sites to bridge the gap between in-person primary care and virtual services, enabling efficient and cost-effective deployment in critical areas.

On-Site at Employers

Carbon Health collaborates with businesses and governments to provide tailored primary and urgent care services directly at the workplace, promoting employee well-being and productivity

Key Positives

Large and Growing Addressable Market

With growing digitalization, a burgeoning geriatric population, widespread adoption of 5G, and a rising tech-savvy population, the future of healthcare will become a lot more digital. For reference, the global virtual care market is projected to grow from $8.4 billion in 2022 to $76.9 billion in 2030 at a CAGR of 32.1%, as per MarketsandMarkets. The market potential for virtual care comes from the need for instantaneous access to professional help, as the current burdens of long wait times and potentially long drives for those that live in rural areas drive the need for a virtual option in health care. On top of convenience, virtual care is cheaper than a visit to an in-person clinic. As for Carbon Health, they offer a wide variety of virtual care ranging from urgent care, preventative care, nutrition, and therapy. In addition to booking appointments with a professional, the app offers both users and physicians real-time monitoring of progress in health. With a wide variety of care provided by Carbon Health, they are well equipped to continue to grow as more people consider the benefits of virtual care.

Moreover, healthy brand visibility will affirm the revenue growth of Carbon Health in the future. The company boasts over 125 brick-and-mortar clinics in 13 states along with virtual care services. Moreover, brand visibility has increased multifold through highlights across magazines such as Forbes and their clinical leaders being the go-to sources for broadcast and print media on COVID guidance. Furthermore, the acquisitions of Steady Health and Alertive Healthcare have expanded the customer base and portfolio of the company.

Robust Partnerships to Ensure a Steady Revenue Stream

Carbon Health launched a program labeled Carbon Health Connect in 2021, with the intent of creating an ecosystem with numerous other healthcare providers to improve healthcare access for patients. This initiative ensured a steady revenue stream for the company

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Carbon Health’s fresh approach to healthcare has further established our reach and visibility as a leading provider in our region. Since our partnership, we expanded market reach and converted over 10% of new patients to our medical group. — Aimee Brewer, President, Northbay Healthcare Group

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Key partnerships under the Carbon Health Connect program are as follows:

• In 2022, Carbon Health partnered with Stanford Health Care with the goal to create convenient and diverse health care for patients. The partnership brought Carbon Health’s clinics and services to Stanford Health Care patients allowing their patients more choices to suit their needs as well as offering a higher level of convenience owing to their digitized healthcare allowing for needed interconnectivity between patients and their physicians.
• In the same year, Carbon Health and Froedtert Health partnered to increase convenience in the Wisconsin market. The partnership helped Carbon Health penetrate into the Wisconsin Market.
• Furthermore, in 2022, Carbon Health and Hims & Hers forged a strategic partnership aimed at augmenting the accessibility of in-person primary care at clinics. The collaboration was prompted by the shared trajectory of substantial growth both companies experienced amid the COVID-19 pandemic. While both entities excel in virtual care, encompassing telemedicine, they differ in their healthcare approach, with Carbon Health adopting a hybridized model and Hims & Hers focusing primarily on virtual services. Through this landmark alliance, Hims & Hers clientele gains exclusive access to Carbon Health’s extensive network of clinics. Leveraging Hims & Hers’ expertise in sexual health and prescriptive care, Carbon Health significantly broadens its service portfolio, enabling it to offer more comprehensive care options to its patient base. This synergy of strengths empowers both entities to tap into new markets and further solidify their positions as leading players in the healthcare industry.

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Partnering with high-quality providers like Carbon Health to expand care options through our platform is a fundamental aspect of our strategy to transform the way healthcare is delivered. — Melissa Baird, Chief Operating Officer for Hims & Hers

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• In 2021, Carbon Health partnered with John Muir Health as a part of its Carbon Health Connect program. In this partnership, Carbon Health planned to open 15-20 new clinics in the East Bay. The partnership resulted in a combination of Carbon Health’s modernized healthcare clinics available both in-person and online with John Muir’s large network of primary care encompassing over 1,000 primary care physicians

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Our affiliation with Carbon Health expands access to urgent care and primary care for patients in many of the communities we serve and gives us a footprint in some new locations. — Cal Knight, President and CEO of John Muir Health

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• In the same year, Carbon Health and Prime Healthcare expanded their partnership with the goal of increasing healthcare access to various patients. The partnership resulted in a combination of Carbon Health’s modernized infrastructure with Prime Healthcare’s large amount of healthcare facilities including 45 hospitals and over 300 outpatient locations.

