Digital health continues to garner significant investor interest as startups across the industry raked in a record-breaking $29.1 billion last year, more than doubling the previous year’s total. Sparked by the COVID-19 pandemic in 2020, the digital healthcare revolution could have further room to run in 2022.
A surge in mental health conditions has created sustained demand for telemedicine, while digital wearables used for tracking key health indicators are seeing greater adoption from consumers. Similarly, artificial intelligence continues to play an increasingly critical role in healthcare and will likely spur further investment into the sector.
Related ETF: Global X Telemedicine & Digital Health ETF (EDOC)
Digital Health Funding Sets New Annual Record
The digital health market remained red hot in 2021 as the industry shattered their annual funding record, previously set in 2020 amid the COVID-19 pandemic.
Per a recent report from Rock Health, US-based digital health startups raked in $29.1 billion in funding last year, more than double the record $14.9 billion in 2020. Pre-pandemic investment in 2019 totaled $8.2 billion, illustrating just how impactful the pandemic has been in spurring investment into the digital health sector.
MRP reported over the summer that digital health spend surpassed $14.7 billion in the first half of 2021, highlighting the fact there was no slowdown in the second half even as pandemic restrictions subsided and vaccination rates rose.
Rock Health notes that over the last decade funding has skyrocketed over 2300%, in part due to a greater number of deals per year. In 2021, there were 729 deals, 88 of which are considered mega deals ($100 million or more), compared to just 484 deals in 2020.
Leading the way last year were digital health companies who focus on the mental health, as Healthcare Dive notes they collectively raised $5.1 billion in 2021, $3.3 billion more than any other clinical indication.
Conversely, telehealth, which is primarily used for mental health appointments, saw its usage decline to a new pandemic low in October 2021, the most recent month of data. Healthcare Dive reports that only 4.1% of private medical claim lines were attributed to telehealth in October, well below the pandemic peak in April 2020 at 13.0%.
While telehealth utilization has steadily been declining, the numbers are still extremely elevated compared to pre pandemic levels. In January 2020, the percentage of private medical claims attributed to telehealth was only 0.2%, meaning October’s data is 2000% higher than pre pandemic norms.
The main question facing the digital health industry is…
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