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Sidecar: Two-Year Telehealth Runway to 2027: Three Actionable Moves for Healthcare Investors · Committed Capital

• 0:09
  Intro: Welcome to Dechert's Committed Capital. This is an episode of Sidecar, a special bite-sized discussion of the latest market issues.
• 0:24
  Markus Bolsinger: Welcome back to Committed Capital, Deckert's podcast on corporate and private equity legal trends. I'm Markus Bolsinger, co-head of Dechert's global private equity practice, and of Dechert's healthcare transactional practice. We are back on a topic that is moving fast: Medicare telehealth coverage and what the latest extension means for investors in digital health. The Continuing Appropriations Act passed in early February has extended Medicare telehealth coverage all the way through the end of 2027.
• 0:53
  Markus Bolsinger: That is not a minor development.
• 0:59
  Markus Bolsinger: It is a much longer extension than the ones Congress has previously granted, and it changes the investment calculus in concrete ways. Today, we will discuss three principles that we believe frame every telehealth deal right now. First, act on the opportunity, but back companies built to outlast any single policy. Second, do the homework. The landscape is more complex than the headline suggests. And third, structure deals with protections built in.
• 1:29
  Markus Bolsinger: I'm joined again by Dechert partner Jennifer Hutchens, based in Charlotte, with our global healthcare transactional and regulatory team, and Brooke Meadowcroft, based in Washington, D.C., both of whom have been on the front lines helping clients assess opportunities and manage risk in the U.S. telehealth environment.
• 1:53
  Markus Bolsinger: If you haven't caught our prior episode on this topic, it is available on all major podcast platforms and on www.dechert.com, but even if this is your first time with us, we'll get you up to speed quickly. Let's get into it.
• 2:09
  Markus Bolsinger: Brooke, can you please set the scene for us? Where does Medicare telehealth coverage stand right now, and why does this extension matter more than the ones that came before it?
• 2:21
  Brooke Meadowcroft: Before the pandemic, Medicare covered telehealth services only in a limited capacity. Covid 19 triggered a major expansion on a temporary emergency basis, one that kept getting extended for nearly five years. When those extensions finally lapsed on October 1, 2025, the industry experienced what stakeholders called "the telehealth cliff," reverting to something close to pre-pandemic coverage. A short-term continuing resolution briefly restored expanded coverage, but only through late January, leaving the industry in a state of uncertainty. That changed in early February, when the Continuing Appropriations Act extended Medicare coverage through 2027. Practically speaking, originating site restrictions were lifted, home-based visits were broadly covered, and a wider range of practitioners are now eligible for reimbursement. The real significance, though, is the
• 3:13
  duration: nearly two years gives providers, platforms and investors a genuine planning horizon and signals that Congress now views expanded telehealth coverage as the new baseline, rather than just an emergency accommodation.
• 3:27
  Markus Bolsinger: Awesome. Thank you, Brooke. Switching to you, Jennifer, nearly two years is a different animal than the 90-day extensions investors have been living with. How does that runway actually change the dealmaking picture and what's the right way to think about it?
• 3:44
  Jennifer Hutchens: Yeah, thanks, Markus, for having me back on the podcast. From my perspective, it changes things quite a bit, and I would say happily so. When Congress was extending coverage only a few months at a time, it was genuinely hard for us to assist our clients - investors - in making big bets on telehealth companies. You are trying to project revenues, two, three, five years out, and if the single biggest reimbursement source, Medicare, in many cases, could disappear every 90 days, that uncertainty had to be priced in. So deals got understandably more cautiously done, valuations were held down, and some capital unfortunately sat on the sidelines all together, waiting for that clarity. I think this 2027 extension gives the industry something that is going to be much more useful and exciting, and that's the gift of time, right? So time for companies to hire and onboard providers, build out their patient base and prove that their model actually works at scale. In the private equity sponsor sector, that is enough runway to make a real investment execute on a value creation plan and really have that credible story to tell the next buyer. So, for a strategic acquirer, it means that you can actually integrate what you buy and build something, rather than just holding on and hoping that the next continuing resolution does, in fact, come through. I would say, though, one word of caution, and this is really, Markus, at the heart of your principle number one, and that is that the 2027 extension is still not permanent. Investors who act as though it is will be caught off guard if the debate starts up again, and we do anticipate it will. So act on the opportunity, but invest in companies build to last beyond that single policy. The smartest move is to back companies that are not entirely dependent on Medicare reimbursement in this telehealth space, businesses that also serve commercially insured patients, employer health plans or direct-to-consumer markets, which is, of course, a big area that we're seeing evolve. That kind of diversification is what separates, in our experience, what is known to be a more resilient telehealth company from one that is just riding off a unique policy tailwind.
• 6:07
  Markus Bolsinger: Awesome. Thank you, Jennifer. That resonates from a dealmaking perspective, and it underscores an important distinction, catalyst versus foundations. The 2027 extension, to me, seems like a catalyst. It unlocks activity and opens a investment window. The foundation, though, is the underlying business model. The extension makes it easier to act. It does not change what we should be looking for, though.
• 6:35
  Markus Bolsinger: With that, let's move to the second principle. Brooke, where specifically should investors be looking and what should they be watching out for before they invest?
