Rock Health, a health IT startup incubator, has announced that digital health venture funding through three quarters of 2015 has outpaced the same time period from last year with funding reaching $3.3 billion, representing 30 percent "trailing twelve month" (TTM) growth.
Also, the average deal size is the largest yet at $15.8 million, but overall deal count is down 9 percent compared to last year. So, in a nutshell, fewer deals for more money.
The top eight deals of the third quarter contributed to more than 50 percent of the quarter's transaction value.
According to the incubator, Series A deals make up roughly 56 percent of all deal volume, and there was an increase in deals for Series D or later. "This doesn't come as a surprise given that digital health companies continue to mature and receive interest from later stage investors," the authors of Rock Health's report noted.
"The top six categories accounted for 56 percent of deal value through Q3 2015 and have remained fairly consistent from the midyear, with the exception of enterprise wellness and EHR/clinical workflow solutions being replaced by personal health tools and tracking and payer administration technologies," the authors reported.
Health tools and tracking devices for healthcare continue to receive a tremendous amount of new, and sustainable, money, helping the categories break into the top: Helix's $100 million launch funding and 23andMe's $79 million Series E.
Technologies designed to improve senior health also have permeated the market. Rock Health points to Honor, which raised a $20 million Series A to help seniors age in place by "providing convenient access to in-home caregivers and a software platform to connect caregivers, seniors and the family through an in-home, custom tablet device and companion mobile software."
Significant growth also is seen in digital diagnostics and life sciences commercialization tools, 195 percent and 110 percent year-on-year growth respectively. Digital health experienced 146 deals so far in 2015. Other highlighted deals from the third quarter include:
- IBM acquired Merge Healthcare in a $1 billion deal. "IBM continues to aggressively expand its healthcare vertical by combining Merge Healthcare's medical imaging competencies with Watson's computing platform," notes Rock Health. "The goal is to apply machine learning analytics to imaging so Watson can provide recommendations to radiologists for more accurate diagnosis."
- Cardinal Health acquired a majority stake in naviHealth for $290 million. naviHealth's software platform helps physicians manage bundled payments through decision support and evidence-based protocols. "As Medicare rethinks how they distribute more than $450 billion in payments, naviHealth provides an entry point for Cardinal Health to take on additional risk and capture profits associated with bundled payments," Rock Health says.
