A new report has revealed that investments in digital health startups fell 19 percent in the first quarter of 2019. Data from Mercom Capital Group showed that investors put $2 billion into digital health startups during the first quarter of the year, less than the nearly $2.5 billion invested one year ago.
“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 percent of them beating the S&P 500, compared to Q4 2018 when 63 percent of the equities we tracked performed below the S&P 500. Favorable market conditions have prompted several companies to announce IPO plans,” said CEO Raj Prabhu of Mercom Capital Group.
According to the report, the top funded categories in the first quarter of 2019 were data analytics companies, which raised $557 million, followed by mHealth apps with $392 million, telemedicine with $220 million, healthcare booking with $177 million, clinical decision support with $107 million, mobile wireless with $90 million and healthcare IT service providers with $80 million.
In addition, there were 38 fewer deals completed in the first quarter of this year versus last year, when investors invested in 187 digital health companies. While private investments fell, public equities saw a boost during the period, with 66 percent of the digital health firms beating the S&P 500.
The top venture capital deals in Q1 2019 included $170 million raised by Doctolib, $100 million by Health Catalyst, $88 million raised by Calm and $80 million by Taimei Medical Technology.
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 all had two transactions a piece, and there was one transaction each recorded by companies that offered asset tracking, document management, long-term and post-acute care and medical imaging.