Total corporate funding for digital health companies totaled $2.2 billion in Q1 2019, though venture capital (VC) funding decreased year-over-year, according to a recent report from Mercom Capital Group.
Venture capital funding, including private equity and corporate venture capital into digital health companies in Q1 2019, came to $2 billion in 149 deals. This compares to $1.4 billion in 142 deals in Q4 2018. Meanwhile, VC funding in Q1 2019 was down 19 percent compared to the same quarter of last year (Q1 2018) when nearly $2.5 billion was raised in 187 deals, the research showed.
Overall, digital health companies have brought in over $37 billion in disclosed VC funding since 2010, the Texas-based Mercom reported.
The top funded categories in Q1 2019 included $557 million raised by data analytics companies, mHealth apps with $392 million; telemedicine with $220 million; healthcare booking with $177 million; and clinical decision support with $107 million. The top VC deals in Q1 2019 included $170 million raised by Doctolib; $100 million from Health Catalyst; $88 million raised by Calm; and $80 million by Taimei Medical Technology.
There were 48 early-round deals in Q1 2019, and a total of 371 investors participated in funding deals in Q1 2019 compared to 412 investors in Q1 2018.
Meanwhile, in Q1 2019, there were 45 M&A transactions—seven of which were disclosed—involving digital health companies compared to 48 M&A transactions (13 disclosed) in Q1 2018. The top disclosed M&A transactions this quarter included the $195 million acquisition of Voalte by Hill-Rom Holdings, followed by BioTelemetry’s acquisition of Geneva Healthcare for $65 million.
A recent report from VC firm Venrock revealed that optimism is continuing for health IT companies, as the overall sector sentiment is enthusiastic, with increased expectations for new company creation and decreased concerns about funding. With talent predicted as the biggest challenge ahead and funding predicted as the least, there is increased evidence of a frothy market, according to those researchers.
“Funding levels were down compared to last year in digital health in the absence of larger deals. M&A activity was also flat. However, digital health public equities experienced a turnaround in Q1 with 66 percent of them beating the S&P 500 compared to Q4 2018 when 63 percent of the equities we tracked performed below the S&P 500. Favorable market conditions have prompted several companies to announce IPO plans,” said Raj Prabhu, CEO of Mercom Capital Group.