Moreover, in January 2023, Carbon Health initiated a strategic collaboration with CVS Health, a move underpinned by a substantial $100 million investment from CVS. As a pivotal aspect of this venture, Carbon Health deployed its urgent care services in selected CVS stores, thereby effecting a significant expansion of their market reach. This strategic move enabled Carbon Health to penetrate previously untapped regions of the country without incurring the substantial costs associated with establishing new clinics. Consequently, the partnership stands to bolster Carbon Health’s hybrid care model, unlocking lucrative growth opportunities.

Despite already operating in over 125 locations across 13 states, particularly in California, Arizona, and New Jersey, Carbon Health’s access to up to 9,900 CVS stores translates to a momentous surge in potential consumers. Given that Carbon Health presently caters to over 1 million users annually, this expanded consumer base bears the promise of exponential growth and enhanced market prominence for the company.

Leadership Team

Carbon Health’s leadership team is filled with both a rich medical and technological background

Eren Bali, Co-founder and CEO: Eren Bali, the CEO of Carbon Health, has experience in developing a successful business, as he was the Co-founder and CEO of Udemy, an online learning company that went public in October 2021 and has a valuation of $3.7 billion. He was also a founding engineer of SpeedDate.com, an online dating site. Eren Bali received his bachelor’s degree in mathematics and computer Engineering from Middle East Technical University.

Caesar Djavaherian, Co-founder and Chief Clinical Innovation Officer: Caesar Djavaherian, the Chief Clinical Innovation Officer of Carbon Health, has lengthy experience in the medical field, working as a Clinical Instructor at New York Presbyterian Hospital and as an Associate Medical Director at TeamHealth. He also was a Co-founder and the Chief Medical Officer at ER Direct, an at-home urgent care facility. He also co-founded Direct Urgent Care, which is the company that merged with Carbon Health in October 2018. Caesar Djavaherian received his Bachelor’s and Master’s in Biological Sciences at Stanford University and then received his Doctor of Medicine from the University of Rochester.

Sujal Mandavia, Chief Medical Officer: Sujal Mandavia, the Chief Medical Officer of Carbon Health, was previously an examiner for the American Board of Emergency Medicine. He was also on the board of the California American College of Emergency Physicians. However, before joining Carbon Health, he spent the previous 12 years as the Senior Vice President for TeamHealth, a company that provides medical outsourcing. Sujal Mandavia received his Doctor of Medicine at the University of Toronto.

Generative AI Integration to Boost Revenue Growth

Charting serves as a comprehensive repository of a patient’s clinical data and medical history, encompassing essential information such as demographics, vital signs, diagnoses, medications, allergies, laboratory test results, treatment plans, immunization dates, progress notes, and more. Carbon Health has recently introduced hands-free charting, an advanced GPT-4-based notes assistant seamlessly integrated into the company’s EHR (electronic health records system). This strategic implementation has significantly bolstered the platform’s capabilities, providing it with a distinct competitive advantage in the market. The incorporation of hands-free charting has led to remarkable benefits, including an impressive 75% reduction in medical chart generation time, now taking less than 4 minutes compared to the previous 16 minutes with manual methods. Moreover, the hands-free charting system boasts an exceptional accuracy rate of 88%. Notably, this AI-powered platform captures 2.5 times more intricate details, elevating the quality and depth of patient records compared to conventional charting methods. By empowering medical professionals with state-of-the-art note assistance and streamlining medical charting processes, Carbon Health is poised to attract the interest of potential customers as well as investors.

Penetration into the Virtual Clinical Trials Market to Propel Revenue Growth

Carbon Health recently launched “Carbon for Research,” a clinical trial research program focused on medical devices, therapeutics, and vaccines. During the COVID-19 pandemic, they prioritized trials for COVID-19 treatments, including a successful phase III trial for Molnupiravir, an antiviral pill. Additionally, they utilized clinical trials to enhance their infrastructure, exemplified by a virtual diabetes care trial. The results demonstrated significant success, with 80% of patients achieving recommended glycemic levels within 6 weeks and 80% maintaining satisfactory control after 15 weeks. This confirmed the program’s efficacy in providing virtual care for sustainable diabetes management.

