2013 Digital Health Funding Update
No joke, digital health funding this quarter was up yet again. With 37 deals valued at $365M, that’s 35% higher than Q1 of last year, suggesting that 2013 will be another record year for the digital health industry.
Some of the largest and most notable deals so far this year include:
- Healthcare data warehousing provider HealthCatalyst, which raised $41M from Kaiser Permanente Ventures, Norwest Venture Partners, and Sequoia Capital
- Audax Health, led by a 23-year-old college dropout, which raised $21M from the likes of former Apple CEO John Sculley
- Kareo’s $20.5M series F to build out their medical office software focused on small medical practices
- Mobile health company PatientSafe Solutions, which raised a $20M series C from Merck Global Health Innovation
Where’s the exit sign?
With all the money going into digital health, we can’t help but wonder when we’ll realize the exits investors are expecting. According to Berkerey Noyes, healthcare IT is a growing segment of M&A transactions, making up 41% of the healthcare industry’s aggregate deal flow.
And we are starting to see some real M&A activity, both strategic acquisitions and what the tech world calls acqhires (including Massive Health and 100Plus – neither of which disclosed the purchase amount). Notable deals this year have included Allscript’s $235M acquisition of dbMotion, AthenaHealth’s $293M acquisition of Epocrates, and UnitedHealth Group’s acquisition of Humedica for hundreds of millions. We’re hearing WellDoc will be the first major acquisition announced in Q2.
2013: The rise of wearables
Armed with funding to scale, wearable device and self-tracker companies Fitbit, Jawbone, Basis, Misfit Wearables, and MC10 are prime to explode on the consumer market this year. Misfit Wearables had almost eight thousand backers of their Shine product on crowdfunding site Indiegogo, meeting their goal in under 10 hours. And sources have told us that FitBit pushed over a million units last year, raking in $76M in revenue.
What’s that about FitBit?
News of FitBit raising a massive $30M leaked, but to our knowledge the round has not actually been closed. This news was like a game of Telephone: TechCrunch published a story with the headline “Fitness And Health Tracker Fitbit Is Raising $30M” ; which others like CNET picked up and changed to the affirmative “Fitbit adds $30M to its coffers”. No doubt they’ll raise the $30M, but we won’t include this in our funding database until money is in the bank or funding filed with the SEC.
In Vogue: Remote Patient Monitoring
Several themes emerged this quarter, with two-thirds of the deals falling in the following categories:
A confluence of factors have led to the growth of remote patient monitoring tools including an aging population, dwindling healthcare resources, and penalties for readmissions. The U.S. market for remote monitoring was less than $4B in 2007 and increased to $10.6B last year, according to a report by Kalorama Information. They expect the market value to reach $20.9B by 2016, explaining the rise of startups we saw funded this quarter:
- Bam Labs ($7.5M) – sleep monitoring device placed under a mattress to detect movement, heart rate, and breathing rate
- Independa ($5M) – technology-enabled independent-living solutions for the elderly
- InTouch Health ($8.9M) – patient monitoring for high acuity clinical environments
- Intuitive Health ($3.2M) – cloud-based remote patient monitoring
- Podimetrics ($2.5M) – home sensors to detect diabetic foot ulcers before they develop
- Sotera Wireless ($15M) – platform for multi-parameter wireless body-worn patient monitoring
If Q1 is any indication, 2013 will be a another groundbreaking year for digital health.