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Digital Health is Here to Stay

July 5, 2012

Digital health companies, a segment fueled by the  convergence of information, wireless, and healthcare technologies, saw a 317 percent jump in financings in the first half of 2012 as venture investors embraced the promise of this emerging area to improve healthcare costs, access, and delivery. Investments in the sector have accelerated as venture funding grew to $499 million in 46 transactions during the first half of the year, compared to just $156 million in 19 transactions for the same period in 2011, according to Burrill & Company.

The largest digital health financings during 2012 include the healthcare pricing consumer information service Castlight Health’s $100 million financing in May, Web-based home healthcare software provider Kinnser Software’s $39.9 million in March, EHR vendor Practice Fusion’s $34 million financing in June, and telehealth provider American Well’s $37 million financing also in June.

“The increased funding in the digital health arena reflects a growing awareness of the transformative power these technologies are bringing to healthcare,” said G. Steven Burrill, CEO of Burrill & Company, a global financial services firm focused on the life sciences. “It is also an area that is attracting both traditional technology and life sciences investors, who recognize the ability these technologies have to reduce cost, improve care, and personalize care.”

The growing venture investment in digital health is part of an overall pick-up in venture activity in the first half of 2012 within the life sciences sector as total venture investment grew nearly 31 percent globally to $6.2 billion. Therapeutics companies raised more than any other sector in the first half of the year with a total of $2 billion in venture funding, a slight increase from the $1.9  billion in the same period a year ago. Tools and technology companies was the only sector to see  a drop as financing fell to $416 million from $619 in the first half of 2011.

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