The company is well equipped to assist virtual clinical trials for pharmaceutical companies, biotechnology companies, and medical device companies, ensuring a new avenue for revenue. According to Grandview Research, the global virtual clinical trials market was valued at $8.3 billion in 2022 and is projected to grow at a CAGR of 5.7% from 2023 to 2030.

Diabetes Program to Ensure Future Revenue Growth

With Carbon Health offering a wide variety of virtual programs for medical assistance, they can have a significant advantage in being able to identify trends and progress made by their patients. One recent example was the recent launch of their virtual diabetes management program. Released in April 2022, their program sought to allow patients who are diabetics to be able to see a detailed track record of their health that is stored as a medical record. Previously, patients with diabetes had to rely on self-management and would have to continuously schedule doctors’ appointments to be able to monitor their progress and ensure that they are making good progress and that nothing has gone wrong. Some features of this app include meal rankings, which track a connection between meals that a patient has consumed to their blood sugar changes to allow patients to better understand which foods they need to avoid. Another feature is that Carbon Health can continuously monitor their patient’s blood sugar levels and whenever the app detects that their blood sugar levels are not good, the app lets the physician know, allowing them to quickly reach out to a patient to get them the help that they need. As a result, the ability of an app to constantly analyze a patient’s data regarding their blood sugar levels has proven to be a potential life saver and something that can seriously benefit a patient’s health.

Virtual Mental Health Segment to Propel Revenue Growth

Carbon Health’s Virtual Mental Health business segment offers cutting-edge telehealth solutions aimed at addressing stress, anxiety, sleep-related issues, and life transitions, among other challenges. The current state of the healthcare system, particularly regarding mental health, has reached a critical stage, leaving millions of Americans without access to much-needed care. One in five adults suffer from mental illnesses, and over half of them are not receiving the treatment they require, leading to prolonged waiting periods for appointments and a severe lack of psychiatrists across various U.S. counties. In this context, Carbon Health stands out as a beacon of hope in the telehealth industry, presenting a highly promising solution. Unlike medical specialties that heavily rely on physical examinations, psychiatry centers on establishing trusted relationships, making it well-suited for remote healthcare delivery. According to Grandview Research, the global telepsychiatry market, valued at USD 5.5 billion in 2019, is projected to experience remarkable growth with a CAGR of 24.7% from 2020 to 2027, primarily fueled by an increasing patient pool grappling with anxiety, stress, and mental health disorders. As Carbon Health embraces this rapidly expanding market, the company is poised to capitalize on the opportunity, driving significant revenue growth and solidifying its position as a leader in telepsychiatry services.

Carbon Health – A Potential Acquisition Target

The healthcare sector has seen an increase in merger and acquisition activity in recent years. In 2023, this pattern will persist, with cross-state affiliations and independent facilities joining more established big companies. Carbon Health has itself exercised inorganic growth strategy for expansion in the past. The most notable transaction was with Direct Urgent Care in October 2018 when the two companies announced a merger, with them adopting the Carbon Health brand name. While expansion efforts via acquisitions have slowed down recently for Carbon Health, its partnership with CVS allowed the company to expand its customer base across the United States. CVS acquired one of Carbon Health’s competitors, Oak Street Health, for $10.6 billion. Similarly, Carbon Health, given its strong competetive position, could be a compelling acquisition target. The telehealth market is crowded with various players and acquiring a cash flow positive startup such as Carbon Health would be an excellent inorganic growth strategy for established players in the space.

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Key Investor Concerns

Downsizing in a Crowded Telehealth Space Raises Concerns

Amidst the disruptive landscape brought about by the COVID-19 pandemic, Carbon Health’s hybrid healthcare business model proved to be a strategic advantage, catering to a nation grappling with a viral infection crisis. Leveraging the surge in demand for viral testing and vaccination services, the company swiftly expanded its workforce, doubling the number of full-time employees since March 2020. However, as the pandemic’s impact wanes and the demand for viral testing and vaccination recede from the peak levels observed in 2020 and 2021, Carbon Health has proactively taken measures to optimize its operations. To align with its core competencies and streamline resources, the company has made a series of calculated workforce reductions. The first significant step in this direction occurred in June 2022 when Carbon Health announced a 8% staff reduction, resulting in 250 workers being let go. In a subsequent move, in January 2023, the company announced another round of layoffs, affecting over 200 employees. This strategic restructuring aims to refocus the organization on its core primary care and urgent care services. Furthermore, Carbon Health faces fierce competition in the market, with formidable contenders like Teladoc Health, Health Catalyst, Amwell, Talkspace, Sharecare, and GoodRx Holdings vying for a prominent position in the telehealth space.

