After carrying out a study on 50 healthcare organisations, Bessemer Venture Partners has explicated the key indicators of successful health tech businesses:
- Annual recurring revenue (ARR)
ARR is a clear indicator of how quickly the business is expanding. Contrary to tech-related businesses, ARR is easier for healthcare SaaS companies.
- Bottom-up approach towards Total Addressable Market (TAM)
Startups should construct a bottoms-up perspective of their TAM rather than merely focusing on the top-down addressable expenditure for their market.
- Customer acquisition cost payback
The payback period for customer acquisition cost (CAC), which is the initial cost of obtaining a client, measures how long it takes to recover your incremental sales and marketing expenditures. This is an indicator of the overall cost related to expenditures required to acquire a client.
- Dollar Retention
Dollar retention may be determined in two different ways: gross dollar retention and net dollar retention. Both factors indicate a critical factor.
For healthcare SaaS companies, tracking engagement and consumption of a particular product or service is vital.
- Cash efficiency and free cash flow margin
Startups must understand the return on investment for every dollar spent, especially in circumstances where the cost of financing is higher. To understand this better, calculating the burn rate is recommended.
- Gross profit margin
Gross profit margin is a metric indicating how much money a company keeps after deducting costs related to providing goods and services. It is also one of the most significant success measures.
- Customer’s Health
The health of your clients is influenced by both clinical and financial ROI.
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