Digital Health Investments Rack up Another Impressive Month in May

by Fenwick & West Life Sciences Group

Digital Health investment in May totaled $691 million, down from the impressive $924 million netted in April. The nearly $700 million in new capital, however, compares favorably to the $421 million taken in in March and shows the continued strength of and investor interest in this burgeoning sector.

As has been the pattern, most of the money went to healthcare IT companies. Investment in Internet-based software companies in May totaled $387 million, or 46% of the total. Investments in traditional software companies accounted for another 18.5%.

So, not surprisingly, the two largest investments of this past month went to SaaS providers.

Flatiron Health is a healthcare IT provider focused on the oncology market. The New York-based company received the largest investment of the month in the form of a $130 million Series B round. The investors included Google Ventures, First Round Capital, LabCorp, and undisclosed angels.

The second largest round in May actually closed at the end of April, but it did not make our April analysis, so we are including it here. NantHealth provides cloud-based intelligent clinical operating systems. It received a $100 investment from the Kuwait Investment Authority, a sovereign wealth fund.

The third largest was Oscar Health Insurance, which garnered $80 million in a Series A round that included Formation8, Founders Fund, Khosla Ventures, General Catalyst Partners and Thrive Capital among others. While this is its Series A, the company came in seventh on our list of the top digital health investments of 2013 with a $40 million round last summer and raised an additional $30 million in January. Oscar is a health insurance provider in New York state that leverages technology.

Lumeris, which is a dba of Essence Group Holdings Corp., provides technology and consulting support to accountable care organizations. The Missouri-based company took in just over $71 million in a private equity round that included Kleiner Perkins, Camden Partners and Sandbox Industries.

The fifth largest investment of the month went to a biotech tools company. Quantapore, of Menlo Park, CA, is developing a nanopore-based nucleic acid sequencing technology that uses an optical read out rather than electrical data acquisition. The biotech company received $35 million in a Series B round. The investors were not disclosed.

Counsyl is a South San Francisco-based technology company that aims to reinvent the clinical lab. The company received a Series D investment for $28 million from Goldman Sachs and Rosemont Seneca Technology Partners.

The seventh largest investment round was for AssureRx, a personalized medicine company in Ohio that helps physicians make dosing decisions for their patients. The company received a $25 million line of credit from Silicon Valley Bank and GE Capital.

The eighth largest round of the month went to a Beijing-based developer of a women’s health app. The company received a Series C round for $20 million from undisclosed investors.

Two internet software providers are tied for the ninth largest, with each garnering $18.3 million. HealthSpot, which provides telemedicine services, received a Series C round investment that included BlueTree Allied Angels and the Cleveland Clinic Foundation. eVariant, which calls itself a CRM/PRM platform, took in a Series B investment from Lightspeed Venture Partners, Salesforce, Health Enterprise Partners and Dignity Health.

Finally, rounding out the top 10 is iRhythm of South San Francisco. The company’s flagship solution, the ZIO Service, provides continuous long-term cardiac monitoring. iRhythm received a $17 million Series E round that included Norwest Venture Partners and Novo A/S.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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