Smartwatches have become almost ubiquitous, virtual GP appointments allow patients to access medical advice from anywhere, and apps exist for tracking everything from mental health to sleep patterns. And now, in a world where consumers are increasingly wrestling back control over their own healthcare, home-to-laboratory testing is the latest development.
DIY home-to-lab health tests allow consumers to diagnose a multitude of health conditions, from food allergies to diabetes, via a finger-prick blood test, all in the comfort of their own home. Providers such as Everly Health, Thriva and YorkTest have grown rapidly over the last two years, buoyed by rising appetite for home testing, as consumers have become au fait with Covid testing on the kitchen table. With the prevalence of many chronic “lifestyle” health conditions growing rapidly, and ongoing trends towards personalised preventative healthcare, it’s no wonder the market continues to grow 15% – 20% per annum1. And while the currently penetrated market remains nascent (estimated just shy of £100m in the UK today1), there is plenty of headroom for growth, offering opportunities for the discerning investor. In this article, we consider some of the trends which mean health testing at home is quickly becoming part of the furniture.
Figure 1: Online Interest in Home-To-Lab Health Tests, Feb 2020 to May 2022
Sufferers and the Healthy Curious
Home-to-lab health tests serve two types of consumer, and there are important trends driving adoption among both.
For “Sufferers“, home-to-lab health tests offer the chance of a diagnosis, often where patients have been failed by traditional healthcare routes. Many consumers taking food intolerance tests (one fast-growing branch of home-to-lab health testing) report persistent symptoms, often despite multiple visits to the doctor. Home-to-lab health testing offers consumers a prompt diagnosis – an especially valuable commodity considering the hospital waiting times which denied many patients access to healthcare during the pandemic.
For the “Healthy Curious” who don’t have specific health issues but want to know more about their health, home-to-lab health tests provide early warning screening tests for conditions ranging from vitamin deficiencies to thyroid problems, allowing consumers to take a one-off health check or monitor their results over time. This growing segment of the population (estimated to represent the majority of health testers today) are increasingly looking to take charge of their own health. For many, home-to-lab health tests are the next step after smartwatches in the evolution of personalised healthcare.
Riding the Wave of the Subscription Economy
With leading health test providers generating over 90% of revenue from subscriptions3, health tests are the latest in a long line of consumer products and services to offer an attractive source of recurring revenue. Test provider Thriva (which has doubled in size since 2020, having received over $15m funding to-date4,5) allows consumers to build their own package of tests and choose how frequently to take them. Other providers such as YorkTest (recently invested in by NVM, supported by Fairgrove) offer consumers a bundle of the most important tests as a regular “health MOT”. When one considers the ubiquity of the health conditions these providers test for, the accessibility of test pricing (tests start from as little as £56), the average package price (£82, according to Thriva’s website) and the frequency of testing (several providers recommend customers repeat tests every 3 months), health test subscriptions represent a significant market opportunity. In the current climate of rising costs of living and squeezed consumer spending, a number of subscriptions are facing the “Netflix effect”. Nevertheless, we expect health tests won’t be the first subscription to be cancelled in a downturn – after all, the tests diagnose persistent symptoms and screen for potentially serious health issues.
Convenience is King
Figure 2: The Home-To-Lab Health Test Customer Journey
In a world of rapid grocery deliveries and on-demand TV, consumers are clearly willing to pay for here and now. The best home-to-lab health test providers offer tests which are fast, easy to perform and easy to understand. While the tests themselves are often relatively standardised (albeit laboratories can have different levels of accreditation, as we discuss below), the customer journey offers scope for crucial differentiation. The best test providers guide consumers through the test selection process (for example, via a short online questionnaire), offer simple and easy-to-use tests (which can be completed in around ten minutes, guided by clear instructions or brief “how to” videos) and offer easily digestible online or app-based results (with a consultation with a medical specialist often included in the price of the test). All of this, and consumers receive their results in as little as four3 days following their initial purchase. Compare that to NHS waiting times, which reached an all-time high during the pandemic, and the proposition to consumers is clear: take control of your health, do it easily, and do try this at home.
Put to The Test: The Science Behind Testing
“Reputation” and “reliability” emerged as the most important purchase criteria from a recent Fairgrove survey of health test customers. And it’s not just consumers who should demand reliability; investors should too.
