Mercom: Global VC funding in digital health hits $5.1B in 1H 2019

Digital Health VC Funding H1 2015-2019

After Rock and StartUp Health, it’s Mercom’s turn to share the digital health funding figures. According to their research, global VC funding in this market during the first half of the year was slightly higher year-over-year (YoY) with $5.1 billion raised in 318 deals compared to the $4.9 billion in 383 deals in H1 2018. Q2 2019 VC funding held strong at $3.1 billion in 169 deals following the $2 billion raised in 149 deals in Q1 2019. This is the highest amount raised in the first six months of the year so far.

Digital Health companies have now received over $40 billion in VC funding deals since 2010. Out of that figure, approximately $30 billion was raised by US-based Digital Health companies.

“Funding activity was robust in Digital Health in the first half of 2019, while M&A activity was weak. The lack of M&A activity has not affected investments over the past years. We are in an ‘invest first and ask questions later’ environment where investors are more worried about missing out in this hot space,” Raj Prabhu, CEO of Mercom Capital Group, said in a statement. “After a long hiatus, we are seeing several Digital Health companies entering the IPO market in the United States. Successful IPOs could open the floodgates, whereas if they fizzle out, it could shut the IPO exit path for many Digital Health companies.”

Healthcare practice-centric companies received 40% of the funding in Q2 2019, raising $1.2 billion in 76 deals compared to $926 million in 66 deals in Q1 2019. Consumer-centric companies accounted for 60% of the funding in Q2 2019, raising $1.9 billion in 93 deals compared to $1.1 billion in 83 deals in Q1 2019.

The top funded categories in H1 2019 were: Analytics with $1.1 billion, Telemedicine with $896 million, mHealth Apps with $627 million, Wellness with $341 million, Healthcare Booking with $336 million, Clinical Decision Support with $287, Wearable Sensors with $285 million, Mobile Wireless with $264 million, and Healthcare Benefits with $208 million.

The Top VC deals in H1 2019 included: $250 million raised by Tencent Trusted Doctors, followed by $205 million raised by Collective Health, $200 million raised by Tempus, $170 million raised by Doctolib, and $100 million raised by Health Catalyst.

A total of 821 investors participated in Digital Health funding deals in the first half of 2019 – 450 in Q2 2019, and 371 investors in Q1 2019.

Prominent corporate investors in H1 2019 included Amazon’s Alexa Fund, GV (formerly Google Ventures), Goldman Sachs, Merck, Wells Fargo, MassMutual Ventures, UnitedHealthcare’s Optum Ventures, Piper Jaffray, BlueCross BlueShield, Honda, Oracle, Merrill Lynch, Fidelity, and Cisco Investment among others.

Twenty-six different countries recorded Digital Health VC funding deals in H1 2019. During the period, there was one IPO for $179.4 million and 91 M&A transactions, compared to 116 in H1 2018.

Digitial Health M&A H1 2019

Notable M&A transactions in H1 2019 were: Dassault Systemes acquired Medidata for $5.8 billion, Golden Gate Capital acquired a 51% stake in Ensemble Health Partners for $1.2 billion, Nordic Capital acquired a majority stake in ArisGlobal for $700 million, JPMorgan Chase acquired InstaMed for more than $500 million, Thomas H. Lee Partners (THL) acquired Nextech Systems for $500 million, and Hill-Rom Holdings acquired Voalte for $195 million.

Mercom’s digital health research covers deals of all sizes across the globe.