Infrastructure Deals Dominate Digital Health Investment in 2015

Fenwick & West Life Sciences Group

Among its list of defining quotes of 2015, Rock Health included one from a physician who was frustrated with the fact that, as she put it, “In my hospital there are 19 software systems across departments – few of which communicate with each other.” The lack of standardization for health care software goes a long way to explaining why infrastructure deals dominated private equity investments in digital health in 2015.


In our analysis of the largest digital health investments of the year (those over $10 million), nearly 40% were investments in infrastructure to support workflow, payment processing, EHRs or encrypted communication. The largest infrastructure investment of the year was a minority growth financing in AvidXchange for $225 million led by Bain Capital Ventures with contributions from Foundry Group, KeyBanc Capital Markets, Nyca Partners, Square 1 Bank and TPG Capital.

Following close behind was a late stage investment in NantHealth by Allscripts for $200 million. The third largest infrastructure investment was a $174 million Series A round in Shanghai Pharmaceutical Big Health Yunshang. IDG Capital Partners and participated in the round.


However, the single largest private investment in a digital health company in 2015 went to a Chinese company focused on consumer engagement. Guahao develops mobile apps that help patients locate providers and schedule appointments. It took in $394 million in a late-stage investment that included China Development Bank Capital, Fosun International, Goldman Sachs, Hillhouse Capital Management and Tencent Holdings.

The second largest investment in a consumer engagement company was a $152 million Series D investment in ZocDoc, which operates a platform where patients can book medical appointments online. Atomico, Baillie Gifford, Digital Sky Technologies, Founders Fund and Khosla Ventures participated in the round.

The third largest investment for the year in the sub-sector was a $145 million Series B investment in New York-based Oscar Health Insurance. Founders Fund, Goldman Sachs, Horizon Ventures and Wellington Management participated in the round that put Oscar in the unicorn club.

Monitoring and Diagnosing

The second largest digital health private equity investment of 2015 was in the monitoring and diagnosing sub-sector. Jawbone, developer of the UP fitness band, closed the largest financing round of the year picking up as much as $300 million in debt from BlackRock.

NantOmics, part of the NantHealth family, is developing a medical diagnostic tool for cancer patients. The company received the second largest investment for a monitoring or diagnosing company, taking in $150 million. The investors were not disclosed.


The largest investment in a digital health company focused on treating disease went to MDLIVE, a telemedicine company. The emergence of telemedicine has been capturing headlines all year, so it’s not surprising to see $50 million of growth equity investment from Bedford Capital go to this Florida-based developer of an integrated virtual health system.

Following closely behind is a $48 million Series C round that went to Fenwick client Omada Health. Omada Health is a digital behavioral medicine company that helps people change habits that put them at risk for preventable chronic conditions. Norwest Venture Partners, Andreessen Horowitz, dRx Capital, GE Ventures, Humana, Providence Health and Services, Providence Ventures, Rock Health and US Venture Partners participated.

Finally, Invenix, which is developing a smart-infusion management system, closed on a $42 million round of equity financing led by WuXi Healthcare Ventures. Cardinal Partners, CICA, Inc., Easterly Capital, Fidelity Biosciences and SCP Vitalife Partners also participated in the late-stage round.

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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Fenwick & West Life Sciences Group

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