With $2.1B in digital health funding, first half of 2015 is keeping pace with 2014(from Rock Health)
At the end of the first quarter, it was too early to tell if digital health funding could keep up with the record-breaking growth in 2014. But now at the half-year mark, investors have spoken—digital health isn’t slowing down with 2015 bringing in $2.1B in funding, just short of the same time period in 2014. There were 139 deals and the average deal size was over $15M, exceeding 2014’s $14.6M. (Note: Our venture funding data only includes disclosed US deals over $2M. Companies that are sector-agnostic with a healthcare vertical are excluded.)
The top six categories of 2015 accounted for more than 50% of all funding in the year, with three categories not being ranked in 2014.
Top six category rankings for wearables and enterprise wellness were driven by single deals—Jawbone in the case of wearables, and Virgin Pulse in the case of enterprise wellness. Both categories, in addition to EHR and clinical workflow did not show up in the 2014 rankings. The fact that analytics and big data show up year after year in the top rankings show that healthcare is not immune to larger trends within technology. The Affordable Care Act has forced consumers into the healthcare marketplace, and they’re not pleased with their dot-com and mobile experiences. Companies are rushing into the expectations gap, delivering experiences that engage consumers in health insurance purchasing (e.g., Stride Health) or product purchasing (e.g., PillPack) and decision-making (e.g., MDsave).
M&A deal activity is up; however, overall dollars are low as compared to 2014.
We tracked 92 M&A deals through the first half of the year, as compared to 95 total in all of 2014; however disclosed deal dollars represent just 13% of the total from last year. The activity in the first half of 2015 has been dominated by digital health companies acquiring other digital health companies as part of relatively small transactions (e.g., Welltok/Predilytics, Fitbit/FitStar, Teladoc/StatDoctors, Elekta/CliniCast), with cash hordes in the payer, biopharma, and provider sectors seeing little movement in the direction of digital health acquisitions.
The most notable acquisition in the first half of 2015 was the Under Armour acquisition of MyFitnessPal for $475M in cash.
The second quarter brought a flurry of IPO activity, with Fitbit leading the way as one of the largest IPOs of the year (digital health or otherwise).
A number of well-known digital health companies went public in the second quarter of 2015, including successful offerings from both Evolent Health and Fitbit (Teladoc went public on the first day of the third quarter of 2015). IPO activity is up overall, with five IPOs through July 1st as compared to five overall in 2014. Performance has also been stronger this year (even though the companies have been trading for less time), with three out of five IPOs holding above their offering price (and in the case of Fitbit and Teladoc, well above). The strong debuts suggest public market receptivity to digital health companies.