News Feature | January 5, 2016

$4.3 Billion Invested In Digital HIT In 2015

Christine Kern

By Christine Kern, contributing writer

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While the number of venture capital-funded deals dropped, the average amount rose.

The number of venture capital-funded deals in health IT saw a dip from 294 in 2014 to 278 in 2015, but the average dollar amount per deal was $.9 million higher, according to a new year-end report from Rock Health. The increase in the average was due to investments in more mature companies and in all, total deals in health IT surpassed $4.3 billion in funding.

The Digital Health Funding: Year in Review 2015 Report also found mergers and acquisitions doubled this year to 180 deals with the Allscripts-NantHealth deal ranking as the largest deal of the year in digital health. NantHealth gained $200 million in new funding, with a total amount raised to date of $680 million.

Digital health continues to account for 7 percent of total venture funding, and digital health is no longer a novelty. Last year, records were doubled, and in 2015 company growth and deals continue to be dominant. The top six digital health categories accounted for 51 percent of all digital health funding in 2015, with payer administration entering the rankings for the first time.

  • Healthcare Consumer Engagement $613M
  • Wearables and Biosensing $489M
  • Personal Health and Tracking $407M
  • Payer Administration $252M
  • Telemedicine $234M
  • Care Coordination $208M

There were more than 330 venture capital firms that invested in at least one digital health deal in 2015, according to the report. Two of the six largest deals this year were by consumer-driven genetic companies, 23andMe and Helix, both deals reaching at least $100 million.

Personal health tools and tracking, care coordination, and life sciences technologies each saw noticeable growth in funding this year. Ultimately, the report asserted, “As the industry faces growing pressure to cut costs, digital health will play a key role in enabling engagement with the end-user and improving communication and coordination.

“The steady amount of funding should calm any concerns of a bubble. Digital health is no longer a novelty as well. We’re seeing company growth, with late stage deals accounting for just over 25 percent of all deal volume.”

Perhaps the largest theme of 2015 was an increased focus on the consumerization of healthcare, with healthcare consumer engagement and personal health tools and tracking categories alone representing almost one-quarter (23 percent) of overall funding. You can access the report here.