Digital healthcare investment in the third quarter wasn’t as robust as in the first half of the year, but 2017 still will set a record for how much money investors plow into the market, says research firm Rock Health.
In the third quarter ended Sept. 30, investment in digital healthcare companies totaled $1.2 billion, an increase of 27.8% from $939 million in the third quarter of 2016, says San Francisco-based Rock Health. In comparison, investment in digital healthcare increased 146% in the second quarter to $2.5 billion from just over $1 billion in the prior year, a sharp jump driven by a series of very large transactions.
The first and second quarters turned out to be a record period for investment in digital healthcare, with 188 deals totaling $3.5 billion, Rock Health says. After a first half in which each quarter averaged 94 deals, that paced slowed to 74 digital health investment deals in the third quarter. “The first half of 2017 had the most funding, largest number of deals, and the most mega-deals we’ve ever seen in a half-year,” says Rock Health research director Megan Zweig. “Investors have not been quite as prolific from July through September.”
For the third quarter, wearables, biosensors and digital fitness equipment generated the most investment at $86 million. Next was digital therapeutics at $67 million, followed by consumer engagement at $59 million, electronic health records and clinical workflow at $58 million and digital therapeutics at $67 million.
Year to date, digital healthcare investment reached $4.7 billion, up 38.2% from $3.4 billion in the prior year, Rock Health says. “We’ve already had more money poured into digital health companies this year than any year prior,” Zweig says.
Other third quarter digital healthcare metrics from Rock Health include:
- Thus far in 2017, there have been 268 digital health funding deals vs.240 by the end of Q3 in 2016.
- There has been at least one digital health initial public offering every year since 2012, but none so far in 2017.
- California still dominates when it comes to digital health funding, with over a third of funding (38%) going to companies headquartered in California. Other funding hubs include New York and Illinois, which represent 15% and 14%, respectively, of overall digital health funding activity.
- Of the 462 investors this year, 45% (207) are investing in digital health for the first time.
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