Innovative digital health companies continue to draw capital

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Venture capital investment continues to flow into digital health companies, according to data from Mercom Capital Group, which closely tracks funding and mergers and acquisitions in the space.

The results suggest that companies are continuing to draw capital as they develop innovative solutions that could meet vexing healthcare IT problems.

Mercom’s data for the first nine months of 2017 shows that companies raised $5.5 billion in 586 venture capital deals, compared with $4.2 billion in 463 deals in the first nine months of 2016. That dollar amount is 31 percent higher than the year-ago period, and it exceeds the entire amount of venture capital raised in all of 2016, says the company, a global communications and research firm.

Still, there was some slowing in the feverish pace of venture capital investment in the third quarter. A total of $1.5 billion was raised in 227 deals from July through September, down 38 percent from the $2.4 billion raised in the preceding three months of this year.

However, the 227 deals in the third quarter of this year was the most recorded since Mercom began tracking finance activities in 2010.

“The third quarter was all about data analytics, with those companies garnering almost a third of the funding in the third quarter, and artificial intelligence companies received more than $200 million,” says Raj Prabhu, CEO and co-founder of Mercom.

Companies serving healthcare provider organizations received $731 million in 78 deals, accounting for 49 percent of the funding in the third quarter. Consumer-centric companies accounted for 51 percent of the funding in the quarter, raising $751 million in 149 deals.

The top funded areas for the first nine months of the year were data analytics with $1 billion; patient engagement solutions, $686 million; mHealth apps, $549 million; telemedicine, $529 million; booking, $407 million; and mobile wireless, $407 million.

In measuring mergers and acquisitions, in the first nine months of 2017 there were a total of 146 digital health transactions, compared with 163 transactions in the first nine months of 2016. There were 56 digital health M&A transactions in the third quarter of 2017, compared with 41 in the previous three months.

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