- Digital health companies raised $5.4 billion in the first half of 2020, a new record, per Rock Health.
- The total was driven by 11 deals valued at $100 million or more.
- The sector is on track to have its best funding year ever, as investors bet on coronavirus-related demand for online doctors appointments and drug delivery.
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The year is halfway over, and digital health startups are on a roll.
The sector is on track to have its best funding year ever, according to a midyear report from Rock Health, a digital health venture fund and advisory firm. Large deals are driving that trend, after healthcare startups overall netted a record number of mega-rounds during the first quarter.
Digital health has redefined major aspects of healthcare systems around the world in the span of a few months. Largely brought on by coronavirus outbreaks, online doctors' appointments, drug delivery, and virtual research have all taken on new significance for patients, researchers, and pharmaceutical companies alike during the coronavirus pandemic.
Investors are upping their bets on digital health, the Rock Health report shows. VCs poured $5.4 billion into this crop of startups in the first half of 2020, a record start to a year. Last year, they invested $4.2 billion in the first half of the year, which was also a record.
Here are the 11 biggest deals in 2020 by midyear, ranked by size from smallest to largest.
Verana Health - $100 million
Verana collects massive amounts of data from medical associations like the American Academy of Ophthalmology so that researchers and life science groups can analyze it.
One product gives physicians a list of patients best suited for their trials based on criteria programmed into the software, for example. Another shows trends in patient diagnoses and their treatments.
The two-year-old startup won $100 million in a Series D round led by Alphabet's GV in February, bringing its total funding to $130 million, a spokesperson told BI.
Other investors include Bain Capital Ventures and Casdin Capital.
Tempus - $100 million
Tempus provides software and datasets to researchers at hospitals and pharmaceutical companies that help them pinpoint individualized treatments for cancer patients based on their genes and other information.
They also make tests for coronavirus as well as neurological and psychiatric conditions and have a lab that does gene sequencing for providers' research projects.
To date, Tempus has raised $620 million in funding, a spokesperson told BI. The latest round, a Series G in March, raised $100 million towards that total and brought the company to a $5 billion valuation, the announcement said.
The funds will go towards the company's continued expansion into other disease areas like diabetes, depression, and cardiology, a spokesperson said.
Investors to date include investment firms Baillie Gifford, Franklin Templeton, T. Rowe Price, and Novo Holdings as well as Revolution Growth, a venture capital company.
Mindstrong Health - $100 million
Mindstrong, a mental healthcare company, raised $100 million in May from new and existing backers Optum Ventures, General Catalyst, ARCH Venture Partners, 8VC, and more. The Series C round brought Mindstrong's total funding to $160 million, a spokesperson told BI.
The California-based startup provides counseling to patients with serious mental illnesses like bipolar disorder, schizophrenia, and major depressive disorder, the spokesperson said; It works with health plans to provide services at no costs to members provides a mobile app for monitoring symptoms.
Mindstrong is using the recent funds to hire more therapists and other clinicians while expanding its offering footprint with a national insurance payer, though the company didn't say which one.
Cedar - $102 million
Cedar is trying to put an end to bad billing experiences with software that takes down insurance information and provides price estimates, as Business Insider's Lydia Pflanzer reported. The company's tech also provides patients with appointment reminders and virtual check-ins.
The New York-based startup raised $102 million in June in a Series C round led by Andreessen Horowtiz. That includes $77 million in equity and $25 million in venture debt via JPMorgan, Cedar said in the announcement.
Cedar is using the funds to build out more pre-visit tools for patients, like copay collection and integration with people's health savings accounts (HSAs), a spokesperson told BI.
Last month, it also gained partnerships with Novant Health and the Delaware-based ChristianaCare, the spokesperson said.
Outset Medical - $125 million
Outset Medical makes a portable dialysis machine that's roughly the size of a mini refrigerator, and has wheels.
Meant to disrupt a traditionally cumbersome and inconvenient course of treatment for patients with kidney trouble, the machine won approval from the US Food and Drug Administration for at-home use earlier this year. It's also available in healthcare sites.
In February, the San Jose-based startup announced its $125 million Series E round. Fidelity Investments, D1 Capital Partners, and Mubadala Capital, the investment arm of Abu Dhabi's sovereign wealth fund, are all investors.
