COVID-19 Ignites Digital Health Investment Activity

2020 is a record year for VC funding; companies raise a record $1.8 billion; telemedicine was leading target.

2020 was a good year for digital health. Venture funding for the sector shot up 66% over 2019, with a record $14.8 billion raised globally in 637 deals, according to Mercom Capital Group, a global communications and research firm. Telemedicine was the leading investment target, receiving $4.3 billion in venture capital funding during 2020. 

The same phenomenon responsible for creating worldwide havoc is the driving force behind these trends.

“COVID-19 supercharged funding activity in digital health in 2020," said Raj Prabhu, CEO of Mercom Capital Group in a news release. "Ten digital health categories had their best year with record funding amounts. It was also the biggest year for IPOs with six digital health companies raising over $6 billion."

Prabhu continued, "The pandemic has mainstreamed the consumer side of digital health technologies in less than a year. Digital health products that were a novelty a year or two ago are now a necessity."

The Q4 and Annual 2020 Digital Health (Healthcare IT) Funding and M&A Report encompasses global deals of all sizes, presenting a comprehensive picture of healthcare IT funding and technology trends. It does not address bioinformatics and medical devices.

Mercom has been producing these reports since 2010. Among the highlights from the 2020 edition:

Top venture capital-funded categories in 2020 included:

• Telemedicine with $4.3 billion, a 139% year-over-year increase, compared to $1.8 billion in 2019
   
• Data Analytics with $1.8 billion
   
• mHealth Apps with $1.4 billion
   
• Clinical Decision Support with $1.2 billion
   
• Practice Management Solutions with $837 million
   
• Wearable Sensors with $815 million
   
• Wellness with $792 million
   
• Healthcare Booking with $765 million
   
• Social Health Networks with $500 million

The top M&A transactions in 2020 were:

• The acquisition of Livongo Health for $18.5 billion by Teladoc
   
• The acquisition of Ancestry by Blackstone for $4.7 billion
   
• BioTelemetry's acquisition by Philips for $2.8 billion
   
• Invitae's acquisition of ArcherDX for $1.4 billion
   
• WellSky's acquisition of Allscripts (CarePort Health) for $1.35 billion

IPO Activity

Digital health IPOs also were significant last year with six companies going public, raising a total of $6.2 billion. Activity included JD Health ($3.5 billion), GoodRx ($1.3 billion), Amwell ($922 million), Accolade ($220 million), Nanox ($165 million), and MindBeacon ($58million).

An executive summary of the report can be downloaded for free; the full report is available for a fee.