Key Takeaways from PitchBook’s Q4 2024 MedTech Trends Report

PitchBook recently published its Q4 2024 Medtech Trends Report featuring analysis on the latest industry developments and investment trends. This report is the latest installment in PitchBook’s quarterly update series on the Medtech industry.

VC Activity

In 2024, Medtech VC investment totaled $13 billion across 828 deals, an increase from the $11.8 billion of deal value the year prior. Despite a slower second half, 2024 annual deal value finished up 9.7% YoY, indicating that 2023 was the low point of the cycle. And 34 VC deals over $100 million have closed since 2024, led by Function Health ($300 billion), Element Biosciences ($277 million), and Neko Health ($260 million). Large deals have dominated the sector, with the top 10% of VC deals in 2024 capturing nearly 50% of investment dollars. At the same time, declining dealmaking has disproportionately affected pre-seed/seed and early-stage startups, with deal counts down 36% and 16%, respectively. This has driven median size to record highs as funding is consolidated among fewer, larger deals. However, with limited exit opportunities, these large deals often came with valuation declines – Element and Freenome’s latest funding rounds both came with valuations cuts of around 30%.

Medtech AI

Established regulatory frameworks and reduced institutional adoption barriers have allowed medtech to outpace other healthcare sectors in AI implementation. Still, funding continues to be directed toward long-existing AI technologies, such as medical-image analysis and diagnostics, rather than net new innovation in generative AI. One exception is the diabetes tech space – in December, Dexcom introduced a GenAI feature for its over-the-counter continuous glucose monitors (CGMs), with personalized health recommendations for sleep, diet, and exercise. Unlike diagnostics and medical devices, which face greater challenges in integrating GenAI, wearables have more near-term potential for AI-driven enhancements. We anticipate further integration of AI into wearable technologies such as CGMs, smart rings, and watches that provide less formal guidance, in contrast to the higher standard of prescriptive, clinical-grade treatment plans.

Exits

2024 was an especially difficult period for Medtech exits, with few major acquisitions or listings. A few exceptions were precision medicine platform Tempus AI’s public listing in June, and point-of-care EEG maker Ceribell’s IPO in October. In a sign that the window may be creaking open for 2025 listings, this year has seen two other notable IPOs: diabetes tech company Beta Bionics went public in January, and Kestra Medical Technologies went out in March at a valuation exceeding $1 billion. Improved exit conditions could bring relief to the backlog of IPO-ready startups in medtech, and 2025 is shaping up to be a stronger year for sector IPOs with Heartflow and Medline Industries both gearing up for listings – Medline reportedly aims to raise $5 billion in an IPO expected this year.

On the M&A front, acquisitions of VC-backed medtech startups have continued to be few and far between, and have been overshadowed by large public-to-public deals such as JNJ’s acquisition of Shockwave Medical. In an early sign that this year may provide more exit possibilities for VC-backed startups, Boston Scientific announced in January that it will acquire the remaining stake of Bolt Medical for $443 million. Boston has been especially active in the capital markets recently, with a $175 million strategic investment in 4C Medical Technologies and a $540 million deal for renal denervation device company SoniVie. We expect tuck-in deals to remain most common as we suspect the highest-quality late-stage medtech companies await the reopening of the IPO window.

Additional Medtech research from PitchBook:
• Q4 Medtech Public Comp Sheet & Valuation Guide
• Diagnostics in the Next Decade: A coming leap forward for the sector

Learn more about the author: Aaron DeGagne, Senior Analyst, Healthcare, PitchBook

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