Digital Health Venture Funding, M&A and IPO Activity in the First Half of 2015
StartUp Health, a New York-based accelerator, and Rock Health, a San Francisco-based seed fund, each recently released its independent 2015 mid-year report on venture funding and transactional data of the digital health sector. The following are some key observations:
Funding Levels Are Keeping Up With the Record-Breaking Levels in 2014. While this year was off to a slower start when compared to 2014, venture funding levels have increased over the second quarter to keep pace with the 2014 record-breaking growth. Both StartUp Health and Rock Health, which uses different reporting metrics, reported total investments of $2.1 billion for digital health startups. This figure falls short of Rock Health’s 2014 mid-year reported total by $70 million and of StartUp Health’s 2014 mid-year reported figure by $200 million.
Strong IPO Market Led by Fitbit. The venture-backed digital health companies that went public during the first half of 2015 raised over $1 billion in capital and produced more than $10 billion in market capitalization. Fitbit, the San Francisco-based maker of fitness tracking bracelets, led the way by raising close to $733 million. The proceeds were the highest for a U.S.-listed tech. company IPO in the first half of 2015. And even though Fitbit priced its IPO at $20 per share, higher than market expectations, its shares surged nearly 50% on the first day of trading to $30.40 and its market capitalization jumped to over $8 billion within one week of the IPO.
Record Number of Mergers and Acquisitions. For the first half of 2015, Rock Health reported 92 merger and acquisition deals in the digital health sector, compared to 95 deals reported for the entire year of 2014. However, the total disclosed values for the 92 deals was only $2.6 billion—just 13% of last year’s disclosed total. The $475 million acquisition of MyFitness Pal by Under Armour—reported during the first quarter—remains the most notable deal in 2015.