Digital Health companies record $6.3 billion in funding 1H of 2020: Mercom Capital Group report

The top-funded categories in 1H 2020 were: Telemedicine with $1.7 billion, Analytics with $826 million, mHealth Apps with $794 million, Clinical Decision Support with $545 million

Mercom Capital Group released its report on funding and mergers and acquisitions (M&A) activity for the Digital Health (Healthcare Information Technology) sector for the second quarter (Q2) and first half (1H) of 2020. Mercom’s comprehensive report covers deals of all sizes from across the globe.

Global VC funding for Digital Health companies in the first half (1H) of 2020 shattered all previous 1H funding records, bringing in $6.3 billion. Funding activity was up by 24 per cent during 1H 2020, compared to $5.1 billion raised in 1H 2019.

However, in Q2 2020, Digital Health companies raised $2.8 billion in 161 deals, a 23 per cent decrease compared to Q1 2020. Year-over-year, funding was down by 11 per cent compared to $3.1 billion in 169 deals in Q2 2019.

Over half of the funding went into just 20 Digital Health companies during Q2 2020.

“Seen as a solution to many of the health challenges resulting from the COVID-19 pandemic, several digital health technologies and services have gone mainstream. Investors have noticed the potential, and Telehealth has been the biggest beneficiary and has received almost $2 billion in the 1H. mHealth apps and data analytics companies have also benefitted. Digital Health companies had their best fundraising first half ever and have now raised $50 billion venture funding in over 5,000 deals since 2010,” said Raj Prabhu, CEO, Mercom Capital Group.

Digital Health consumer-centric companies accounted for 66 per cent of the funding in Q2 2020, raising $1.8 billion in 105 deals, while practice-centric companies accounted for 34 per cent, raising $947 million in 56 deals.

The top-funded categories in 1H 2020 were: Telemedicine with $1.7 billion, Analytics with $826 million, mHealth Apps with $794 million, and Clinical Decision Support with $545 million.

Telehealth companies received a record of $962 million in 50 deals in Q2 2020 compared to $930 million raised in 35 deals in Q1 2020. Funding increased 42 per cent YoY in Q2 2020 compared to the same period last year.

Other top categories that received funding in Q2 2020 included mHealth Apps with $429 million, Data Analytics with $253 million, Wellness with $172 million, and Medical Imaging with $161 million.

Early round venture capital funding (Seed, Series A) came to $690 million. Most of the VC funding in early rounds in 1H 2020 went to Telemedicine, mHealth Apps, Data Analytics, and Clinical Decision Support companies.

Four hundred and eighty-eight investors participated in funding deals in Q2 2020, compared to 433 investors in Q1 2020. Optum Ventures led Digital Health financing activity during Q2 with six investments. Seedcamp and Y Combinator each made four investments, and another 31 investors made two or more investments during Q2 2020.

A record 921 investors participated in 1H 2020, compared to 821 investors in 1H 2019. This is the largest number of investor participation in 1H since 2010.

The Top VC deals in 1H 2020 included: $285 million raised by ClassPass, $250 million raised by Alto Pharmacy, $194 million raised by Amwell (formerly American Well), $155 million raised by KRY, and $150 million raised by Concerto HealthAI.

Twenty-one different countries recorded Digital Health VC funding deals in Q2 2020. Companies in the US recorded the most number of VC funding deals with 105.

Fourteen Digital Health products received FDA / CE approvals in Q2 2020 and 224 since Q1 2017.

In 1H 2020, a total of 83 Digital Health M&A transactions were announced compared to 91 in 1H 2019. In Q2 2020, there were 42 M&A transactions compared to 46 M&A transactions in Q2 2019.

mHealth Apps were involved in the most M&A deals in 1H 2020 with ten transactions, followed by Data Analytics and Practice Management Solutions companies with nine each. Telemedicine companies recorded eight transactions, and Wearable Sensors and Wellness companies had five each. Medical Billing companies were involved in four transactions.

Notable M&A transactions in 1H 2020 were: the acquisition of ArcherDX by Invitae for $1.4 billion, Teladoc Health’s acquisition of InTouch Health for $600 million, lululemon athletica’s acquisition of MIRROR for $500 million. AMN Healthcare acquired Stratus Video for $475 million, and CompuGroup Medical acquired Cerner’s assets in Germany and Spain for $248 million.

This report covers 731 investors and companies.

Mercom’s comprehensive report covers deals of all sizes across the globe.

To learn more about the report, visit: https://mercomcapital.com/product/1h-q2-2020-digital-health-healthcare-it-funding-ma-report