$6.8 bn in digital health funding through Q3 blows the doors off 2017: Rock Health

And the money rolls in. All Rock Health had to do was wait a quarter to get breathless [TTA 4 July], because digital health funding through Q3 is now exceeding the full year 2017 by $1.1 bn. The average deal size has accelerated substantially–$23.6 million versus last year’s $16.4 million. The deals are bigger but fewer–290 so far versus 357 last year–and the length of time between funding rounds has consistently grown shorter. 

Another proportional shift is the growth of Series B and C startups, at long last, and a more than doubling of D+ deals.

A big shift in this quarter were that the stars lined up, perhaps for the first time, with at-home and on demand health. American Well of course at $291 M loaded these dice, but also benefiting from the throw were the similar Doctor on Demand, Honor (home care), and NowRx med delivery service. Faster meds at lower cost have become a major area of action (Amazon with PillPack, TelePharm, others). Digital therapeutics that help to monitor health at home followed from Pear Therapeutics, Click Therapeutics, Akili Interactive, Virta Health, Propeller Health, and Hinge Health. 

And where the money comes from? Independent venture funds still account for 63 percent, and corporate VCs for 15 percent.  Some of those CVCs are major names such as GSK, Abbott, and Cigna. Big tech is also moving into healthcare, with Amazon’s $1bn acquisition of PillPack, the Apple Watch 4, Google’s Nest.

Rock Health’s trend prediction is continued consolidation in digital health, with companies continuing to acquire each other. “With available capital and a desire to build out product lines, talent, and client bases, it’s not surprising to see a great deal of M&A activity within digital health.” One example given is Welltok, which plays in the consumer health ‘activation’ area, and their acquisitions from corporate health management programs to Wellpass, which has created such as Text4Baby, Text2Quit and Care4Life and whose largest customer is state Medicaid plans.

Keep in mind that Rock Health tracks deals over $2 million in value from venture capital, excluding government and grant funding. They omit non-US deals, even if heavily US funded.

Rock Health’s report. Healthcare Dive.  Mobilhealthnews‘ own top 17 M&As, which include Best Buy-GreatCall and Logisticare-Circulation in the burgeoning area of non-emergency medical transport (NEMT).

2015 digital health VC funding flat, consolidations nearly double: Rock Health

Rock Health published yesterday their 2015 annual Digital Health Funding report, and perhaps it is good news that 2015 activity maintained the blazing 2014 total at $4.3 bn. Still, it represents a compound annual growth (CAGR) from 2011-2015 of 30 percent.

Consumer digital health is thriving, with healthcare consumer engagement, personal health tools and tracking accounting for 23 percent of overall funding. Two of the six largest deals were won by consumer-driven genetic companies, 23andMe and Helix.

The one new record was that there were 278 deals across 248 companies, with an record-breaking average deal size of $15.6m. What continued is that the vast majority of funding deals (70 percent) were Series B and below, but C and C+ deals increased slightly.  It was also a big year for exits. M&A activity nearly doubled in volume with 180 deals and $6B in disclosed activity. Their index comprising shares of publicly traded digital health companies was off over 5 percent with two of this year’s IPOs trading lower than their opening prices.

According to the Rock Health newsletter, early-funded companies had a few zombies among them. Rock Health looked at companies up to five years ago, and found that 11 percent they classified as either dead or “zombies” (which have not raised a round in 3+ years). “Most likely to die? A disproportionate number of these zombie companies are in the care coordination, EHR, or clinical workflow space.”

The web page with a link to the full study is here. Unfortunately, the download is not free, but $99.

First M&A roundup for 3rd quarter: more action, less value, whither digital health?

VC/research firm TripleTree is first out of the gate with its roundup of merger and acquisition activity in healthcare, July through September. The news and directions are mixed. Deals are up 28 percent from the two previous quarters but down 12 percent in total deal value. Most are in the healthcare facilities area with home care giant Gentiva acquiring Harden Healthcare and insurance giant Humana adding to its LTC, Medicaid/Medicare portfolio with American Eldercare. 19 healthcare companies had successful IPOs totaling ~$3 billion of transaction value. Two highlighted here are Envision Healthcare Holdings (ambulance and outsourced physician services) and Benefitfocus (benefit administration software and tracking). Given that they are the creator of the iAwards at the annual Wireless-Life Sciences Alliance in May which focuses on digital health, the decidedly non-buzzy companies getting the action here are perhaps another indicator of the funding cooling preceding M&A as projected by Rock Health back in July [TTA 9 July], with their 3rd Quarter report due out shortly.