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Digital health companies rack up record $15 billion in first half of 2021

by John R. Fischer, Senior Reporter | July 30, 2021
Business Affairs
Digital health companies set records in the first half of 2021 by raising $15 billion in funding and completing 136 M&A transactions
Digital health companies raked in $15 billion in funding in the first half of 2021 (1H 2021), setting a new record.

Funding activity rose by 138% in 1H 2021, compared to $6.3 billion in 1H 2020. In addition, 136 digital health M&A transactions were agreed upon at the same time, compared to 83 in 1H 2020, and a record of 12 companies went public during the first six months of the year, according to Mercom Capital Group in a new report.

“Venture investments in digital health during 1H 2021 have already surpassed funding raised in all of 2020 and is the largest amount raised in a single year since 2010. Telehealth again led funding activity, accounting for almost 30% of the funding raised in 1H 2021. An even more impressive data point in the first half of the year was the record M&A activity, which has been flat in previous quarters despite the funding surge,” said Raj Prabhu, CEO of Mercom Capital Group, in a statement.

Corporate funding for digital health companies, including VC, public marketing financing and debt, came out to $19 billion in H1 2021, with organizations raising $7.2 billion from 179 deals in Q1 2021 and $7.7 billion from 195 in Q2 2021. Fifty digital health companies together raised $100 million or more in 1H 2021. Year-over-year funding rose by 175% compared to the year before.

Telemedicine companies contributed the most at $4.2 billion, followed by wellness organizations at $1.7 billion, mHealth app developers at $1.6 billion, analytics companies at $1.5 billion and clinical decision support software developers at $1.1 billion. Digital health attracted a record 1,254 investors in 1H 2021, compared to 921 the same time last year. The Top VC deals included $540 million raised by Noom, $500 million by Roman, $360 million by Keep and $300 million each by Capsule, KRY and Hinge Health.

Digital health also saw the highest number of M&A transactions recorded in the first half of any year at 136. This was up from 83 in 1H 2020 and consisted of 63 deals in Q1 2021 and 73 in Q2 2021. Telemedicine companies also led here with 25 transactions, followed by practice management solutions companies at 20. Analytics, clinical decision support and mHealth app organizations each recorded 10 deals.

One notable transaction was Microsoft’s acquisition of Nuance for $19.7 billion. Others included Optum's acquisition of Change Healthcare for $13 billion; Datavant's acquisition of Ciox Health for $7 billion; KKR's acquisition of Therapy Brands for $1.5 billion; and Boston Scientific's acquisition of Preventice Solutions for $925 million.

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