Remote Health Solutions in Canada and Israel—Here to Stay

Bennett Jones LLP

Bennett Jones LLPSince COVID-19 hit, almost every aspect of our lives has been touched by the pandemic, including the way health care is provided. Remote health solutions (aka digital health solutions, virtual care, telemedicine or telehealth) like remote diagnosis, remote monitoring, medical adherence and others have stepped in to address an urgent need. Innovative companies in Israel and Canada have been hard at work developing these kinds of solutions, creating opportunities for revolutionizing health care—all the while helping their investors profit during these challenging economic times.

Two very recent Canadian examples of such solutions providers who have successfully closed financings are virtual care and pharmacy tech startup MEDNOW.CA (raising C$6.5 million seed investment) and telemedicine and AI startup CloudMD (raising C$13 million), now trading on the TSX Venture Exchange. At the same time, many companies in this sector in Israel (which has been in the forefront of technological advancement in this area) have also successfully raised funds in the last few months, including a number from Canadian investors. These include: digital stethoscope startup Tyto Care (US$50 million round of investment, led by Canadian VC, Olive Tree Ventures); Scopio Labs, focused on automating imaging of full microscopy samples into digital scans (US$16 million series B funding, also participated by Olive Tree Ventures); and, offering a platform that provides measurements of heart rate, heart rate variability, oxygen saturation and respiration rate (US$13.5 million, in which Canadian VC, Esplande Ventures participated).

With all of this activity going on, Ted Shoub and Elad Travis, two of the heads of the Canada-Israel Initiative at Bennett Jones, and Aviram Hazak of the prominent Israeli law-firm Herzog, Fox and Neeman recently hosted a Maple and Honey Forum webinar "Remote Health Solutions – Sales and Investment Opportunities in Canada and in Israel." Special thanks to our panel speakers: Sharon Baker – Vice President, Technology and Services, Ontario Telemedicine Network; Aviad Tamir – Head of Life Sciences & Healthcare, Invest in Israel; Ronnie Jaegermann – Venture Partner, Beyond Ventures; Mayer Gniwisch – General Partner, Olive Tree Ventures; Jacques Sayegh – CEO and Managing Partner, Samuel Capital Partners; Courtney Cole – Founder/CEO at ForaHealthyMe Inc.; and Gal Salomon – CEO and Co-Founder, Clew Medical. We encourage you to watch the entire webinar, but here are some of the highlights of the sales opportunities panel and the investment opportunities panel.

COVID-19 has transformed the primary healthcare industry. Prior to COVID-19, the adoption rate in Canada for remote health solutions was around 4 percent, but recent estimates have put current adoption rates between 45 and 55 percent, and what is more, a significant percentage of patients say they will continue to prefer virtual health services to traditional in-person visits even after the pandemic is over. In Ontario, Canada's largest province, which experienced a slow rollout of such services over many years, the government is now looking at ways to utilize these services to increase efficiency and level of services that can be provided to individuals and health care providers. Prior to COVID-19, doctors in Ontario's publicly funded health care system did not even have billing codes for virtual consultations. Some of the most sought after solutions in Canada are: video solutions that have the ability to connect physicians with patients, secure messaging, tele-stroke, tele-dermatology, remote care management for chronic diseases, palliative care programs, mental health consulting, behavioral therapy, virtual COVID wards—monitoring symptoms at home, and electronic medical records (EMRs).

Meanwhile, in 2018, Israel launched a five-year, US$275-million program to support adoption of technologies by the health system and connecting remote health solutions providers to academia.

While there are many Canadian companies offering these kinds of services, Israeli providers are also well-placed to bring these technologies to Canada. This has created opportunities for collaboration between Canadian and Israeli companies in this field. In fact, Canada is seen as a pilot country for Israeli companies interested in research and development. Canada has state-of-the-art hospitals and costs are cheaper than in the United States, and many of the hospitals in Canada also have accelerators, looking to adapt technologies from other countries. An example of this collaboration is Real View Medical Imaging, an Israeli startup offering the first and only system providing true 3D real-time holography guided interventions. They are collaborating with the Toronto General Hospital to create one of the most advanced facilities of its kind in the world. Private sector cooperation is happening as well. Israeli deep-learning medical imaging analytics start-up, Zebra Medical Vision is collaborating with TELUS Ventures to advance AI-based preventative care in Canada with its AI solution for COVID-19 detection and disease progression tracking.
All of this activity involving Israeli remote health solutions providers has attracted the attention of sophisticated and discerning investors in Canada, who grasp the significant opportunities out there at this time. What is on a Canadian investor's wish list? Investors are looking for companies with solutions that:

  • improve the patient experience, 
  • improve the clinical experience, 
  • establish a better outcome for the patient and the healthcare system, 
  • are affordable and help lower costs. 

Where necessary, investors like to see a clear regulatory pathway—FDA, CE, and Health Canada. Lastly, investors are looking for strong management teams, including founders with significant investments in their businesses. Investors warn that even strong companies face challenges raising money during COVID-19, including the inability to engage face-to-face with investors and discounted valuations.

While private investors are looking for opportunities, Canadian public markets is the answer for many of these providers. Canada is the one of the best countries in the world for small cap companies looking to raise funds by going public. The regulatory pathway is relatively easy and it is a gateway to the U.S. stock exchanges. While pre-COVID, it might not have been so easy to get investment banks' attention for healthcare companies, since the outbreak, there has been new found interest, and better expertise is being developed in the i-banking community.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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