Q 1 investment and financing report of rock health in 2019: financing US $986 million, and the valuation of digital medical Unicorn continues to rise

In 2018, the amount of financing in the field of digital health care reached a record high, but in the first quarter of 2019, the financing situation in this field tends to be flat At the same time, after two and a half years of "drought" period, the IPO market in the field of digital medicine ushered in a turning point Rock Health recently released the financing report of digital medical field in the first quarter of 2019 The arterial network has been compiled and sorted, focusing on the following aspects: 1 The financing of digital medical companies slowed down in the first quarter of 2019; 2 Enterprises are keen to invest in digital medical field; 3 The "drought" period of digital medical IPO is coming to an end 4、 We call on digital medical companies to adopt a result oriented business model First, financing of digital medical companies slowed down in the first quarter of 2019 In a record year of 2018, digital medical companies in the United States raised a total of 8.1 billion US dollars In the first quarter of 2019, digital medical companies in the United States raised a total of US $986 million and completed 61 transactions This is about half of the financing amount in the first quarter of 2018, but it is roughly the same as that in 2017, 31% lower than that in 2016 Comparison chart of digital medical financing in the United States from 2016 to 2018 (screenshot from the original report) in the past six months, the financing situation of digital medical enterprises in the United States has been stable, but the situation in the middle of 2018 is slightly special In the third quarter of 2018 alone, investors poured $3.3 billion into the industry at an alarming rate, compared with $1.2 billion in the fourth quarter of 2018 Excluding the influx of money during the most popular period of digital healthcare in mid-2018, the average quarterly investment in the past two years (first quarter of 2017 to first quarter of 2019) was $1.4 billion This also means that the $986 million invested in the first quarter of 2019 is slightly lower than the recent trend There are two new digital medical unicorns that are growing strongly in the first quarter of 2019, indicating that their valuations continue to rise Among them, calms, a meditation app maker, is valued at $1 billion after raising $88 million in round B Calm plans to use this round of funds to develop new products and expand the international market Health catalyst, a provider of health analytics platform, raised $100 million in round F, with a valuation of $1 billion The company plans to continue building its platform to help hospitals link and analyze isolated databases, and it is understood that health catalyst is planning an IPO 2、 Enterprises are keen to invest in the field of digital medicine Investors in the field of digital medicine mainly include well-known venture capital companies, technology companies and medical enterprises Andreessen Horowitz, Khosla ventures, new enterprise associates, y combinator, Novartis, Merck and GV all invested in digital healthcare in the first quarter of 2019, and they have invested continuously in this field in the past few years Analysis of digital medical investment transactions (screenshot from the original report) in the past five years, venture capital institutions of enterprises have participated in about one third of digital medical transactions This is in sharp contrast to the participation of American enterprises in the overall venture capital activities of non-medical industry From 2014 to 2018, enterprises participated in 13% - 16% of venture capital investment in non-medical industry, only half of the digital medical investment Given that about 85% of digital medical companies tend to be acquired by enterprises, it is not surprising that enterprises are interested in digital medical investment, which is also an effective way to use external innovation to promote enterprise growth and profitability Enterprise investment in digital medical transaction analysis (screenshot from the original report) health system has been a very active enterprise investor It has unique capabilities, professional clinical knowledge, and can identify innovative projects for medical service providers and patients Kaiser Permanente, Mayo Clinic and ascension are the more active medical service organizations in the past five years Since 2014, they have made more than 10 Investments respectively Moreover, they are three of 11 venture capital institutions, with double-digit digital medical investment 3、 The "drought" period of digital medical IPO is coming to an end The last IPO of American digital medical companies is in 2016, which will be changed soon this year According to reports, livongo, peloton, change healthcare and health catalyst are all planning to go public in 2019, and Goldman Sachs and JPMorgan Chase are all leading the IPO process of these four companies Among them, livongo, health catalyst and peloton have an average history of 10 years, and they have raised an average of $505 million, which is consistent with the historical average of previous tracking It is worth noting that the potential IPO company change healthcare (CHC) was acquired by McKesson in 2016 for us $3.3 billion, which was rated by the media as the largest digital medical acquisition in that year Although IPO is an important milestone for early venture investors, investors should also pay close attention to how these IPO events promote the company to provide services for patients, customers and future public market investors In addition, the potential digital medical IPO boom is also expected by a number of well-known technology companies, including Uber, LYFT, slack and pinterest, which are planning to go public Interestingly, in the IPO application document, LYFT specifically mentioned that it would expand its development in the medical field so as to enable more patients to make vehicle appointments in time Acquisition type analysis (screenshot from the original report) the speed of digital medical M & A tends to slow down in the first quarter of 2019, during which 21 start-ups were acquired, 32% lower than the average value of 31 acquisitions per quarter in 2016-2018 Internal integration of digital healthcare will continue, with digital healthcare acquiring 13 start-ups (more than half of total acquisitions in the quarter) Behavioral health has gradually become a hot field Ableto, a virtual behavioral healthcare provider, acquired joyable, which provides users with coach supported health programs to overcome anxiety and depression At the same time, livongo acquired mystrength, which provides evidence-based and clinical evaluation based therapies, such as cognitive behavioral therapy (CBT), the third acquisition of livongo in 18 months The acquisition of these companies represents an industry trend - more and more companies are combining multiple products into broader solutions to benefit from a shared platform driven business channel 4、 Call on digital healthcare companies to adopt a results based business model in the first quarter of 2019, with 25% of transactions focused on care and disease monitoring This is in part a response to digital solutions, especially remote patient monitoring (RPM) and improved compensation for chronic care management (CCM) On January 1, 2019, the medical insurance and Medicaid Service Center (CMS) launched three new CPT codes for remote patient monitoring These billing codes set some rules and conditions, and medical service providers can seek compensation to provide remote monitoring of physiological parameters and remote treatment management services There is synergy between rpm and CCM services, and these new billing codes represent recognition of the value provided by digital healthcare companies that provide telemedicine, chronic care management, and other forms of virtual care This represents a big step forward for the industry, where healthcare providers can get more pay for their services without requiring patients to go to the doctor's office If implemented properly, it will benefit all stakeholders, so more and more companies begin to provide technical support for remote care for medical service providers However, some companies' services may overemphasize the short-term benefits under these new CPT codes, instead of focusing on the innovation and transformation of their RPM / CCM services, which may occur in start-ups Startups may be chasing short-term revenue because they believe investors value these rather than long-term potential and vision However, in the long run, the medical market will severely punish short-term profit seeking behavior That's why we call on digital healthcare companies to adopt a results based business model Marigold health is a good example Their services provide a specific compensation code for care coordination, which is based on the evidence-based plan, which will strictly measure and manage the recurrence rate and readmission rate of patients Original link: https://rockhealth.com/reports/q1-2019-the-end-of-the-digital-health-ipo-drop/