Dive Brief:
- Digital health funding continues to slide, with the third quarter seeing the sector’s lowest funding since the first quarter of 2019, according to a new report from CB Insights.
- Global digital health funding of $4.6 billion fell 36% from the second quarter to the third quarter this year, and 72% from its record high in the second quarter of 2021, the market intelligence firm found.
- That deceleration in funding is especially severe in the areas of clinical trials tech, telehealth and health IT, though telehealth and health IT continue to see some of the highest funding amounts overall.
Dive Insight:
Digital health momentum appears to be slowing coming out of the breakthrough 2021 year. Industry watchers have chalked shrinking funding up to market adjustment and forces like inflation and interest rates.
Notably, telehealth funding halved from the second to the third quarter this year. It’s the third straight quarter of declines, bringing telehealth funding to its second-lowest total in the past five years, CB Insights found.
That’s a marked turnaround from the avalanche of dollars that flowed to telehealth companies at the height of COVID-19, when the pandemic spurred unprecedented demand for virtually delivered care.
Despite that growth, this year’s total telehealth funding is projected to be less than half of what the sector brought in during 2021, CB Insights said.
Mental health funding had a small gain after two straight quarters of decline. The sector went from 90 deals in the fourth quarter of 2021 to 83 deals in the first quarter of 2022 and 70 in the second, before popping back up to 72 deals in the third.
The number of megarounds with funding totaling $100 million or above also dropped to its lowest total since the first quarter of 2019. Top funding rounds went to programmable cell therapy company ArsenalBio, which brought in $220 million in September; heart disease startup Cleerly, which brought in $192 million in July; and mobile health platform Allm, which brought in $182 million in July.
The third quarter had the lowest unicorn birthrate since the second quarter of 2020, according to the report. There were only three new unicorns valued over $1 billion in the quarter: health startup accelerator Redesign Health and nurse staffing platform Incredible Health, both with $1.7 billion, and UK-based Spectrum Health, with $1.2 billion.
M&A exits fell for the second quarter in a row to just 48. That’s the lowest number of exits in the past five years, according to researchers.
Meanwhile, initial public offerings appear to be rebounding, with seven IPOs in the third quarter.
