Noom raised $540 million to build a business around helping people live healthier

The news

Digital health platform Noom announced a whopping $540 million Series F funding round last week. Bloomberg News speculates the round will push the company's valuation to $3.7 billion.

Noom plans to use the money to expand their services to business customers and new lines of business (e.g., stress management, sleep improvement and the management of health issues like high blood pressure and diabetes), and retain some of it for share buybacks.

An IPO with a valuation of around $10 billion seems likely later this year. 

Half a billion USD for a healthtech startup is big news. Looking at operational figures, the money may even be well-invested, since the pandemic bolstered the diet coaching app: In 2020, Noom made $400 million in revenue, about twice as much as the year before. They were also able to expand their network of full-time health coaches to more than 3,000 people, and they pushed their total number of users to more than 45 million worldwide. Once you have become a trusted interface, it is only logical to think about expanding into adjacent markets. 

The bigger picture

Obesity is one of the biggest health problems in industrialized nations. About 75 percent of adults in the U.S. are overweight, and about 43 percent are considered obese, according to the Centers for Disease Control (CDC). It's a problem that can't be addressed by fighting symptoms, but only by addressing causes and behaviors. And Noom's user reviews prove them right. 

Our perspective

Noom is another example of a flourishing unregulated healthcare market that owns and operates an important interface for the end customer. The better these interfaces can provide prevention and behavior change services, the greater their impact on the regulated medical market. The healthcare market will feel this sooner rather than later, and it is therefore imperative—for the good of the patient—that both markets converge.