A recent report from Rock Health revealed that investors put $3.4 billion into digital health companies between January 1 and June 30, 2018, nearly matching last year’s record $3.5 billion during the first half of 2017. The average deal size was $17.9 million, the highest it’s been since Rock Health started tracking funding data in 2011.
Rock Health’s analysis is limited to U.S. companies with deals greater than $2 million and doesn’t include diagnostic and healthcare service companies. The analysis noted that there have been more repeat investors than in the past, which shows that the digital health industry is attracting experienced investors with long-term goals rather than “tourists” attracted by hype.
That said, the industry hasn’t seen many exits since the first half of 2015. Many of the exits that have happened are the result of mergers and acquisitions; for example, Amazon’s purchase of PillPack for $1 billion. However, analysts said, this phenomenon goes beyond the digital healthcare sector to the startup industry at large.
Rock Health’s report also notes that digital health companies are most likely to be acquired by other digital health companies because they have a great deal of capital on hand and want to grow quickly through product extensions and new hires.