After pouring money into multiple types of digital healthcare deals in 2017, investors so far are picking up where they left off for the first quarter of 2018.
For the first quarter ended March 31, funding of digital and mobile healthcare deals totaled $1.62 billion, up 14.9% from $1.41 billion in the first quarter of 2017, says digital health research and investment firm Rock Health. “As the digital health sector matures, investors have become more confident investing in large, late-stage rounds,” says Rock Health director of research Megan Zweig.
Investors in the first quarter had a big appetite for deals for digital and mobile healthcare companies that developed products and services for chronic disease diagnosis followed closely by companies that developed product and services for disease management.
Investors ponied up $279 million across five deals involving chronic disease diagnosis, compared with 13 deals at $270 million for disease monitoring, 10 transactions valued at $267 million for consumer health information and 12 deals at $216 million for research and development.
Rounding out the top categories at 11 transactions valued at $169 million and six deals worth $166 million were on-demand healthcare services and health benefits administration, respectively. For the first time, diagnosis of disease was the most-funded value proposition among digital health companies, and monitoring of disease, the second-most-funded value proposition, also had the most deals,” Zweig says. “Consumer health information—technology used to help patients navigate the healthcare system and their own health—continues to be a top-funded value proposition as well.”
HeartFlow Inc., a Redwood City, Calif., developer of 3-D models that help heart specialists detect coronary artery disease, raised the most money in the disease diagnosis category. The company will use the $240 million from Wellington Management Company LLP and Baillie Gifford & Co. “to push forward with commercialization and invest for long-term success by continuing to advance the ways in which it can help patients and physicians,” says HeartFlow CEO John Stevens.
Among digital disease monitoring companies, Bigfoot Biomedical Inc., a Milpitas, Calif. -based developer of artificial intelligence applications for doses and delivery of insulin for people with diabetes, will use $55 million from Abbott Laboratories and other investors to support ongoing product development, clinical trials and commercial deals for Bigfoot Loop, an automated insulin delivery system, and Bigfoot Inject for decision support for people on injection therapy, says CEO Jeffrey Brewer.
Other first quarter digital healthcare findings from Rock Health include:
- The average annual deal size was $21 million compared to $16.4 million in the first quarter of 2017.
- In the first quarter, 182 investors contributed to 77 deals.
- 37 digital health companies were acquired during the quarter.
“On the heels of the biggest year in venture funding, the digital health space is starting off 2018 with a bang,” Zweig says.
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