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Digital health attracted $57.2 billion investment in 2021

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Digital health companies raised a total of $57.2 billion in funding in 2021, an increase of 79 per cent from 2020, according to a new report.

Mental health and wellness; medical imaging and AI-based diagnostic software; and clinical trials technology proved the most attractive digital health investments.

Hampleton Partners’ latest Healthtech M&A Market Report is published today.

There were 601 health tech acquisitions in 2021, an increase of 13 per cent since 2020 and 40 per cent since 2019.

Ten health tech deals closed at over $1 billion last year.

David Bell, director, Hampleton Partners, said:

“Though the new investment has been significantly concentrated around telemedicine due to the pandemic, venture capital is increasingly diversifying its health tech targets, with AI-based clinical decision software and digital therapeutics being key areas.

“We also found that Europe was a hot spot for investment with funding rounds significantly exceeding the global average, with a 131 per cent increase to $6.7 billion in total investment from 2020 to 2021.

“European digital health funding now accounts for around 12 per cent of global investment, up from 9 per cent in 2020.”

Mental health & wellness tech

Investment in mental health technologies reached $5.5billion in 2021 – an increase of 139 per cent since the previous year.

Major European deals included Ieso’s $53 million Series B raise in November 2021 from VCs and CVCs including Morningside Technology Ventures, Molten Ventures, and Sony Innovation Fund. Ieso provides online Cognitive Behavioural Therapy (CBT).

Meanwhile, US-based mental health therapy provider Ginger raised a $100 million series E round led by Blackstone, before merging with guided meditation app, Headspace.

Medical imaging & AI diagnostics software

Investment from VCs and CVCs has more than doubled from under $300 million in 2017 to $700 million in 2021.

AI-powered diagnostics and drug development company PathAI raised $255 million between their seed round in December 2016 and their latest Series C found in May 2021.

Clinical trials technology

The pandemic massively disrupted the traditional clinical trials model, leading investors to target innovations that improve recruitment and participation.

This sub-sector has seen a rise in investment of 53 per cent from $1.8 billion in 2020 to $2.7 billion in 2021.

Examples include Medable, which raised a $78 million Series C and $304 million Series D, taking total investment to $507 million since 2015.

Meanwhile, Teckro, an Irish platform provider aiming to improve clinical trial participant enrolment, raised $25 million in a series D round in November 2021. The firm has raised a total of $66 million, with investment from Northpond Ventures and Sands Capital.

Health tech M&A 2022

Hampleton Partners anticipates that on the clinical side, companies specialising in disease tracking and testing, biopharmaceutical research and medical supplies are increasing their technology-based preparedness to take advantage of interoperability, virtual health, cloud-based platforms, artificial intelligence, and other emerging technologies.

Meanwhile, on the patient side, an increasing number of health tech companies are focused on mental health, wellness, fitness, telemedicine smart-foods and personalised, at home health monitoring.

Bell said:

“This backdrop has led to increasingly significant capital raising and M&A consolidation, especially as the enterprise health tech market alone is projected to reach $1.3 trillion by 2025 and is showing no signs of slowing down.

“Ultimately, health tech is benefitting from adoption and digitisation during COVID. In Europe and the US, it is an increasingly important investor asset class.”

Largest disclosed health tech deals of 2021

$30.0 billion – Data to Decision AG acquired MEDIQON GmbH, a provider of software solutions to manage and analyse data for making informed healthcare sector decisions

$28.3 billion – Oracle acquired Cerner Corp, a provider of healthcare practice management software and SaaS, for 5.2x revenue and 21.4x EBITDA

$19.7 billion – Microsoft acquired Nuance Communications, a provider of AI-enabled desktop and mobile interactive voice response and automation SaaS, for13.6x revenue and 72.6x EBITDA.

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