Investment in the digital health sector continues to see strong growth in 2021, as funding in the first half of this year has already surpassed the total amount invested in 2020. M&A activity among major tech companies, including Apple, Walmart and Amazon, has been particularly strong with each of those firms working to cement their presence in the healthcare services sector. IPO and SPAC listings of digital health startups have also continued to heat up this year.
Though overall digital health utilization has dropped off in some categories since the height of the pandemic, usage remains well above pre-pandemic levels and growth is expected to continue – albeit at a more moderate pace than the breakout witnessed last year.
Related ETF & Stocks: Global X Telemedicine and Digital Health ETF (EDOC), Doximity, Inc. (DOCS), Teladoc Health, Inc. (TDOC), Apple Inc. (AAPL), Walmart Inc. (WMT), Amazon.com, Inc. (AMZN)
Investment On Pace to Double Last Year’s Record Spend
Digital health investment has shown no signs of slowing, even as the global pandemic begins to subside. Last year, digital health funding in the US totaled a record $14.6 billion, amid a rise in telehealth usage. According to Bloomberg, investment recently topped $14.7 billion at the end of Q2, topping last year’s total in just the first half of 2021.
Funding has jumped more than 1200% over the last decade and is projected to climb even higher going forward. According to a recent Accenture report, surveying 399 healthcare executives across six different countries, healthcare’s digital transformation is just getting started as 87% of healthcare executives believe their business and technology strategies are becoming inseparable. Additionally, an equal portion of executives said their digital transformation is accelerating, while 93% said they are tackling the tech transformation with a sense of urgency this year.
Digital health is poised for tremendous growth across the globe through the next decade. A market research report from Precedence Research, highlighted by Globe News Wire, found that the global digital health market was worth roughly $181.8 billion in 2020. That sum is forecast to grow to $551.1 billion by 2027 as the healthcare industry continues to capitalize on technology trends including smartphone usage and artificial intelligence development.
MRP highlighted the ongoing wave of growth in digital health earlier this year, noting that 25 companies raised $100 million or more in Q1 2021, also known as a ‘megadeals’. According to Forbes, there have been 48 megadeals so far this year, on pace to more than double the 40 megadeals completed in 2020. Leading the way is weight loss app Noom, which raised $540 million in May giving it a $3.7 billion dollar valuation. Online pharmacy startup Ro followed up with a $500 million dollar funding round, bringing its valuation to roughly $5 billion.
Not all digital health trends that benefited from the pandemic are accelerating in 2021. After reaching record highs in the middle of the pandemic, telehealth usage has declined 37% in the first quarter of 2021, per a Trilliant Health report published by eMarketer.
However, that figure is bit misleading, as telehealth appointments are still significantly ahead of where they were two years ago. eMarketer writes that there were roughly 9 million telehealth visits in March of 2021, well ahead of the 2 million average monthly visits between April 2019 and January 2020.
Digital health offerings, including telehealth, online pharmacies, weight loss apps, continue to garner significant investor interest. As more money flows into the sector, larger companies including Apple, Walmart and Amazon have begun to move into the industry, striking deals to capitalize on the growing digital trends.
M&A Activity Heats Up, Prompting More Public Offerings
Mergers and acquisitions have been accelerating in 2021, with 131 digital health M&A deals taking place thus far, an average…
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