VC digital health funding reached record $2.5bn in Q1

Venture capital funding for digital health reached a record $2.5 billion in the first quarter of the year, according to new research.

A quarterly report into digital health funding and M&A by Mercom Capital Group showed that this is only the second time since 2010 that VC funding for digital health reached more than $2 billion since 2010.

The amount raised in Q1 was a sharp increase compared with the last quarter of 2017, including private equity and corporate venture capital injected $1.7 billion in the sector.

And the size of the deals increased generally in the first quarter – there were slightly fewer in Q1 (187) compared with 197 in Q4 2017.

This pushed the average size up – in Q1 the average deal was worth $13.4 million, comrade with $9.3 million in Q4 2017.

[caption id="attachment_39724" align="alignnone" width="180"] Flatiron's Nathan Turner[/caption]

The top disclosed M&A deals for the last quarter were the $1.9 billion acquisition of Flatiron Health by Roche, (sold by CEO Nathan Turner, pictured) ABILITY Networks $1.2 billion acquisition by Inovalon, and Intermedix $460m acquisition by R1 RCM.

In all there were 48 M&A transactions in digital health, Mercom said in its report.

Top funded categories in Q1 were data analytics ($679 million), clinical decision support ($516 million), mHealth apps companies ($247 million), telemedicine firms ($178 million), and digital health benefits companies ($160 million).

The top VC-led deals in the first quarter were $240 million raised by Heartflow, $200 million raised by Helix, $200m raised by Somalogic, $146 million raised by PointClickCare, and $110 million raised by Collective Health

There were 24 countries that had digital health VC funding deals in Q1, although perhaps unsurprisingly, US companies received the most funding and had the most deals.

California was a hot spot, where there were 30 deals, followed by New York (16 deals), Massachusetts (10), Pennsylvania (7), and Maryland (5).

There were 80 smaller transactions of $2 million or below, including three accelerator/incubator deals, and over 400 investors participated in funding deals.

According to Mercom disclosed VC funding in digital health since 2010 is around $28 billion.