According to Rock Health's new end-of-the-year funding report, total digital health funding was down to $4.2 billion, an 8 percent drop from 2015's total of $4.6 billion. But even though less money was infused into the industry, 8 percent more companies received funding: 296 versus 273 last year, a record number of companies funded.
Interestingly, nearly 20 percent of the funding was wrapped up in the six largest deals: a $220 million round for Human Longevity, $175 and $165 million rounds for Flatiron Health and Jawbone respectively, and large rounds for Healthline, Health Catalyst, and Accolade. The large round for Human Longevity went a long way toward catpulting genetics to the top of Rock Health's list of best-funded categories in digital health.
"Genomics and Sequencing" was the most funded category at $410 million in funding, followed by "Analytics and Big Data" and "Wearables and Sensing" -- at $312 million, about half of which was the large Jawbone investment. Telemedicine, digital health devices, and population health rounded out the top six.
As well as boasting a high number of companies funded, 2016 also saw a high number of distinct investors, including 237 who made their first investment last year.
"Four hundred and fifty-one unique investors made bets in digital health this year—though three-quarters of them invested in just one deal (we call them 'dabblers')," Rock Health Founder Halle Tecco wrote in the report. "We counted 237 investors who made their first digital health investment in 2016, including Campbell’s Soup Company, Expa, New York-Presbyterian, and Pfizer (welcome!). Forty investors were “active” this year, closing three or more deals. Five firms were extra prolific in 2016, making six or more investments: .406 Ventures, Andreessen Horowitz, GE Ventures, Khosla Ventures, and UPMC."
Rock Health also tracks the number of woman CEOs in digital health and found that number was actually down since last year -- in 2015, 11 percent of funded digital health companies had a woman as CEO and in 2016 only 9 percent did.
The report says there were 136 mergers and acquisitions in 2016, so it includes quite a few we didn't track at MobiHealthNews, including WellTok's quiet acquisition of employee wellness company Keas in early 2016.
"Companies that sell to hospitals were popular acquisition targets in 2016, including 10 physician practice management technology companies, 11 hospital administration tools, and 21 companies building EHR/clinical workflow tools," Tecco wrote. "The most common type of acquirer continued to be other digital health companies, followed by tech companies."
Finally, the Rock Health report looks at publicly traded digital health companies. They found that Fitbit, which IPO'd in 2015, did the worst of any public digital health company in 2016, with shares dropping from an opening price of $29.76 per share to an end-of-the-year price of $7.32 per share. On the other hand iRhythm, which went public this year, had the best performance of any digital health company, opening at $17 per share and ending the year at $30 per share.