Healthcare Technology – A Look Ahead…

Healthcare technology investors are in a quandary. Business was really good this past year yet the world all around us is suffering in so many profound ways. The investment data are in and it was a very strong year for both new commitments and liquidity. According to Rock Health, a record $14.1 billion was invested in 440 companies; nearly doubling the $7.5 billion invested in 2019. Other sources tabulated somewhat different results, but the trend was the same (Mercom – $14.8 billion across 372 companies: MobiHealthNews – $13.8 billion across 637 companies). Notably, healthcare technology investment was just over 9.0% of all venture capital activity in 2020 ($156.2 billion – an all-time record high).

Rock Health identified four significant categories of activity: $2.7 billion invested in “on demand” healthcare; $2.0 billion for drug discovery/development; $1.8 billion invested in behavioral health companies; and, $1.7 billion directed toward fitness/wellness opportunities. Interestingly, there were 40 financings that were greater than $100 million in size, accounting for 57% of the total activity – and undoubtedly explaining why the average deal size spiked to nearly $32 million, more than 50% larger than what was seen in 2019. A clear indicator of maturity in the sector and that there are now a number of “emerging winners.” Liquidity in the healthcare technology sector was also quite robust with 145 M&A transactions, six IPOs, and seven SPAC offerings.

Obviously, the pandemic played a significant role in all of this activity. According to an analysis by Health (Read more...)