What exactly are digital therapeutics?

Digital therapeutics are software programs that have been clinically validated and often FDA-cleared to prevent, manage, or treat medical conditions. Unlike health and wellness apps, they undergo rigorous clinical trials to prove their effectiveness, similar to traditional pharmaceutical drugs. They can be prescribed by doctors and may be eligible for insurance reimbursement.

How do prescription apps work as medical treatments?

Prescription apps deliver evidence-based interventions through software that patients access on their smartphones or other devices. For example, they might provide cognitive behavioral therapy for depression, personalized coaching for diabetes management, or specialized exercises for musculoskeletal conditions. They often include features like symptom tracking, personalized recommendations, and direct communication with healthcare providers.

Why is insurance reimbursement so important for these companies?

Insurance reimbursement is critical because it makes digital treatments affordable for patients and creates a sustainable revenue model for companies. When insurers agree to cover these treatments (like they would cover a traditional medication), it validates the technology, increases adoption by doctors and patients, and creates a clear path to profitability for the companies developing these digital therapeutics.

What risks should I know about when investing in digital therapeutics companies?

Digital therapeutics companies face several challenges: lengthy regulatory approval processes, securing insurance coverage, competition from large tech companies entering healthcare, and the need to demonstrate long-term clinical effectiveness. Many are early-stage companies with limited revenue that are still working toward profitability, making them potentially more volatile investments compared to established healthcare or technology stocks.

What's the difference between telehealth and digital therapeutics?

While both involve digital healthcare, telehealth primarily connects patients with healthcare providers remotely (like video consultations), whereas digital therapeutics are actual software-based treatments that can work with or without direct provider involvement. Some companies in this portfolio focus primarily on digital therapeutics, while others offer broader telehealth platforms that may incorporate digital therapeutic elements.

15 handpicked stocks

Digital Therapeutics & Prescription Apps

Software is becoming the new medicine. These carefully selected companies are developing FDA-cleared applications that treat everything from mental health to diabetes. With growing insurance reimbursement and massive scalability, these digital treatments represent healthcare's next frontier.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17