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Digital Health Venture Capital Funding Tops $4 Billion in First Half of 2017

July 19, 2017
by Heather Landi
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Global venture capital (VC) funding for health IT companies in the first half of 2017 was 36 percent higher year-over-year with a record $4 billion raised in 359 deals versus the $3 billion raised from 286 deals in the first half of 2016, according to a report from Austin, Texas-based communications and research firm Mercom Capital Group.

Mercom released its report on funding and mergers and acquisitions (M&A) activity for the healthcare information technology (IT) / digital health sector for the second quarter (Q2) and first half (1H) of 2017.

According to the report, health IT/digital health funding in the second quarter 2017 also was a record, increasing 47 percent to $2.4 billion in 194 deals versus the $1.6 billion raised in 165 deals in the first quarter of this year.

Digital Health has surpassed $22.5 billion in the 3,031 VC funding deals Mercom has tracked since 2010.

Total corporate funding in health IT companies, including VC, debt, and public market financing, totaled $2.4 billion in the second quarter of this year versus $1.8 billion in the first quarter.

“This was the best half and best quarter ever for digital health companies as a result of a few very large deals. We are now comfortably on pace to have the biggest funding year for digital health companies,” Raj Prabhu, CEO and co-founder of Mercom Capital Group, said in a statement. “Even with such robust funding, there is still no sign of any digital health IPOs and M&A activity is yet to catch up to the funding momentum.”

According to the report, the top health IT categories for VC funding in the first half of 2017 were patient engagement solutions with $684 million; data analytics with $458 million; mHealth apps at $399 million; booking at $391 million; telemedicine with $297 million; mobile wireless with $275 million and electronic medical records at $237 million.

And, the report notes some of the top VC deals in the second quarter of this year—$500 million for Outcome Health; $231 million for Modernizing Medicine; $140 million for PatientPoint; $90 million for Blink Health; $75 million for WuXi Nextcode and $70 million for ClassPass.

In the second quarter of this year, 454 investors (including two accelerators/incubators) participated in  funding versus 309 in the first quarter, and 25 countries recorded VC funding in Q2 2017.

What’s more, in the first half of this year, there were a total of 90 healthcare IT M&A transactions, versus 110 in the first half of 2016.

Prominent M&A transactions in this past quarter include Best Doctors for $440 million by Teladoc, Cochlear's of Sycle for $78 million, athenahealth's of Praxify Technologies for $63 million and Entrada by NextGen Healthcare for $34 million, according to Mercom’s report.

 

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