Rock Health and StartUp Health agree Q1 2018 was digital health's biggest quarter yet

By Jonah Comstock
02:22 pm

Rock Health and StartUp Health, two groups that track investment in digital health, have come out with their respective quarterly reports on funding in the space, and both agree on a couple of interesting insights: that Q1 2018 is the largest Q1 yet, that larger late-stage deals contributed disproportionately to that total, and that investment is increasingly coming from non-traditional investors, especially providers.

Rock Health set the total funding for the quarter at $1.62 billion, with the top 10 deals representing 55 percent of the funding. StartUp Health's figure was $2.8 billion, with the top 10 deals making up 42 percent of all investment. These deals included $240 million for 3D heart model startup HeartFlow, $200 million for consumer genomics startup Helix. After that, StartUp Health's list includes $100 million+ deals for Oscar and PointClickCare, and Rock Health includes another for Collective Health, one of its portfolio companies.

"As the digital health sector matures, investors have become more confident investing in large, late-stage rounds," Rock Health researchers Megan Zweig and Denise Tran wrote. "...The top 10 deals of Q1 2018 represent over 55 percent of total funding—but only 13 percent of deals—in the quarter. The average annual deal size has ticked up over the years, and this quarter was no exception: the average deal size is up to $21M relative to $16.4M last year."

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Rock Health notes that traditional VCs are still the primary investors, behind 64 percent of the investment. Corporate investors made up 17 percent of investors, and out of that group providers led, followed by payers and then pharma companies. Providers are also the primary end users for the companies receiving funding, according to StartUp Health, with companies focused at them raising $1.42 billion over 82 deals.

"Within end users (the organization or individual who benefits from the Company's value), most deals are continuing to primarily serve the provider, as evidenced by the administrative workflow and clinical workflow functions," StartUp writes in its report. "Through providers garnered two times more funding than the next end user (patient), the average and median funding size remained fairly even."

In terms of the categories of companies that were the most well-funded this quarter, Rock Health ranked disease diagnosis, disease monitoring, and consumer health information as the top three. StartUp Health ranked Genomics first, followed by diagnostics and screening, and finally clinical decision support.


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