Digital healthcare corporations managing meals and lifestyles are recently pushing for mergers and acquisitions (M&A) and making various attempts, such as partnering with pharmaceutical and insurance companies. They are diversifying their businesses and exploring new markets as they have reached a growth limit.
◇Nudge Healthcare to expand into the mental health market
The corporations that are diversifying their businesses are all leaders in this field. Nudge Healthcare launched the money-making step counter app Cashwalk in 2017 and maintains its position as the No. 1 app in the domestic lock screen market. Dr. Diary is the largest blood sugar platform corporation in South Korea, achieving 1.8 million cumulative downloads as of last year. Kakao Healthcare has been independent from Kakao for four years.
Nudge Healthcare noted on the 14th that it has recently acquired the psychological counseling platform "Trust" and is integrating services, and is in the process of acquiring the KOSDAQ online advertising company "NBT."
Nudge Healthcare was founded in 2016 by CEO Na Seung-kyun, a doctor, and CEO Park Jeong-shin, a developer. The company was the first to introduce a step counter to mobile phone lock screens. As of February this year, the cumulative number of downloads reached 24 million, with 3.7 million daily active users (DAU).
Earlier, Nudge Healthcare acquired the corporate employee support program specialist Dain last year, and this year it is acquiring two more companies. This is a strategy to diversify its business through external acquisitions.
The companies being targeted for M&A are being acquired through Nudge Healthcare subsidiary Dain and NBT through another 100% subsidiary, Momento. Dain is a B2B company that provides psychological counseling programs to corporations and institutions, while Trust is a platform provider offering psychological counseling and mental health management services to individuals.
Nudge Healthcare plans to expand its business portfolio into the mental health field through these company acquisitions. CEO Park Jeong-shin of Nudge Healthcare stated, "We will leap to become an integrated digital healthcare platform encompassing both physical and mental health through the acquisition of Trust."
It is interpreted that the company has recognized the limitation of growth with only a walking app, which led it to adopt the mental health sector as a new growth driver.
Nudge Healthcare's annual revenue was 79 billion won in 2022, 105.6 billion won in 2023, and is projected to be 118 billion won in 2024, continuing its growth trend. However, the sales growth rate last year was 11.7%, slowing from the previous year's rate of 33%. Last year's operating profit is estimated to be about 2.88 billion won in 2024, which is roughly a 77% decrease from the previous year's 12.51 billion won.
With the increase in the number of people experiencing anxiety and depression, there is also a judgment that the mental health service business has significant growth potential. According to data submitted by Member of Parliament Kim Ye-ji of the Health and Welfare Committee to the National Assembly, the number of patients with depression increased by 25% from approximately 870,000 in 2020 to about 1.09 million in 2023. Particularly, there was a sharp rise in patients among children and adolescents, and young adults. The number of patients aged 0-9 with depression increased by 79.9% during the same period, while those aged 30-39 increased by 53.5%, and those aged 10-19 increased by 52%.
◇Digital blood sugar management companies tackle profitability decline
Dr. Diary and Kakao Healthcare, both of which entered the diabetes and blood sugar management service market, are vigorously forming partnerships with various corporations. Although both companies saw year-on-year revenue growth last year, profitability declined, resulting in larger losses. Therefore, it is interpreted that they are expanding collaborations and partnerships to increase service users and improve business performance.
Dr. Diary on the 14th launched a blood sugar management-focused smartphone package, "My Health Phone," in collaboration with Samsung Electronics. "My Health Phone" integrates continuous blood sugar monitoring devices (CGM), wearable devices, and personalized coaching services based on the Galaxy S25 series.
The company announced last month that it has entered into a strategic partnership with pharmaceutical company HANDOK and will collaborate with HANDOK. Dr. Diary, which operates a diabetes and obesity management app, will be responsible for coaching services, content provision, and app operation, while HANDOK will conduct marketing and sales activities targeting primary medical institutions.
Kakao Healthcare launched the blood sugar management app "PASTA" last February. It signed a business agreement with health functional food company H.PIO on the 31st of last month and has started full-scale collaborative marketing this month. Kakao Healthcare plans to operate a pop-up store with H.PIO's health food brand, Denplus, at AK Plaza Bundang until the 17th.
Both companies also established partnerships with insurance companies. Dr. Diary entered into an agreement with Hyundai Marine & Fire Insurance in December last year and is developing a project to offer a weight management program developed by Dr. Diary to 75 patients with gestational diabetes among insurance clients. Kakao Healthcare also signed a business agreement with AIA Life last month.
Dr. Diary's revenue last year increased by 42.6% compared to the previous year, recording about 14.8 billion won. However, the current net loss was about 4.8 billion won, which is a 5.5% increase in the loss scale compared to the previous year. Kakao Healthcare also recorded a revenue of about 11.9 billion won last year, up 166.2% compared to the previous year, but its current net loss increased by 146.5% to 54.5 billion won.
Both companies have strategies to improve profitability through service expansion and overseas expansion. In the case of Dr. Diary, services have expanded from diabetes to blood sugar and hypertension, and are now extending to obesity and weight management. Kakao Healthcare is also expanding its market from diabetes to obesity. A representative from Kakao Healthcare stated, "The goal is to enter the Japanese market this year," adding, "We are currently discussing collaboration options with several companies, including large Japanese pharmaceutical companies."