Funding for digital health companies reached $2.1 billion in the first half of 2015just short of the $2.3 billion during the same time period during 2014s record-breaking yearaccording to Rock Health, which funds and supports early stage healthcare companies.
Rock Health released its 2015 Midyear Report revealing that there were 139 deals in the first six months of the year with the average deal size pegged at more than $15 million, exceeding $14.6 million in 2014. The firms funding data only includes disclosed U.S. deals over $2 million.
According to Rock Health, digital health funding was approximately 5 percent of total venture funding in the first quarter (latest data available), outpacing overall funding, the software sector, and traditional healthcare sectorsincluding biotech and medical devices.
The report reveals that public digital health companies outperformed the broader stock market through the first half of 2015. Five digital health companies held initial public offerings in 2015 through July 1, raising more than $1 billion and generating $11 billion in market value, with Fitbit leading the way as one of the largest IPOs of the year. Overall, IPO activity was up with five IPOs through July 1 versus a total of five for all of 2014.
The top six technology categories in 2015 accounted for more than 50 percent of all funding, with three categories not ranked in 2014. The top six categories include: wearables and biosensing, analytics and big data, healthcare consumer engagement, telemedicine, enterprise wellness, and electronic health record/clinical workflow.
Wearables and enterprise wellness were driven by single dealsJawbone in the case of wearables, and Virgin Pulse in the case of enterprise wellness, writes Malay Gandhi, Rock Healths managing director, in a blog. Both categories, in addition to EHR and clinical workflow did not show up in the 2014 rankings. The fact that analytics and big data show up year after year in the top rankings show that healthcare is not immune to larger trends within technology.
The firm also tracked 92 mergers and acquisitions through the first half of 2015 compared to 95 total M&As in all of 2014. However, Rock Health reported that the disclosed deal dollar value represents just 13 percent of the total from last year.
So far, this year has been dominated by digital health companies acquiring other digital health companies as part of relatively small transactions (e.g., Welltok/Predilytics, Fitbit/FitStar, Teladoc/StatDoctors, Elekta/CliniCast), with cash hordes in the payer, biopharma, and provider sectors seeing little movement in the direction of digital health acquisitions, according to Gandhi. The most notable acquisition in the first half of 2015 was the Under Armour acquisition of MyFitnessPal for $475 million in cash.
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