Financing of digital healthcare companies slows down in third quarter

Source: Rock Health

According to Rock Health, after a first half in which companies raised over $2 billion each quarter, Q3 2019 saw funding of $1.3 billion, a total of $5.5 billion since the start of the year.

The year-end trend is around $7.3 billion, about 13% less than in 2018.

The market continues to be characterized by large deals, nine of which are over 100 million dollars and, in general, the concentration of capital. The two most important transactions were:

  • Capsule, the online pharmacy that offers daily delivery in New York City, raised $200 million in September to expand its service throughout the United States. Online prescription and delivery of drugs is at the center of market attention. In 2018 Amazon acquired PillPack to compete with the pharmacy giants CVS and Walmart, both offering online pharmacy services.
  • Beta Bionics, a company that develops an automated bionic pancreas, closed two $63 million rounds this year – a B-series in January and a B2-series in July – for a total of $126 million. The funding will be used for final product development, phase 3 clinical trials, product certification and commercial launch. Beta Bionics competes with digital startups such as Bigfoot Biomedical and medical devices such as Medtronic and Dexcom to provide a closed-loop insulin delivery system for patients with type 1 diabetes.

During 2019, five companies were listed on the stock exchange: Livongo, a platform for chronic patient management; Health Catalyst, technology and services for data analysis; Phreesia, applications to increase the patients intake; Change Healthcare, payment management and health information exchange (HIE) solutions; Peloton, live fitness courses and on-demand courses through its gym bike, treadmill and app.

Behavioral health solutions, i.e. mental well-being (from relaxation and meditation to digital therapies) and women’s health, are a maturing investment sector with more funding, broader agreements and a large number of advanced companies.

If you’d like more information on the Rock Health report, you can find it here.

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