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Digital health companies getting larger investment deals this year

Chris Seper

Here’s even more evidence of the white-hot digital health market: a look at 2012 so far shows more companies are scoring larger investment deals in the space.

new report by healthcare accelerator Rock Health that gathered all the digital health companies receiving at least $2 million in investment shows those deals are up 73 percent at this point compared to 2011. There’s been a total of $675 million in digital health investments through June, compared to $390 million at this point last year.

It’s not just the deals that are up but the companies, too. In all of 2011, 92 companies won at least $2 million in investment. So far in 2012, it’s at 68 — including last week’s $30 million deal with Valence Health.

The report leverages data from Capital IQ, CrunchBase, the National Venture Capital Association and Rock Health’s own funding database, and defines digital health as companies at the intersection of technology and healthcare. So that covers everyone from a company like wireless health products company Fitbit to the personalized medicine company AssureRx.

And keep in mind the report and its dollar amounts don’t cover the millions in deals that have been done under the $2 million mark.

Four segments of digital health are getting the most attention: physician tools, sensors, home health and data/analytics. The fourth segment has had some of the biggest deals — the $100 million Castlight Health deal and the $50 million GoHealth investment.

What’s clear is that while this space continues to grow quickly, it’s even more likely to speed up as all sectors gain investor credibility. There is still significant skepticism about many segments of digital health by institutional investors. At the Kauffman Foundation’s Life Science Ventures Summit this past weekend in San Francisco, Dana Mead from Kleiner Perkins said his fund remains skeptical around many deals in the space — particularly mobile health — for concerns over reimbursement and business models.

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