Although their figures differ, StartUp Health and Rock Health both noted in their end-of-year digital health reports that dealflow reached a new peak in 2017. StartUp Health counted $11.5 billion on the back of 794 deals, partly because it includes life science companies with a technology component such as Guardant Health which provides a tumor sequencing test and GRAIL, a cancer diagnostics business. Rock Health had $5.8 billion across 345 deals, 30 percent more than 2016.
Exits were down, however —there were no initial public offerings and 119 publicly disclosed acquisitions, according to Rock Health. Free electronic medical record provider Practice Fusion’s acquisition by Allscripts was a part of the conversation at the J.P. Morgan Healthcare conference this week as something of a poster child for overvalued companies in the digital health sector. Practice Fusion had raised more than $150 million from investors such as Qualcomm Ventures and Kleiner Perkins Caulfield and Byers before it was snapped up this week for only $100 million — not the kind of deal any venture investor would salivate over.
StartUp Health’s report observed some dramatic shifts among the most active digital health investors. Among the top five, Khosla Ventures only made 10 publicly disclosed investments last year compared with 15 in 2016. GE Ventures deals plummeted in 2017 to nine compared with 18 two years ago. Lower down the list, Norwest Venture Partners’ deals dramatically increased to seven last year compared with two in 2016. F Prime also had a big deal jump from three in 2016 to eight last year.
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Technology companies focused on the patient/consumer experience once again was the dominant category with 191 deals, according to StartUp Health.
Rock Health noted that 60 percent of the companies funded last year sell to providers.
Photo: goir, Getty Images