Theranos is a much-publicised example of what can happen when tests don’t deliver what they said on the tin (or the test tube). The US start-up professed to have invented a revolutionary blood test that only needed a single drop of blood to diagnose conditions from cancer to diabetes, achieving a valuation of $9bn in the mid-2010s before collapsing overnight when its technology failed to work7. The episode will have served a lesson to many investors, and is not a wholly isolated incident. Several cowboy companies remain remarkably successful today by claiming to be able to diagnose food intolerances from a single strand of hair. Suffice to say, two hair tests conducted by the same Fairgrove employee under different names yielded starkly different results. As such, it remains crucially important to understand the science behind health tests. Investors should remain vigilant and demand reproducible results, an accredited laboratory and reputable clinical teams. As for respectable health test providers, they are already well-versed at educating consumers on the efficacy of their tests. With only a few percent of the UK population having taken a home-to-lab health test to-date, providers know that consumer education will be crucial for fuelling growth in what remains an emerging market.
Personalised Healthcare “3.0”
With almost a third of adults in the UK using a smartwatch8, personalised healthcare is clearly not a new trend, but for home health test providers it’s an important one. The movement towards customised care offers a myriad of opportunities for health test players to up-sell, cross-sell and make clever use of customer data.
Cross-selling additional tests is an obvious first opportunity for health test players: many providers offer portfolios of over 20 tests, and as a customer already testing for thyroid function, why not test for a vitamin D deficiency as well? Expanding along the care pathway offers providers another opportunity: for a customer who identifies higher cholesterol than recommended, why not schedule an extra consultation with a specialist to discuss the results? Add to that vitamins and supplements, a market worth roughly £0.5b in the UK9 and a logical complementary purchase for health-conscious testers, and health testing becomes a compelling platform from which to sell additional products and services. While personal data is a subject to be carefully navigated, customer databases offer the ideal opportunity for personalised marketing, and could be the beginning of far-reaching healthcare hubs where consumers log in to track their health statistics over time, and receive more relevant, tailored healthcare in return. With insurance providers such as Vitality offering lower premiums to consumers who track their exercise, what about premiums for consumers with a history of perfect health test results? The wearables market has evolved from “1.0” step counters to “2.0” trackers which monitor signs from blood glucose to heart rate variability – health test providers appear well-positioned to capitalise on the next revolution in personalised healthcare.
The New Kid on the Block in Employee Benefits
While the majority of home-to-lab health tests are sold direct to consumers today, there is a significant opportunity for health test providers to expand distribution via employee benefits platforms (another area where Fairgrove has a range of credentials, having most recently supported on the sell-side in the management buy-out of Vivup). For employers, home-to-lab health testing complements existing health and well-being benefit portfolios, with a care pathway which remains direct-to-consumer and largely bypasses the employer; for employees, buying via their employee benefits platform makes brands more easily discoverable, more affordable (given discounts on tests and monthly salary sacrifice), and more trustworthy (never underestimate the power of a colleague testimonial at the water cooler).
Figure 3: Organisation Attitudes to Health and Well-Being Management
Testing the Waters Across the Pond
Across the pond, US providers are paving the way in home-to-laboratory testing. Home-to-lab health test providers Everly Health and LetsGetChecked have more than doubled in size5 and together attracted over $750m4 in funding since 2019, and while US consumers are typically more accustomed to paying out of pocket for healthcare, the scale and pace of growth in the US should cause UK investors to sit up and take note. Everly Health, itself valued at $2.9b on revenues estimated at roughly $200m10, started as a food intolerance testing specialist before expanding into a wider range of blood tests (including men’s and women’s hormone tests and sexual health tests) and expanding further along the care pathway into specialist consultations.
In the UK, health test providers are smaller, but similarly fast growing. YorkTest, Thriva and Numan have all grown rapidly in the last two years, buoyed by the impact of Covid on consumer willingness to test at home – and they are attracting significant interest. Having raised $73m4 to-date, UK-based men’s health platform Numan has recently expanded into home-to-lab health testing (having initially been focused on men’s health issues such as erectile dysfunction and hair loss). Numan’s blood test, designed to encourage men to check their health without concern, is branded the “Fear Nothing Blood Test” – Numan, like many other providers, has big plans to make home-to-lab health testing accessible, affordable, and here to stay.
Figure 4: Headcount Development for Selected Home Health Test Providers
Footnotes and Sources
1 Market size and growth estimates are based on Fairgrove analysis, including top-down market sizing and bottom-up sum of competitor revenues.
2 Shortest time taken between ordering a test kit and receiving the results, based on a Fairgrove mystery shopping exercise conducted in June 2022.
3 Based on market interviews conducted by Fairgrove in May 2022.
4 Funding figures have been taken from Crunchbase, June 2022.
5 Size estimated based on employee numbers from LinkedIn and company accounts.
6 Thriva website.
7 BBC article: Elizabeth Holmes: Theranos founder convicted of fraud, Jan 2022.
8 Statista Global Consumer Survey 2021.
9 Mintel: Vitamins and Supplements market size.
10 Bloomberg valuation and revenue estimate for Everly Health, March 2021.
Other: FT article: Is the ‘subscription economy’ going to feel the Netflix effect?, May 2022.