What a difference a year makes. Last year, we noted that 2013 was a blockbuster year for digital health investments with almost $2 billion of private capital going into the sector. We highlighted the 10 largest deals of 2013, which ranged from $35 million on the low end to $85 million on the high end.
In 2014, digital health investment topped $4 billion, according to our friends at Rock Health, and 10 investments were valued at more than $100 million – and that number doesn’t even include the digital health IPOs.
The past year saw three digital health companies go public, including our client Castlight Health, which raised $177.6 million in March in the first digital health IPO of the year. Everyday Health also made its Wall Street debut in March, raising about $100 million. HealthEquity followed in July raising $127.5 million. All three companies provide web-based services to help consumers or employers better manage health outcomes and/or the cost of care.
Three of the 10 largest private investments of the year were not conventional venture investments, including the largest deal of the year, Summit Partners’ $550 million recapitalization investment in Ability Network, a developer of internet-based practice management software for hospitals and other healthcare facilities. Alignment Healthcare, which works with payers and providers to ensure continuity of care for members and patients, received a growth equity investment from General Atlantic in the amount of $125 million, and Guahao Technology, which operates Weiyi, a pair of mobile apps that connect patients and doctors, raised $100 million with a minority investment from Tencent.
Of the remaining 2014 digital health investments valued at $100 million or more, four companies (NantHealth, InVitea, Heartflow and Butterfly Networks) focus on diagnostics. By contrast, in 2013, there were no diagnostic-oriented digital health companies on my list of the 10 largest digital health investments of the year.
Top Private Digital Health Investments of 2014
Click here to view the table.
The growing significance of the digital health sector was not lost on attendees at J.P. Morgan’s Healthcare Conference in January. The contingent of digital health companies at the biotech investor meeting was larger and more visible this year than in years past. Prolific digital health investor Bryan Roberts of Venrock and 23andMe’s CEO Anne Wojcicki drew standing-room only crowds.
On the eve of JP Morgan’s event, Fenwick, along with Rock Health and Goldman Sachs, once again hosted the Top 50 in Digital Health dinner. While last year we found it a challenge to limit the honorees to 50, this year it proved impossible, so we expanded the event to include 70 digital health leaders. We also gave special recognition to nine attendees who have driven exceptional progress and innovation including:
- Angel of the Year: Sami Inkinen
- Crowdfuding Hero: Empatica
- Diversity Leadership Award: Castlight Health
- Fastest Growing Company: Zenefits
- Inventor of the Year: Babak Parviz
- Most Beloved CEO: Frank Williams of Evolent Health
- Most Prolific Corporate VC: Qualcomm Ventures
- Most Prolific VC: Kleiner Perkins Caufield & Byers
- Reporter of the Year: Sarah Kliff of The Washington Post
At the dinner, we conducted an informal poll, asking guests to name the organization that had the biggest accomplishment in digital health during 2014 (excluding their own). The top results were Rock Health, Castlight (for its IPO), Omada Health, Google and Apple (HealthKit).
We also polled attendees about the biggest milestone their organization achieved in 2014. The answers included making investments in the space, launching a product, increasing access to care, generating coverage in the media, announcing a pivotal partnership or acquisition and releasing a meaningful clinical study.
I’ve already seen the 2014 momentum continue into 2015 and can’t wait for the year ahead!
This article was first published on the Law.com Network on March 11, 2015.