Digital Health Funding Plateaus At $600 Million In Q1 2015

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Rock Health released its quarterly report on digital health funding this week, highlighting some positive trends, but also an overall stall in the investment growth seen during 2014. After doubling year-over-year investments by the close of 2014, activity in the digital health industry has tapered off with Q1 2015 closing at $630 million, just shy of 2014’s Q1 which saw $700 million in new investments. Still, the report is quick to point out that while investments may not be growing at the same rate, VC interest appears to be is sustaining around the same levels seen in 2014. Putting a slightly rosier spin on it, the report says that this quarter is 15 percent higher than the average quarter from the past four years.

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While the industry may not be growing at quite the same pace, the funding is certainly still flowing. This year, investor interest is still strong for core EHR systems, which raised $63 million in total. But the trajectory of the market overall is trending toward secondary systems designed to make use of the data being captured by EHRs. Big data analytics was far and away the highest funded category, with $107 million in new capital led by Health Catalyst’s $70 million Series D this past March. Consumer engagement was the next most funded category with $68 million going to companies trying to build the fabled technology layer that sits between patients and the payers and providers that makeup the healthcare industry. Digital diagnostics, population health management, and digital medical devices rounds out the list of top six categories.

Mergers and acquisitions were also active this quarter. Athenahealth made news early in the year with its acquisition of cloud-based EHR vendor Rasorinsights. The announcement marks Athena’s start into the inpatient EHR market. On the consumer side, the race to build a broad digital health ecosystem has motivated both Under Armour and Fitbit to grow through acquisitions. UA acquired MyFitnessPal for $475 million and personal coaching app Endomondo for $85 million, both in February. Fitbit expanded its own hardware offerings by acquiring Fitstar, a personal health coaching app that has a long history of deep integration with the Fitbit product line.


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