Tuesday, October 19, 2021

Digital health cos raise record $7.2bn in VC funding in Q1 2021 – Express Healthcare

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Nearly $66 billion have been raised by digital health companies since 2010

Global venture capital (VC) funding, including private equity and corporate VC into digital health companies in Q1 2021, came to a record $7.2 billion in 179 deals, up 60 per cent compared to $4.5 billion in 139 deals in Q4 2020. VC funding in Q1 2021 increased 100 per cent compared to the same quarter of last year when $3.6 billion was raised in 142 deals, as per the latest report from Mercom Capital Group.

This was the single largest funding quarter to date for digital health since 2010, as per the release. Total corporate funding for digital health companies – including VC, debt, and public market financing – reached $8.3 billion in Q1 2021.

Since 2010, digital health companies have received nearly $66 billion in VC funding in over 5,500 deals and almost $22 billion in debt and public market financing (including IPOs), bringing cumulative investments into the digital health sector to $88 billion.

In Q1 2021, 27 large funding deals of $100 million or more accounted for 67 per cent ($4.8 billion) of the total funding.

The top-funded categories in Q1 2021 were: telemedicine with $2 billion, followed by mHealth apps with $912 million, analytics with $906 million, clinical decision support with $661 million, and wellness with $559 million.

There were 67 early funding rounds in Q1 2021. Most early-round funding went to telehealth and mHealth app companies.

Categories with the highest quarter-over-quarter growth were: mhealth apps with 117 per cent, wellness with 108 per cent, telemedicine with 80 per cent, data analytics with 54 per cent, and clinical decision support with 31 per cent.

The top growth categories YoY were: mHealth apps with 150 per cent, wellness with 400 per cent, telemedicine with 154 per cent, data analytics with 58 per cent, and clinical decision support with 48 per cent.

The top VC deals in Q1 2021 were: $500 million raised by Ro (Roman), followed by Hinge Health with $300 million, Tonal with $250 million, Forward Health with $225 million, and Komodo Health with $220 million.

“Q1 2021 was the largest funding quarter ever for digital health. Almost half of all funding raised in 2020 was matched within just the first quarter of 2021 and Q1 VC funding was more than venture funding raised in any one year between 2010 and 2017. Telehealth was the biggest beneficiary with a 100 per cent increase in funding quarter-over-quarter. Increased M&A activity was another positive takeaway from the quarter. While it certainly looks like digital health is positioned for a record-breaking year, the next two quarters will tell whether the COVID-19 fuelled funding surge is peaking or has peaked,” said Raj Prabhu, CEO, Mercom Capital Group.

The telehealth category, including telemedicine and remote monitoring, received a total of $2.4 billion in 53 deals.

A total of 547 investors participated in funding deals in Q1 2021 compared to 433 investors in Q1 2020. Eleven digital health products received FDA approvals in Q1 2021.

VC investors that participated in five or more funding rounds in Q1 2021 were: Tiger Global, Insight Partners, Bessemer Venture Partners, General Catalyst, Khosla Ventures, Optum Ventures, and Thrive Capital.

Digital health VC funding deals were distributed across 21 countries in Q1 2021. US digital health companies secured 86 per cent (or $6.2 billion) of the total $7.2 billion in VC funding in Q1 2021, compared to 78 per cent (or $2.8 billion) of the total $3.6 billion in Q1 2020.

Six companies went public in Q1 via IPOs and SPACs, raising a total of $1.1 billion: Signify Health ($610 million), Hims & Hers ($279.5 million), Dialogue Health Technologies ($79 million), Movano ($43 million), Mednow ($29 million), and MCI Onehealth ($21 million).

In Q1 2021, there were 63 M&A transactions involving Digital Health companies compared to 52 M&A transactions in Q4 2020. In a YoY comparison, there were 41 M&A transactions in Q1 2020.

Telemedicine companies led M&A activity with ten transactions, followed by practice management solution companies with seven, and data analytics and clinical decision support companies with six transactions each.

The top disclosed M&A transactions included: Optum acquired Change Healthcare for $13 billion, Boston Scientific acquired Preventice Solutions for $925 million, Philips acquired Capsule Technologies for $635 million, Appriss Health acquired PatientPing for $500 million, and Accolade acquired Innovation Specialists (dba 2nd.MD) for $460 million.

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