Privacy Concerns & Technological

In the realm of telehealth, patient data privacy and confidentiality hold paramount legal significance. However, a critical peril lies in the susceptibility of medical information leakage by hackers and data miners. Numerous instances have surfaced where hackers and data miners gained unauthorized access to private user data, including sensitive details like passwords and financial statements. This alarming reality poses a substantial concern, compelling businesses to prioritize the assurance of robust security measures for safeguarding medical information. Unsurprisingly, the foremost apprehension shared by both patients and medical practitioners pertains to privacy issues. A prevailing lack of trust prevails concerning the complete security and immunity of patient data from potential leaks. Building and maintaining trust in the security of patients’ information becomes a primary imperative for the success of telehealth services. Moreover, the effectiveness of telehealth hinges on a reliable internet connection, which regrettably isn’t always readily available. A recent survey conducted by the Associated Press among adults aged 50 and older revealed that a staggering 49% of respondents encountered technical difficulties during telehealth appointments. These issues range from laggy video calls and unstable internet connections to glitchy software. These technological hurdles present a significant challenge to the seamless growth of telehealth services and may impede the expansion of its user base. In conclusion, addressing the dual concerns of data security and technical reliability is pivotal to establishing a thriving and sustainable telehealth ecosystem. As businesses endeavor to secure patient information and optimize technical performance, they can pave the way for telehealth to become a trusted and effective means of healthcare delivery. Carbon Health faces these challenges as well being an emerging startup in the telehealth market.

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Industry Overview

The COVID-19 pandemic accelerated the shift towards online and virtual markets, particularly in virtual healthcare. Safety concerns led to the need for social distancing and avoiding large gatherings, making virtual care a paramount solution. The number of virtual care visits significantly increased from 840,000 in 2019 to 52.7 million in 2020. Integrating more virtual healthcare is essential for providing convenient access to physicians, ensuring consistent monitoring of patients’ progress, and promoting better understanding of their health journey.

Healthtech Startups Funding to Regain Momentum after Valuation Correction in the Post-COVID Era

In the post-COVID landscape, startups and investors in the health tech industry are recalibrating their expectations for a more realistic and sustainable future. The market correction and the need for right-sizing innovators have led to a shift in investment patterns. During 1H23, U.S. digital health startups secured a total of $6.1 billion through 244 deals, with an impressive average deal size of $24.8 million. However, 2Q23 witnessed a decline from 1Q23 with only $2.5 billion raised across 113 deals, marking a trend of sub-$3 billion quarters like 3Q22 and 4Q22. If the funding rate of 1H23 continues in 2H23, the lowest funding year since 2019 is ahead, signifying a course correction in the health tech market after the COVID-fueled surge. The future of health tech startups looks bright with the recalibration of expectations. Moreover, the fact that 71% of 1H23’s investors were repeat digital health backers highlights the strong trust established in these startups.

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Key Market Drivers

Healthcare Worker Shortage: Global healthcare staffing shortages are a growing concern, with the WHO projections indicating a shortage of 10 million healthcare workers by 2030. To address this challenge, implementing remote options for routine check-ups and non-emergency needs is crucial. Leveraging Artificial Intelligence allows patients to avoid unnecessary doctor’s office visits, making the health industry better equipped to handle the ongoing healthcare shortage.

Maintaining Continuity: Remote healthcare offers significant benefits, enabling continuous monitoring of a patient’s health status, especially for chronic conditions like high blood pressure, diabetes, and heart issues. Carbon Health’s app ensures a seamless and streamlined experience for patients to monitor their progress. Their diabetes care program, for instance, allows continuous monitoring of glucose levels, leading to instant advice and adjustments for maintaining quality health. Users in the program show an additional 4 hours a day with blood sugar levels in range compared to non-app users, proving its effectiveness in improving health outcomes, particularly for diabetics. Carbon Health’s app becomes a vital lifeline for individuals, providing essential support and success in managing their health.

Aging Population: The median age in the United States is steadily increasing, reaching 38.9 years in 2022, up from 37.4 years in 2012 and 28.1 years in 1970. This rise is attributed to increased life expectancy, especially evident in the population of people aged 65 and older, which was 55.8 million (16.8% of the population) in 2020, a 38.6% growth rate in just 10 years. Therefore, there is a higher demand for primary and urgent care, with a particular need for continuous monitoring and virtual doctor’s appointments for individuals with mobility issues.

