Infrastructure Investments Rule in Q3

Fenwick & West Life Sciences Group

Our analysis of digital health investment in the third quarter of 2015 revealed that just under $3 billion was invested in the sector and more than half of that went to infrastructure providers.


A total of $1.48 billion was invested in health infrastructure technology in Q3. The two largest infrastructure investments of the quarter were both late-stage deals and accounted for 28 percent of capital invested in the subsector.

AvidXchange, which provides automated bill payment solutions, completed a $225 million [minority growth financing] round led by Bain Capital Ventures with contributions from Foundry Group, KeyBanc Capital, Nyca Partners, Square 1 Bank and TPG Capital.

The second largest infrastructure investment was in NantHealth, which develops cloud-based clinical operating systems. Allscripts was the only investor in the $200 million round.

There were 38 infrastructure investments throughout the quarter with an average value of $39 million. In addition to the two deals noted above, three other investment rounds topped $100 million.


Investments in companies focused on consumer or patient engagement made up more than a quarter of investment in digital health in the third quarter. A total of $809 million was invested in technology aimed at improving engagement – with nearly half of that going to Chinese company Guahoa, which develops mobile apps to locate providers and schedule appointments. CDB Capital, Fosun International, Goldman Sachs, Hillhouse Capital Management and Tencent Holdings participated in the $394 million late-stage round.

The only other investment in the subsector that exceeded $50 million was a Series D investment in ZocDoc, which also operates a platform where patients can book medical appointments online. Atomico Baillie Gifford, Digital Sky Technologies, Founders Fund and Khosla Ventures participated in the $152 million round.

In all, there were 23 investments in this subsector with an average value of $35 million each.

Diagnosing and Monitoring

Companies developing tools to diagnose or monitor patients received $448 million in new funding in the third quarter. Out of a total of 21 investments, two were for $100 million or more, six rounds were for $10 million or less and the average round for the group was $21.3 million.

NantOmics, which is developing a medical diagnostic tool for cancer patients and part of the aforementioned NantHealth, received the largest investment within the subsector in a $150 million round. Investors were not disclosed.

Helix Opco, the developer of a consumer-facing genome platform, raised $100 million from Illumina, Laboratory Corporation of America, Mayo Clinic, Sutter Hill Ventures and Warburg Pincus.


Digital Health companies that focus on treating disease raised $142 million in the third quarter in 11 deals. The two largest deals of the quarter accounted for two-thirds of that total. The remaining investments were all for $15 million or less.

Fenwick client Omada Health, a digital behavioral medicine company that helps people change habits that put them at risk for preventable chronic conditions, raised the largest investment of the quarter for this subsector in a $48 million Series C financing. Norwest Venture Partners, Andreessen Horowitz, dRx Capital, GE Ventures, Humana, Providence Health and Services, Providence Ventures, Rock Health and US Venture Partners participated.

The second largest investment in the treatment category was in Ivenix, which develops a smart-infusion management system that communicates with other information technology platforms. Cardinal Partners, CICA Inc., Easterly Captial, Fidelity Biosciences, SCP Vitalife Partners and Wuxi Pharmatech 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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