Total corporate funding for 1H 2019 came to $5.5 billion
Mercom Capital Group, a global communications and research firm, 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 2019. Mercom’s comprehensive report covers deals of all sizes from across the globe.
Global VC funding for digital health companies in 1H 2019 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 1H 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 a year so far.
Digital health companies have now received over $40 billion in VC funding deals since 2010. US digital health companies have raised approximately $30 billion to date.
Total corporate funding in digital health companies – including VC, debt, and public market financing – set a new record for the second quarter with $3.3 billion in Q2 2019 compared to $2.2 billion in Q1 2019, for a total of $5.5 billion. In 1H 2019, there was one IPO for $179.4 million.
“Funding activity was robust in digital health in the first half of 2019, while M&A activity was weak. Weak M&A activity has not affected investment activity over 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. After a long hiatus, we are seeing several digital health companies entering the IPO market in the US. Successful IPOs could open the floodgates, whereas if IPOs fizzle out, it could shut the IPO exit path for many Digital Health companies,” said Raj Prabhu, CEO, Mercom Capital Group.
Healthcare practice-centric companies received 40 per cent 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 per cent 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 1H 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 funded categories in Q2 2019 were: telemedicine companies with $676 million, analytics with $551 million, wellness with $304 million, mHealth Apps with $236 million, wearable sensors with $226 million, healthcare benefits with $208 million, clinical decision support with $180 million, mobile wireless with $174 million, and healthcare booking with $159 million.
There were 73 early stage deals in Q2 2019, compared to 48 deals in Q1 2019.
The Top VC deals in 1H 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. There were 450 investors that participated in funding deals in Q2 2019, compared to 371 investors in Q1 2019.
Prominent corporate investors in 1H 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.
26 different countries recorded digital health VC funding deals in 1H 2019. 21 different countries recorded digital health VC funding deals in Q2 2019.
In 1H 2019, there were a total of 91 digital health M&A transactions, compared to 116 in 1H 2018. In Q2 2019, there were 46 M&A transactions, compared to 68 M&A transactions in Q2 2018.
mHealth App companies were involved in the most M&A deals in 1H 2019 with 15 transactions, followed by Practice Management Solutions with nine, analytics with eight deals, telemedicine with seven deals, and clinical decision support companies with five deals.
Notable M&A transactions in 1H 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.
Acquirers of digital health companies 1H 2019 included a diverse group of tech giants, pharma companies, and insurance companies like Apple, Google, Best Buy, Merck UnitedHealth Group. Top M&A deals were dominated by private equity (PE) firms and financial institutions like Thomas H. Lee Partners, Nordic Capital, Golden Gate Capital, and JPMorgan Chase.
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