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Despite few industry exits, investors continue to pour money into digital health

Despite few industry exits, investors continue to pour money into digital health (Mobi Health News)

  • According to the latest Rock Health report, digital health companies raised a total of $4.2bn across 180 deals through H1 2019 – on pace to reach a $8.4bn total if this pace continues.
  • Currently, M&A remains the most popular exit for digital health companies, with 43 deals in 2019 so far. However, this year is expected to break the three-year period without an IPO, with Livongo, Health Catalyst, Change Healthcare, Phreesia and Peloton all set to go public.
  • With few exits in the last eight years, Rock Health found that 81% of investments since 2011 are still awaiting a liquidity event, resulting in a $29.4bn “net liquidity overhang” (NLO). The NLO is calculated by subtracting investments made in companies that have exited from the total dollars invested.

Analysis and Comments

  • After 2018s record year in digital health funding, it is interesting to see that the trend is continuing (rather than slowing down in 2019, as Rock Health’s 2018 report had predicted).
  • Notably, 69% of investors in H1 2019 were repeat investors and c. 30% of venture dollars went to large ($100m+) mega deals.
  • The 2019 report, parts of which can be found here, includes some other interesting findings, including analysis on whether the current digital health funding environment is an investment bubble (they conclude it isn’t).

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