United States: Top Ten Digital Health Investments Of 2013; Generating Momentum For The Year Ahead

Digital health investing started the year on a high note with four $20+ million rounds of funding in January alone for MD Live, TigerText, MC10 and WellDoc. That's a very promising continuation of the tremendous funding growth we saw last year when digital health investment set a new record. Rock Health reported that the sector netted nearly $2 billion – a 39% increase over the previous year and more than double the aggregate investment made in 2011. Below is an overview of the biggest reported deals of 2013.

EHRs and Big Data

Our analysis of the largest investments of 2013 shows that most of the dollars went into electronic health records (EHR) companies and big data plays. That's consistent with recent history; these are subsectors that are capital intensive, but also the most likely to reduce costs in the short-term.

The biggest deal of the year was an $85 million Series D round for Practice Fusion, a provider of EHR and practice management software that also supports a consumer-facing platform. Business and tech reports have speculated that Practice Fusion is anticipated to go public in the next year or so.

Ranked eighth on our list is xG Health Solutions, which took in $40 million in private equity to develop products and services based on Geisinger Health System's intellectual property. Since Geisinger is widely recognized for its EHR technology, we might expect that this company will also be EHR focused.

The last two companies on the list are both big data plays, WorldOne, which took in $35 million from Deerfield Management, and Blue Health Intelligence, which raised $34.5 million from undisclosed investors.

Digital Medical Devices

Two of the top five investments of the year went to digital medical device companies. This subsector includes companies with hardware or software to treat specific diseases or conditions. Proteus Digital Health was the fifth largest deal of the year raising $45 million in a Series F round. Proteus has been a pioneer in the convergence of digital technology and conventional therapeutics with its FDA approved digital pill technology.

OrthoSensor, another digital medical device company, had the fourth largest digital health round of the year garnering $48 million in a Series B investment. Their focus is developing intelligent implantable orthopedic devices that provide real-time, actionable information about the implant's placement and performance.

Consumer Engagement

There were two consumer engagement platform companies in the top ten list including Sharecare, the second largest, with a Series C investment of $68 million. Sharecare is an online health and wellness engagement platform known for its RealAge Test, a social Q&A familiar to Facebook users and Dr. Oz fans.

Oscar Health Insurance is developing a service that will provide users with unlimited telemedicine consultations and free generic medications. The company had the seventh largest round in our list raising $40 million in a Series A round.

Consumer Devices

Digital health stalwart Fitbit was the recipient of the sixth largest investment of the year with a $34 million Series D round. According to a recent report, Fitbit web-enabled wearable fitness tracker accounted for 77% of "full body activity" trackers shipped in the five weeks prior to Christmas.

A stealthy new comer, Anki, says it is applying robotics and artificial intelligence technologies to create consumer products. The San Francisco-based company was third on our list with an initial round of $50 million.

Four of the top ten investments went to companies in the San Francisco Bay Area – Proteus, Anki, Fitbit and Practice Fusion. New York, another center of gravity for the sector, is home to two companies on the list, Oscar Health Insurance and WorldOne. Included below is a chart showing the top 10 private investment rounds in 2013 and giving us a clear sense for the momentum coming into 2014.  

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