• 6:45
  Brooke Meadowcroft: Sure. So the 2027 extension has reopened conversations that were stalled on the opportunity side. We are seeing a renewed interest in behavioral health and chronic care management platforms, which have been among the biggest beneficiaries of the expanded Medicare coverage. With the reimbursement picture clear for the next two years, those companies have a real window to scale. Remote patient monitoring is another area worth attention.
• 7:07
  Brooke Meadowcroft: The combination of expanded practitioner eligibility and home-based visit coverage creates favorable conditions for companies operating in that space. But principle two is do your homework before investing.
• 7:22
  Brooke Meadowcroft: Investors need to do careful diligence on how a target company's revenue is actually structured. A business that derives the majority of its revenue for Medicare telehealth reimbursement with little commercial payer diversification carries a different risk profile than one with a more balanced mix. The 2027 extension is meaningful, but it is not a guarantee of what comes after, beyond reimbursement structure.
• 7:45
  Brooke Meadowcroft: The broader regulatory environment for telehealth remains unsettled in ways that matter for investors.
• 7:51
  Brooke Meadowcroft: Prescribing standards are still evolving, broadened abuse enforcement continues to be an active government priority, and the interplay between federal and state oversight of telehealth services adds another layer of complexity that does not resolve simply because Congress has extended coverage.
• 8:06
  Brooke Meadowcroft: Companies operating in this space are subject to scrutiny that goes well beyond what a reimbursement timeline can address, and diligence has to account for that broader exposure.
• 8:15
  Markus Bolsinger: Awesome. Thank you, Brooke. Jennifer, even with the clarity through 2027 the clock really is already ticking on the next debate. How do you suggest building policy risk into a deal structure? And what does the third principle look like in practice?
• 8:33
  Jennifer Hutchens: You know, Markus, I think this is where legal and transaction structuring can do the real work and lifting. Principle three is, in my mind, build in protections when structuring deals. The first thing we as counsel think about for our clients is making sure that the reimbursement risk is properly reflected in how a deal is priced and structured.
• 8:56
  Jennifer Hutchens: So earn outs tied to revenue milestones can be a useful tool here, but of course, they need to be carefully drafted so that a reimbursement contraction does not create a dispute about whether a milestone was genuinely missed or was simply a function of policy change outside of the company's control. Representations and warranties around regulatory compliance and billing practices also deserve heightened attention in these telehealth transactions. The government has made it abundantly clear that telehealth fraud enforcement is, in fact, a true priority, and a target company's history of coding and billing practices is an area where thorough diligence can surface real liability. If you're looking at the equity side, sophisticated sponsors are also building contractual protections that contemplate what happens if the coverage environment shifts materially before their exit, whether through adjusted return thresholds, drag along mechanics or co-investment structures that can distribute policy risk more broadly across the investor base. The core message is that the 2027 extension creates favorable conditions for sure, but smart deal structuring means not assuming those conditions will hold indefinitely.
• 10:11
  Markus Bolsinger: Thank you. Got it. And Jennifer, last word to you. We are in these conversations with strategics and sponsors every day. If there's one thing you would want them to walk away with, what is it?
• 10:25
  Jennifer Hutchens: Yeah, so stepping back, telehealth isn't just a set of reimbursement codes, right? It truly is the front door to a consumer-centered health ecosystem. The 2027 extension does not create that value. The value is already there. What it does remove is a persistent, near-term overhang that has been suppressing investment activity and, in many ways, compressing valuations in a space that really deserves better. It deserves better for all of us as patients. And that framing connects directly to our three principles. Principle one, act on that opportunity, but invest in companies built to last beyond any single policy. The businesses that will define this space over the next decade are not the ones riding a Medicare tailwind. They are the ones that are building diversified revenue models that can withstand whatever the next coverage debate brings next. Principle two, do that homework. Consumer demand for these services is real and durable, but not every company in this space has built its foundation carefully. This is where compliance and reimbursement exposure can turn a promising investment into a costly one. And principle three, build in protections. This is where your counsel can be incredibly helpful. The 2027 extension creates favorable conditions, but smart investors will need to structure their agreements to account for the possibility that those conditions may change. The platforms, technologies and care models that have been built on the back of expanded Medicare coverage have genuinely true staying power. Use the 2027 window to find companies that are building durable infrastructure. That's those diversified payer relationships, defensible clinical protocols, proprietary data assets, and particularly in the consumer-direct space, integrated pharmacy or device rails, because those are the businesses that will not just survive the next coverage debate, but they will be defining what digital-first care delivery looks like, not just to 2027 but probably for the next decade.
• 12:38
  Markus Bolsinger: Awesome. Thank you, Jennifer and Brooke. Three clear principles and an almost two-year window to act on them.
• 12:45
  Markus Bolsinger: This has been Committed Capital's look at the Medicare telehealth extension through the end of 2027 and what it means for digital health investors.
• 12:52
  Markus Bolsinger: The Dechert healthcare team is in these conversations with clients every day. If you want to think through what any of this means for a specific deal or portfolio company, reach out.
• 13:04
  Markus Bolsinger: Thank you for listening, and we'll be back with the next episode next month. Thank you.
• 13:14
  Outro: Thank you for listening to Dechert's Committed Capital.
• 13:18
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