- Digital health funding for the first quarter of 2018 hit a record high of $1.62 billion across 77 deals, up from $1.41 billion a year ago, according to a new Rock Health report.
- The quarter’s activity included three $100 million-plus megadeals: 3D coronary artery modeler HeartFlow with $240 million; consumer genetics startup Helix with $200 million; and health benefits solutions developer Collective Health, a Rock Health portfolio company, with $110 million.
- The top 10 deals were 55% of total funding numbers for the quarter, but just 13% of the number of deals. The average deal size was $21 million, versus $16.4 million in Q1 2016.
Digital diagnostic solutions garnered the lion’s share of funding. The sector saw five deals valued at $279 million, led by the HeartFlow deal.
The second most-funded category was disease monitoring with 13 deals totaling $270 million. Enthusiasm was especially high in the diabetes space, with five startups — Bigfoot Medical, Sano, Intuity Medical, Siren and Common Sensing — all raking in funds.
The other top value propositions were consumer health information with 10 deals totaling $267 million, R&D catalysts (drug discovery and clinical trial management) with 12 deals at $216 million, on-demand healthcare services with 11 deals at $169 million and health benefits administration with six deals with $166 million.
Helping to drive investment were positive signs on the regulatory front, including a $400 million budget increase for the Food and Drug Administration and FDA Commissioner Scott Gottlieb’s plans for a new Center of Excellence on Digital Health, the report notes.
Gottlieb laid out the agency’s digital health goals in January in what was billed as a strategic roadmap for the year. Among priorities for digital health is building out the Pre-Certification Pilot Program.
Rock Health also tracked investors to see who supported digital health. In the 2018 first quarter, 182 investors contributed to the space. Of those, 64% were traditional venture capitalists, 17% were corporations and 5% were private equity firms. Of corporate investors, providers were the most prominent, accounting for 24% of all transactions. Corporate investors also included tech firms like Amazon, Apple and Baidu.
The quarter saw 37 M&A deals in the digital health sector — putting it on pace to beat 2017’s 119 deals and 2016’s 146, according to the report. Notable were Allscripts’ $100 million purchase of Practice Fusion and Roche’s $1.9 billion acquisition of EHR company Flatiron Health.
In other deals, SaaS-based Ability Network snapped up data analytics company Inovalon for $1.2 billion and Fitbit acquired Twine Health for an undisclosed sum.