Digital Health: 2017 Shaping Up To Be a Banner Year for VC Funding
By Davida Dinerman, MSL Boston
During the first half of 2017, investment in digital health start-ups shattered previous records with 188 digital health deals and $3.5 billion invested. The amount invested in the first half of 2017 was 82 percent of the total invested in 2016. There is also strong evidence that venture capitalists (VCs) are continuing to seek out the right companies to help finance.
In the past, there was a lot of talk about consumerism and patient-centered healthcare, however, a vacancy existed in the way of new approaches. The industry is now seeing the kinds of strategies required to meet the urgent needs of patients and exponentially transform healthcare for the better. Despite or because of the uncertainties in federal policy, VCs are seeing advancement in value-based care, patient experience, population health, and reduced per capita costs.
According to a new study from Rock Health, the top-funded categories for digital health are consumer health engagement; digital therapies; analytics/big data; digital diagnostics, personal health tools & tracking, and wearables/biosensing.
Outcome Health, in the consumer health engagement category, closed its first round of funding: a record $500M (on a $5B pre-money valuation) from growth investors including Goldman Sachs Investment Partners, CapitalG, and Leerink Transformation Partners. Peloton Interactive, a personal health tools company, raised a $325M Series E led by Wellington Management, Fidelity Investments, Kleiner Perkins, and True Ventures. Modernizing Medicine, which makes a mobile-based electronic health record for specialists, raised $231 million from global private equity firm Warburg Pincus.
In addition to private equity investors, there are a number of mergers and acquisitions and investment on the provider side. UPMC and Mayo Clinic invested in Certify (biometric solutions), Qrativ (AI platform and clinical data to identify treatments for rare diseases), AliveCor (personal health/digital diagnostics), and Sense.ly (consumer health engagement). Physicians are also investing in digital health. In June, CNBC.com featured a story titled, “Rich doctors are beginning to offer their time —and money— to health-tech start-ups.”
The provider-as-investor is a notable trend. Historically, providers were not early technology adopters. They are now recognizing the value of applications that not only solve their own challenges to pursue value-based care, apply data to improve patient outcomes, and build interoperability to help improve the industry overall.
Other notable transactions point to vendors’ holistic view of the healthcare IT space, and an eye on revenue potential, as they blend complementary technologies and services. McKesson led the largest acquisition of the quarter with its purchase of CoverMyMeds for $1.1 billion in an effort to strengthen McKesson’s technology products to pharmaceutical manufacturers, clinicians and payers, and secure patients’ access to their prescribed drugs. Smaller deals included DirectPath’s acquisition of Patient Care to expand DirectPath’s suite of healthcare engagement and compliance services to employers; and Mango Health’s $9 million financing from Express Scripts married gaming with medication management and adherence.
All of this activity bodes well for companies in the digital health space. The best, most highly funded idea is only that until it’s coupled with a strategy to build and spread the story. That’s where an integrated marketing program comes in to help legitimize a new company and its executives, create excitement, and engage potential customers.
Weaving together earned media, influencer relations, content creation, event planning, digital and social media engagement helps boost awareness of the company’s vision, solutions and achievements.
Conference and event planning is another critical part of integrated marketing strategy. Many events offer excellent opportunities to facilitate networking and collaboration between start-ups, established companies, academics, government agencies, and investors. When I spoke with people from HIMSS last month, they talked about their collaboration with Health 2.0, an important resource for entrepreneurs looking to build their businesses and connect with potential investors. In addition to HIMSS18, digital health entrepreneurs should consider: J.P. Morgan Healthcare Conference (by invitation), Connected Health, Health Datapalooza, SXSW, Stanford Medicine X, and Forbes Healthcare Summit.
MSL has experience elevating visibility for digital health, med device and pharma clients at industry events. Our capabilities accommodate a range of budgets and can include: awards programs, social and digital campaigns, lead-gen focused content marketing, industry analyst relations – and, if you need it – advocacy and public affairs, corporate social responsibility, crisis communications and investor relations.
If you’re interested in building awareness for your brand and gaining a stronger voice in your market through an integrated marketing program, or you’ll be attending a conference and need support for planning and communications, contact Davida Dinerman at 781-684-0770 or firstname.lastname@example.org.
Davida Dinerman is a senior account supervisor and health IT sector deputy at MSL Boston.