The news: Pyx Health, a wellness company that helps people combat loneliness, has acquired food-as-medicine startup FarmboxRx. The deal was fueled by a $47.5 million investment from S2G Investments.

Zooming in: Both companies sell their platforms to health insurers (chiefly Medicare and Medicaid) that offer the services as a covered benefit.

• Pyx’s technology identifies health plan members who have unmet social needs like loneliness and connects them to a virtual care team.
• FarmboxRx contracts with insurers that pay for healthy groceries on behalf of their members. Patients build rewards and receive more healthy food boxes when they get recommended health screenings and vaccinations that help keep them out of the hospital.

Why it matters: There is an overlap of people who fit into both companies’ total addressable market.

• US adults who lack access to safe and nutritious food were more likely to report being socially isolated or lonely than people who had sufficient access to healthy food, according to a study published last year in the American Journal of Preventive Medicine.
• 47.4 million US consumers lived in food-insecure households in 2023, per US Department of Agriculture data.
• Meanwhile, Gallup estimates that a similar number—about 52 million US adults—deal with loneliness.

The bigger picture: With an administration that’s more likely to fund programs for nutrition than anti-obesity drugs, investors and buyers are eying food-as-medicine companies in the Medicare and Medicaid market.

However, the HHS’ focus is on big food brands and banning artificial dyes and chemicals from food and drink products. The government hasn't yet taken a stance on devoting more funding toward healthy food interventions. Plus, looming Medicaid cuts could mean that food-as-medicine companies serving government health plans might not be poised to grow as anticipated when HHS Secretary Robert F. Kennedy Jr. took office.

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