Digital health firms nab record $57.2bn funding in 2021; report

by Stephen Riddle

The final numbers are in, and now it’s official – digital health companies raked in a massive $57.2 billion in funding last year, beating prior records with a 79% increase over 2020.

The data from CB Insights’ annual State of Digital Health report notes that the record investments were apparent across all geographies and were “fuelled by the growing need to provide digital solutions and delivery models to patients during the pandemic.”

Highlights of the year included an all-time high in “mega-rounds” – financings valued at $100 million or more – that reached an all-time high of 154 in 2021, almost twice the level seen in the previous year.

Heading the list in the fourth quarter was Devoted Health’s massive Series D, raising $1.1 billion for the Medicare Advantage health plan specialist and valuing the company at more than $12 billion. Devoted provides virtual and at-home care powered by a data analytics platform called Orinoco.

Regionally, the US was way out in front, accounting for $397.9 billion of the total. That included almost $11 billion in the fourth quarter of 2021 alone, followed by Asia with $2.8 billion in the three-month period and Europe with $1.1 billion.

The data also confirm another big trend in digital health last year – consolidation in the sector – with 574 M&A deals, up 44% on the prior year.

Heading the list in value terms was Walgreens Boots Alliance’s raising its stake in primary care and telehealth provider VillageMD to the tune of $5 billion.

There was also Best Buy’s $400 million acquisition of remote patient monitoring specialist Current Health, and 23andMe’s purchase of Lemonaid Health in another $400 million deal, bolting on its on-demand platform for remotely accessing medical care and pharmacy services.

“As dominant players emerge in this highly fragmented market, we expect to see this consolidation trend continue,” says CB Insights.

Other highlights for 2021 include a sharp increase in funding for digital therapeutics (DTx) companies, with 122 deals totalling $3.4 billion, driven by transactions involving tools for chronic disease management and improving patient outcomes in clinical trials.

Top of the list is Hinge Heath’s $600 million Series E, upping its value to more than $6 billion. The company provides digital tools for managing musculoskeletal (MSK) conditions like back and joint pain.

Funding for mental health tech startups also leaped 139% year-on-year in 2021, with BetterUp’s series E and Cerebral’s series C – both valued at $300 million – heading the table.

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