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Digital Health Funding Surpasses $4.1B in 2014

January 5, 2015
by Rajiv Leventhal
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Venture funding for digital health companies surpassed $4.1 billion in 2014, good for a 125 percent year-over-year growth, according to a new report from Rock Health, a San Francisco-based company that provides funding and full-service support to start-up companies.

The total funding nearly reached the combined total of all three prior years combined, according to the report. The top six categories that accounted for 44 percent of all digital health funding in 2014 were: analytics and big data, healthcare consumer engagement, digital medical devices, telemedicine, personalized medicine, and population health management.

Personalized medicine, defined as software used to support the practice of medicine customized to an individual’s genetics, slid into the top six for the very first time this year. This growth in funding could be attributable to the technological innovations in both genomics and data analysis in recent years, the report concluded. The other five categories continue to see strong funding as a result of the changing healthcare legislative and reimbursement environment.

What’s more, 295 deals closed with an average deal size of $14.1million.Throughout 2014, 95 mergers and acquisitions (M&A) deals were tracked, with disclosed transactions valuing over $20 billion. Large health tech companies continued to be the most active acquirers—but medical device, payers, and tech companies are making moves too. These industry players understand that the convergence of healthcare and technology will shape their business models and competitive landscape, the report concluded.

Beyond 2015, three categories experienced significant growth, according to the report. Telemedicine and digital therapies are redefining what is considered care and how it gets delivered. By leveraging technologies, both healthcare professionals and care treatments can be more widely distributed and accessible to those in need. Moreover, as healthcare reform continues to change the reimbursement environment, payer administration tools will become key to helping stakeholders navigate the healthcare system (and get paid), the report’s authors stated.

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