Those proceeds are slated to fund expansion of Outset Medical's dialysis system, called Tablo, across acute- and chronic-care markets in the US, the announcement said. The startup says it's available via prescription and usually covered by insurance.
DispatchHealth - $135.8 million
DispatchHealth sends a care team to people who have an urgent medical issue, like an asthma attack or deep cut, but don't necessarily have to go to the hospital. In available cities, people can reach DispatchHealth through a mobile app, website, or phone call.
In June, Optum Ventures led the company's Series C round with participation from Alta Partners, Questa Capital, Echo Health Ventures, Oak HC/FT, and Humana. It turned up $135.8 million, which DispatchHealth says it'll use for expanding to more areas.
The startup has $216.8 million in total funding, a spokesperson told BI.
Insitro - $143 million
Insitro aims to cut down on expensive failures in the pharmaceutical industry by building models of diseases and studying which drugs will work on them with, among other things, machine learning that leans on insights from loads of people's genetic and clinical data.
The startup counts Andreessen Horowitz, GV, and ARCH Venture Partners among its backers, and its $143 million Series B round drew funds from BlackRock, Casdin Capital, a large pension plan, and others, the company announced in May.
Element Science - $145.6 million
Element Science makes personal defibrillators that attach to people's bodies, which the company says can restore normal heart function in the event that they stop beating.
In March, it raised $145.6 million in a Series C round via Third Rock Ventures, GV, Quiming Venture Partners USA, and more, for a total of $183 million raised to date, Element's CEO and Founder Dr. Uday Kumar told BI.
Kumar said that the company will use the funds for hiring more workers, securing a second site for manufacturing, and funding clinical studies for its defibrillator, which isn't yet for sale in the US.
Meanwhile, it's weighing the possibility of applying for emergency authorization from the FDA for its heart device, given some patients at higher risk for heart attacks are not seeking medical treatment due to coronavirus outbreaks, he said.
"Much will depend on how the environment changes over the next few quarters," Kumar said.
Amwell - $194 million
It's been a big year for telemedicine giant Amwell, which reportedly filed for an initial public offering after coronavirus sent the number of patients who use it skyrocketing. The company is run by brothers Ido Schoenberg and Roy Schoenberg.
In May, the company gained $194 million in a Series C financing. It's now raised more than $500 million, a spokesperson said. Investors include pharma company Takeda, SV Health Investors, and Cito Ventures.
While telehealth companies benefited from loosened regulation to fuel their response to the coronavirus pandemic, one of President Donald Trump's top health administrators says that digital health needs to continue after outbreaks subside, as BI's Kimberly Leonard reported.
Alto Pharmacy - $250 million
Alto is a digital pharmacy that sends patients their prescriptions in San Francisco, Denver, Las Vegas, and other cities around the country, a spokesperson told BI.
As Business Insider's Lydia Pflanzer reported, models like Alto's have taken on more importance during coronavirus outbreaks because people are looking for safer ways to get their pills. But a crop of these drug-delivering upstarts have been going to bat with pharmacy chains like Walgreens and CVS Health as well as Amazon's PillPack for years.
In January, Alto raised $250 million in a Series D round led by Softbank's Vision 2 Fund with participation from GreenOaks Capital, Jackson Square Ventures, Olive Tree Capital, and Zola Global, the announcement said. That brought total funding to $351.6 million.
Since then, the company nabbed a drug delivery deal with Stanford University for one of its studies on smoking cessation, the spokesperson said.
ClassPass - $285 million
ClassPass runs a popular exercise app offering customers gym classes at a variety of venues for a flat monthly rate. It raised $285 million in January, just before coronavirus outbreaks essentially shut down the startup's offline business.
"The recent fundraise provided an important safety net for ClassPass as our offline business was forced into hibernation," a spokesperson for the company told BI.
ClassPass has shifted to offering digital classes and waived its commissions, sending 100% of the revenue back to its fitness and wellness partners, the spokesperson said. Now, ClassPass is relisting some in-person classes as some regions in its 30-country network start to reopen.
The New York-based startup says it's raised $549 million to date and counts Apax Partners' investment fund Apax Digital as well as investment firms L Catterton and Temasek among its backers.