Digital health companies continued raking in venture capital during the first three quarters of 2019, according to a new report from Mercom Capital Group, but the number of deals and the value is about 10% lower year over year.
During the third quarter of 2019, digital health companies pulled in $2 billion in venture capital funding across 156 deals, compared to 169 deals in the previous three-month period that accumulated $3.1 billion in funding. Year over year, venture capital funding dropped 35% compared to the third quarter of 2018, which brought $3.1 billion in 173 deals.
For the first three quarters of 2019, digital health deals have yielded $7.2 billion in 474 deals. During the same period in 2018, 556 deals were made at a total value of $8 billion.
“After a strong Q2, funding and M&A activity slowed in the third quarter and financial activity is lagging compared the same period of last year,” Raj Prabhu, CEO of Mercom Capital Group, said in a statement.
The findings come at a time when capital funding for the healthcare industry overall has remained strong, in particular for AI-focused companies.
Telemedicine led as the top digital health category for venture capital during the first three quarters of the year, totaling $1.5 billion. Analytics deals garnered $1.3 billion, while mHealth Apps brought in $1 billion.
Despite a slowdown, there were several large deals during the third quarter of 2019, including $550 million raised by Babylon Health, a U.K.-based AI startup. Capsule, a digital pharmacy, raised $200 million, and China-based AllinMD raised $100 million.
During the third quarter of 2019 there were also four digital health IPOs that brought in $1.2 billion: Change Health, Livongo Health, Health Catalyst and Phreesia. The outcome of those IPOs is likely to be watched closely by investors.
“The performance of the much anticipated four digital health IPOs at the end of Q3 has been disappointing and the fate of future IPOs may depend on how well these companies fare,” Prabhu said. “Large deals continued to dominate with six companies raising half of all the funding in the third quarter.”
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."