Global venture capital funding in digital health dropped 6% in 2019, with 615 deals nabbing $8.9 billion in capital, according to a new report from Mercom Capital Group.
By comparison, there were 698 deals in 2018 totaling $9.5 billion. Digital health companies in 2019 also snagged deals outside of venture capital––total corporate funding, including VC, debt and public market financing, hit $10.1 billion. M&A transactions were also down compared to 2018, dropping 24%. During the year, 169 M&A transactions occurred, compared to 223 in 2018. In addition, there were 19 companies that participated in multiple transaction in 2019.
Over the past decade, digital health companies have received $44 billion in VC funding, over 4,500 deals, as well as nearly $14 billion in debt and public market financing. That brings the total cumulative investments in the space to $58 billion. During the year, the average funding deal size was $14.4 million, up from an average of $13.6 million in 2018.
"It looks like venture funding into digital health may have peaked. Investors became a lot more careful last year after several tech companies were found to be overvalued," Raj Prabhu, CEO and Co-Founder of Mercom Capital Group, told Health Exec. "Weak post IPO performance of tech/digital health companies last year has also contributed to the cautious approach to investing, resulting in a slight decline in funding levels."
Telemedicine brought in the most investments in 2019 for the sector, with $1.8 billion, followed by data analytics ($1.6 billion) mhealth apps ($1.2 billion), clinical decision support ($748 million), mobile wireless technology ($556 million) and booking ($537 million).
After three consecutive years of growth, venture deals and dollars for digital health companies declined in 2019,” Raj Prabhu, CEO of Mercom Capital Group, said in a statement. “After a long dry spell, there were four U.S. IPOs, but their performance so far has been underwhelming. M&A activity also declined in 2019. The big winners were telemedicine companies, with a 55% percent increase in funding YoY while digital health products that were powered by AI, brought in over $2 billion.”
Consumer-centric companies brought in more investments compared to practice-centric companies during the year––$5.3 billion in 354 deals and $3.6 billion in 261 deals, respectively. The majority of deals were also conducted in the U.S.––426 deals amassed $5.9 billion in funding.
Here are some of the top transactions in 2019:
- Dassault Systemes’ $5.8 billion acquisition of Medidata
- A majority stake acquisition in Waystar for $2.7 billion but The EQT VIII Fund and Canada Pension Plan Investment
- Google’s $2.1 billion acquisition of Fitbit
- Golden Gate Capital’s $1.2 billion majority stake in Ensemble Health Partners
- Agfa-Gevaert Group’s $.107 billion acquisition of Dedalus Holding