2018 breaks records for digital health investment: report

Global funding in digital health companies reached new highs last year as $9.5 billion was raised in 698 deals, according to a new report.

The record-breaking year saw a 32% increase from the $7.2 billion raised in 778 deals in 2017.

The Digital Health Funding and M&A from Mercom Capital Group report adds that total corporate funding into digital health – including VC funding, debt, and public market funding – climbed to $13 billion in 2018 compared to $8.2 billion in 2017.

The top VC funded deals in 2018 were: $300 million raised by home DNA testing company  23andMe; $291 million for telemedicine company American Well; $250 million raised by medical imaging firm Butterfly Network, $240 million for coronary artery disease detection company Heartflow, and $200 million each raised by WuXi Nextcode, Helix, and SomaLogic.

Most of the funding was recorded in the United States, where nearly $7 billion was raised in 420 deals.

The categories that received the most funding were data analytics with $2.1 billion, mHealth apps with $1.3 billion, telemedicine with $1.1 billion, mobile wireless companies with $847 million, clinical decision support with $714 million, and wearable sensors with $703 million.

“Venture capitalists’ love of digital health companies is evident, but Wall Street is not yet convinced as more than 60% of publicly-traded digital health stocks traded below the S&P 500 in 2018,” commented Raj Prabhu, CEO and co-founder of Mercom Capital Group. “Funding deals every year have significantly outpaced M&A and IPO activity and exits continue to be a big challenge for digital health companies.”

In terms of M&A, there were 223 transactions in 2018, compared to 203 in 2017.

mHealth apps were the most acquired category in 2018 with 32 deals, followed by data analytics with 27, and practice management solutions with 22.

The largest deal in 2018 was the acquisition of athenahealth for $5.5 billion by Veritas Capital and Elliott Management.