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Mercom: Digital health companies have raised $5.5B in VC funding YTD

The third quarter VC funding came to $1.5B in 227 deals, a 38 percent decrease compared to the record $2.4B raised in 194 deals in Q2 2017.

Mercom: Digital health companies have raised $5.5B in VC funding YTD

After Rock Health and StartUp Health, we have Mercom Capital Group sharing its funding and M&A figures for the Healthcare IT / Digital Health sector for the third quarter and first nine months (9M) of 2017, covering deals of all sizes from across the globe.

According to the research firm, global VC funding in 9M 2017 was 31 percent higher than the same period in 2016 with $5.5B raised in 586 deals compared to the $4.2B raised in 463 deals in 9M 2016. The third quarter VC funding came to $1.5B in 227 deals, a 38 percent decrease compared to the record $2.4B raised in 194 deals in Q2 2017. The 227 deals in Q3 2017 were the most recorded in a single quarter since 2010.

Since Mercom began tracking in 2010, the Digital Health sector has now received $24 billion in 3,258 VC funding deals.

Total corporate funding in Health IT companies — including VC, debt, and public market financing — came to $1.7 billion in Q3 2017 compared to $2.4 billion in Q2 2017.

"The record breaking funding year continues for digital health companies. The 227 funding deals in Q3 was the most ever for a single quarter," Raj Prabhu, CEO and Co-Founder of Mercom Capital Group, said in a statement. "The third quarter was all about Data Analytics with those companies garnering almost a third of the funding in Q3 and artificial intelligence companies receiving more than $200 million."

Healthcare practice-centric companies received $731 million in 78 deals, accounting for 49 percent of the funding in Q3 2017 compared to $745 million in 63 deals in Q2 2017. Consumer-centric companies accounted for 51 percent of the funding in Q3 2017, raising $751 million in 149 deals compared to $1.6 billion in 131 deals in Q2 2017.

The top funded areas in 9M 2017 were: Data Analytics with $1 billion, Patient Engagement Solutions with $686 million, mHealth Apps with $549 million, Telemedicine with $529 million, Booking with $407 million, and Mobile Wireless with $407 million.

The top funded categories in Q3 2017 were: Data Analytics companies with $554 million, Telemedicine companies with $232 million, mHealth Apps companies with $150 million, and Mobile Wireless companies with $132 million.

There were 69 early stage deals in Q3 2017, including 29 accelerator and incubator deals.

The Top VC deals in Q3 2017 included: $165 million raised by WuXi Nextcode, $75 million raised by M2Gen, $70 million raised by Tempus, $37 million raised by AbleTo, and $34 million raised by HealthEdge.

A total of 401 investors — including seven accelerators/incubators — participated in funding deals in Q3 2017 compared to 454 investors in Q2 2017, of which two were accelerators/incubators.

In the first nine months of 2017 there were a total of 146 Digital Health M&A transactions compared to 163 transactions in 9M 2016. There were 56 Digital Health M&A transactions in Q3 2017 compared to 41 in Q2 2017.

Notable M&A transactions in Q3 2017 included: WebMD's acquisition by KKR portfolio company Internet Brands for $2.8 billion; the acquisition of the healthcare technology and consulting business of Advisory Board Company by Optum for $1.3 billion. Konica Minolta acquired Ambry Genetics Corporation for $1 billion; Navicure acquired ZirMed for $750 million; FNFV Group acquired T-System for $200 million; and Allscripts acquired McKesson's EHR and revenue cycle tools for $185 million.

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