Affordability: Affordable healthcare remains a major challenge in the United States, with spending reaching $4.3 trillion in 2021, significantly higher than other nations. Lowering healthcare costs is crucial for the economy, and virtual health care presents a viable solution. Compared to in-person care, virtual health appointments are significantly cheaper, costing under $50 on average, while in-person appointments average $176, not including additional factors like travel expenses and time commitments. Embracing virtual health care is essential in alleviating the financial burden on individuals and the healthcare system.

Financials

Revenue Outlook

Disclaimer: Carbon Health has not released audited financials and is not expected to do so until it files for IPO. The revenue model and the implied valuation are preliminary and are based on Manhattan Venture Research’s internal assumptions and will be adjusted to reflect any incremental information.

We estimated the revenue of Carbon Health based on comments made by Eren Bali, the CEO of Carbon Health. The future projections are based on the US telehealth market report by Grandview Research. As per Eren Bali, Carbon Health’s revenue in 2021 was $220 million, up 300% from 2020, and $7 million in 2019. Furthermore, according to Grandview Research, the US telehealth market is expected to grow at a CAGR of 44.4% from 2022 to 2028. Based on these comments the revenue projections are as follows:

Relative Implied Valuation

Carbon Health competes with a number of telehealth companies. The company’s closest peers, according to our judgement are Teladoc Health, Health Catalyst, and GoodRx. Teladoc Health went public 4 months after its Series F round. The company got a markup of 246% on its last private round. Similarly, in the case of GoodRx, the markup was 353%. However, Health Catalyst witnessed a markdown of 9% on its last private round. Considering an average of these three scenarios, we believe Carbon Health could command a markup of 190-200% at their IPO , translating to $4.1 to $4.2 billion.

Funding Rounds & Private Valuations

Carbon Health has secured $623.2 million in funding across eight funding rounds. Carbon Health’s approach of streamlining urgent and primary care through technology has resonated with both customers and investors, leading to significant investor interest since 2020. Notably, the company raised $100 million in 2020, followed by $350 million in 2021. The company’s ability to attract investment has continued to grow, with its latest funding round – a $100 million Series D-III in January 2023 by sole investor CVS Health Ventures. The latest funding round valued the company at $1.4 billion, a 57% markdown from its valuation of $3 billion post-series D in July 2021. This correction was driven by the normalization of telehealth adoption in the post-COVID era. Notably, telehealth usage stood at 70% in 2020, a period when the US healthcare system was ill-prepared for the overwhelming influx of COVID-related patients. However, in 2022 telehealth usage came down to 20% to 25%, still higher than the 5% of pre-COVID 2019. Reaching the 70% mark again is foreseeable but it will occur through a more organic trajectory.

Comparative Public Multiples

The following table shows the multiple of public companies operating in the telehealth space. The public multiples provide a useful reference point for Carbon Health’s future valuation. Given the strong track record of the company in telehealth, it is reasonable to expect Carbon Health to command a premium over its public peer multiples. Carbon Health’s AI-powered platform is poised to make it a highly valuable company.

About Manhattan Venture Partners

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About the Analyst

Santosh Rao

Santosh Rao has over 25 years of experience in equity research with a primary focus on the technology and telecom sectors. He started his equity research career at Prudential Securities and later moved to Dresdner Kleinwort Wasserstein, Gleacher & Co, and Evercore Partners, where he followed Telecom and Data Services. Prior to joining Manhattan Venture Partners, he was the Managing Director and Head of Research at Greencrest Capital, focusing on private market TMT research. Santosh has an undergraduate degree in Accounting and Economics, and an MBA in Finance from Rutgers Graduate Business School. While at Gleacher & Co he was ranked leading telecom equipment analyst by Starmine/Financial Times

-The MVR Team

Disclaimer

I, Santosh Rao, Head of Research, certify that the views expressed in this report accurately reflect my personal views about the subject, securities, instruments, or issuers, and that no part of my compensation was, is, or will be directly or indirectly related to the specific views or recommendations contained herein.

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Copyright 2023 Manhattan Venture Research LLC. All rights reserved. This report or any portion hereof may not be reprinted, sold, or redistributed, in whole or in part, without the written consent of Manhattan Venture Research. Research is offered through VNTR Securities LLC.

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