Digital health funding continues its strong trajectory in 2018 as providers eye strategic investments

A bar chart showing positive business growth
Digital health funding is off to a strong start in 2018 after a record-breaking year. (Getty/NicoElNino)

After a historic year of digital health funding, investment dollars continued to pour in during the first quarter of the new year.

Across the U.S. digital health funding reached $1.62 billion in Q1, according to data compiled by Rock Health. It was the largest first quarter on record, surpassing the $1.41 billion in venture funding in the first three months of 2016. Digital health investments reached $5.8 billion for all of 2017.

StartUp Health, which analyzes digital health deals across the globe, reported a record 191 deals during Q1 totaling $2.8 billion, identical to Q1 funding totals the previous year.

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Rock Health analysts noted that investors “have become more confident investing in large, late-stage rounds.” Following eight deals totaling more than $100 million in 2017, three mega-deals closed in the beginning of 2018. And, for the first time, disease diagnosis tools led the way with $279 million in funding.

Some of the largest deals included Roche’s acquisition of Flatiron Health for $1.9 billion and Allscripts finalizing its deal Practice Fusion for $100 million. As FierceHealthcare previously reported, Allscripts initially offered $250 million for the EHR vendor, but pulled its offer following Department of Justice inquiry coupled with eClinicalWorks’ $155 million settlement last year.  

RELATED: Allscripts offered to buy Practice Fusion for $250M. A DOJ investigation changed everything

Healthcare providers continue to be one of the most prominent strategic investors in digital health, accounting for 24% of corporate investor transactions so far in 2018, according to Rock Health. Much of that is driven by the fact that the majority of digital health startups are selling to providers.

StartUp Health’s analysis also indicated that provider solutions appear to be generating the most capital so far this year, with administrative and clinical workflow emerging as key focus areas.