The news: Digital musculoskeletal startup Sword Health scored $163 million in a Series D funding Round—vaulting its valuation to nearly $2 billion.

More on Sword Health: Sword Health provides virtual physical therapy programs that help people manage MSK conditions, which employers can offer to their health insurance enrollees.

The bigger picture: Virtual physical therapy startups are in hyper-growth mode.

• Sword Health itself has been on a roll with securing funding this year.
• In July, it brought in $135 million and in January it raised $25 million.
• And its virtual physical therapy peer Hinge Health reeled in a whopping $600 million in October—bringing its valuation to $6.2 billion, and making it one of the highest-valued digital health companies on the market.

One key driver: Employers are looking for ways to cut back on sky-high MSK care costs.

• Around one-quarter of US healthcare costs ($455 billion) are driven by four care categories—and musculoskeletal care has the second-highest spend ($130 billion), just behind heart disease ($181 billion), per Optum.
• For employers, chronic musculoskeletal pain management costs $20 billion annually—that’s around 17% of employers’ healthcare budgets.

What’s next? We could see telehealth firms eye an M&A deal with a virtual physical therapy startup—it could be a huge value add for them in a post-pandemic world.

• Chronic pain is a swelling health issue in the US: 20% of US adults experience chronic pain.
• Despite high rates of chronic pain, just 1% of telemedicine services used by US adults were related to physical therapy, according to Civic Science’s February 2021 study. For context, primary care (33%), mental health (6%), and dermatology (2%) all have higher telehealth usage rates.
• Plus, the virtual physical therapy market is projected to be worth over $9 billion by 2027, per Fortune Business Insights.