Global venture capital (VC) funding in digital health/health IT, including private equity and corporate venture capital, reached $2B in funding across 156 deals in Q3 2019, according to market research firm Mercom Capital Group. The 9M & Q3 2019 Digital Health (Healthcare IT) Funding and M&A Report reveals global venture capital reached $7.2B over 474 deals in the first nine months of 2019 compared to $8B in 556 deals in 9M 2018. In Q3 2019, Digital Health companies raised $2B in 156 deals compared to $3.1B in 173 deals in Q3 2018.
The top funded digital health funding categories in Q3 2019 were:
– Telemedicine: $651M
– mHealth Apps: $391M
– Analytics: $201M
– Mobile Wireless: $173M
– Healthcare Service Booking: $151M
– Clinical Decision Support: $138M
– Practice Management Solutions: $119M
Other key findings of the report include:
– Digital Health practice-focused companies received $599 million in 60 deals, accounting for 29% of the total $2 billion of VC funding raised in Q3 2019.
– Consumer-focused companies raised $1.4 billion in 96 deals and accounted for 71% of the total $2 billion VC funding raised in Q3 2019.
– The top Digital Health VC deals in Q3 2019 were: $550 million raised by Babylon, followed by $200 million raised by Capsule, $100 million raised by AllinMD, $60 million raised by Healthy.io, and $52 million raised by Nurx.
– There were 21 countries that received Digital Health VC funding in Q3 2019, compared to 24 countries in Q3 2018.
– In Q3 2019 (within the United States), 37 deals originated from California, followed by New York with 11 deals, attracting the most VC funding with $398 million and $297 million respectively.
– In Q3 2019, announced debt and public market financing raised by Digital Health companies came to $1.4 billion in seven deals compared to $398 million in six deals in Q3 2018.
– There were four IPOs in Q3 2019, which brought in $1.3 billion, compared to Q2 2019, when $179 million was raised in one IPO.
– In 9M 2019, there were 125 Digital Health M&A transactions compared to 172 transactions in 9M 2018.
– In 9M 2019, Health Information Management companies recorded 53 transactions, followed by Mobile Health with 24, Service Provider with 13, Telehealth with 11, Personal Health with 10, Revenue Cycle Management with six, Scheduling, Rating & Shopping with four, and Security and Social Health with two transactions each.
Impact of Findings
“After a strong Q2, funding and M&A activity slowed in the third quarter and financial activity is lagging compared the same period of last year. The performance of the much anticipated four digital health IPOs at the end of Q3 has been disappointing and the fate of future IPOs may depend on how well these companies fare,” said Raj Prabhu, CEO of Mercom Capital Group. “Large deals continued to dominate with six companies raising half of all the funding in the third quarter.”