In April 2022, we published a blog post exploring Q1 digital health funding within the US using a framework introduced by Leavitt Partners in a recently published whitepaper. Applying the same methods, we tracked funding across the digital health landscape In Q2.
Q2 saw 144 deals in digital health for a total investment of $4.6 billion and an average deal size of $32.43 million. The total investment amount is divided among the core segments as follows:
- Clinical Enhancement: $1.5 billion
- Health Data Systems: $1.4 billion
- Remote Care Delivery: $1 billion
- Mobile Health & Wellness: $427 million
- Precision Medicine: $312 million
When comparing total and average investments by core segment, trends are proportionate for all segments but Precision Medicine. As seen in the graph below, Precision Medicine has a higher average investment than its counterparts. This may be a result of the complex and costly nature of Precision Medicine (Bio Banking, Genetics, Next Gen Sequencing research, etc.) and a relatively low number of Precision Medicine companies receiving investments in Q2.
Significant investments, which we define here as investments of $100 million or more, occurred as follows in each core segment:
- Health Data Systems:
- Clarify, $150 million (Healthcare Analytics)
- Aledade, $123 million (Population Health Tools & Data)
- IntelyCare, $115 million (Administrative Automation & Digitization)
- Aidoc, $110 million (Administrative Automation & Digitization)
- Capital Rx, $106 million (Administrative Automation & Digitization)
- Remote Care Delivery:
- Biofourmis, $300 million (Remote Patient Monitoring)
- Clinical Enhancement:
- Reify Health, $220 million (Clinical Trials)
- CareBridge, $140 million (Care Coordination)
- Tessa Therapeutics, $126 million (Clinical Trials)
- ai, $100 million (Care Coordination)
- OMass Therapeutics, $100 million (Disease Management & Therapeutics)
- Precision Medicine:
- Aspen Neuroscience, $147.5 million (Genomics)
- Mobile Health & Wellness:
- NexHealth, $125 million (Engagement Tools)
In Q1, the core segment that received the highest amount of funding was Clinical Enhancement, followed by Remote Care Delivery. In Q2, Clinical Enhancement captured the top spot once again, but saw a 12% decrease in funding allocation from the previous quarter. Health Data Systems saw a 41% increase, while Remote Care Delivery and Precision Medicine decreased by 44% and 65% respectively in Q2.[i] Mobile Health & Wellness underwent a substantial change compared to the other core segments with a 414% increase from Q1. Within this segment, the mHealth and Engagement Tool subsegments dominated the investment allocation for Q2.[ii]
When we examine subsegments within the top three core segments, we can better understand the investment activity of Q2. In Health Data Systems, digital health companies in the Administrative Automation & Digitization subsegment accounted for 53% of the number of companies that received funding. This is to be expected, as the demand for digital health companies that offer solutions around system integration has been very high in recent years. In Clinical Enhancement, Clinical Trials and Care Coordination companies accounted for 25% and 23% of the total. And in Remote Care Delivery, Telehealth accounted for 50% of the total number of investments.
After a year of record-setting digital health investment in 2021, digital health investments in 2022 are lagging. A total of $14.7 billion was invested in the first half of 2021, while this time period in 2022 has seen a combined total of $10.1 billion—nearly a $5 billion drop. Contributing factors could include recent interest rate hikes, inflation, increased investor caution, and volatility seen in today’s markets. This investment slump could also be attributed to a slowing demand in segments like Remote Care Delivery that reached a pinnacle during the COVID-19 pandemic. As we move forward into Q3, we expect this trend to continue, with investment levels remaining lower than those seen in 2021.
[i] The following core segments in Q1 have been adjusted as follows to capture additional investments not reflected in the original Q1 blog post:
- Health Data Systems: From $897 million to $1028 billion
- Remote Care Delivery: From $1,695 billion to $1,800 billion
- Clinical Enhancement: From $1,667 billion to $1,659 billion
- Precision Medicine: From $600 million to $900 million
These adjustments bring the total investment in Q1 to $5.5 billion.
[ii] We began tracking private DH health investments in January 2022. We are continually improving and refining our information gathering method and acknowledge present limitations that may exist in our current processes.