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The venture capital (VC) funding, including private equity and corporate venture capital, into digital health (Healthcare IT) companies stood at $2 billion from 149 deals in the first quarter of this calendar year. This compares with $1.4 billion across 142 deals recorded during the sequential fourth quarter (Q4) of 2018, according to a report by Mercom Capital Group.
Digital health companies have brought in over $37 billion in disclosed VC funding since 2010. The total corporate funding for digital health companies — including VC, debt and public market financing — totalled $2.2 billion in Q1, 2019, it said.
Also read:PE, venture capital investments at a high in the first quarter of 2019
Raj Prabhu, CEO of Mercom Capital Group, said, “Funding levels were down compared to last year in digital health, in the absence of larger deals. M&A activity was also flat. However, digital health public equities experienced a turnaround in Q1 with 66 per cent of them beating the S&P 500, compared with Q4 2018 when 63 per cent of the equities we tracked performed below the S&P 500. Favourable market conditions have prompted several companies to announce IPO plans.”
Top deals
The top funded categories in Q1 2019 were data analytics companies (raised $557 million), mHealth apps ($392 million), telemedicine ($220 million), healthcare booking ($177 million), clinical decision support ($107 million), mobile wireless ($90 million) and Healthcare IT service providers ($80 million).
There were 48 early-round deals in the first quarter. The top VC deals in Q1 included a $170-million investment raised by Doctolib, followed by Health Catalyst ($100 million), Calm ($88 million) and Taimei Medical Technology ($80 million).
Also read:VC investments in India robust even as deal volumes take a hit globally
A total of 371 investors participated in funding deals in Q1 compared with 412 investors in the same quarter a year ago. Digital health VC funding deals were distributed across 17 countries in Q1 2019.
In Q1 2019, there were 45 M&A transactions (seven disclosed) involving companies in this sector compared with 48 M&A transactions (13 disclosed) in Q1 2018.
Mergers and acquisitions
Practice Management Solutions companies led M&A activity with five transactions, followed by Data Analytics companies, with four transactions. Companies providing Clinical Decision Support, Electronic Medical Records, and Emergency Department Information Systems had two transactions each.
There was one transaction each recorded by companies offering Asset Tracking, Document Management, Long-Term and Post-Acute Care, and Medical Imaging.
The top disclosed M&A transactions included the $195 million acquisition of Voalte by Hill-Rom Holdings, followed by BioTelemetry’s acquisition of Geneva Healthcare for $65 million.
Alphabet's Google acquired Fossil Group’s intellectual property related to a smartwatch technology currently under development for $40 million, Netmeds acquisition of KiViHealth for $10 million and Livongo Health’s acquisition of myStrength for $10 million.
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