03 Feb, 2017

Dreaming of where to invest next? Digital healthcare!

 -Digital-healthcare-investment

Digital healthcare is a fast-growing industry. Under Armour announced this week that digital healthcare, despite being only a small portion of the business, has been their fastest-growing channel.

“For the year ended Dec. 31, Under Armour posted sales of web-connected fitness products of $80.4 million, an increase of 51% from sales of $53.4 million in 2015. In comparison, overall sales for Under Armour increased year over year 22% to $4.64 billion $3.82 billion, while apparel, its biggest category, increased revenue 15% to $3.22 billion in 2016 from $2.80 billion in 2015.”  – Internet Health Management

The digital healthcare opportunity for companies like Under Armour is the building of digital connected wearable or apparel, that allows the on-demand consumer to track and compare their health. For athletes and fitness nuts, the opportunity to compare their performance is enticing. Under Armour has invested also $500 million in launching connected fitness products and acquiring MyFitnessPal.com.

And they are not the only ones looking at digital healthcare as an investment opportunity.

Mobile fitness trackers have been big business over the past few years. From Apple Health app to FitBit, you the consumer are now empowered to monitor you and your family’s health. According to the Digital Health Consumer Report of 2015, undertaken by Rock Health, digital health technology has been adopted by 80% consumers. This equates to around 4.5 billion people worldwide! mHealth apps have empowered the patient and led to an unprecedented amount of data. Big Data. Data analytics enables healthcare providers to target, attract, and retain increasingly well-informed patients at the ‘moment of healthcare need.’ The first wireless fitness monitor was released in 1982 – the Polar Sport Tester PE 2000 – which exclusively monitored heart rate. With an influx of technology in the noughties, the fitness monitor evolved to track steps, sleep, heart rates, exercise, diet and more. Wearables are a huge business, with FitBit releasing its first product in 2008. Now, with vast competition, FitBit has actually suffered a drop in stock price of 70%.  With more fashionable options on the market and mobile manufacturers like Apple and Samsung, creating their own devices which incorporate more than just fitness tracking, FitBit may be losing its grip on the market. The wearable industry now encompasses the entire sports universe, both with professionals and consumers alike. In our on-demand world, consumers relish the next advancement that will make tracking anytime, anywhere. This extends to the medical realm.

Tracking healthcare is not limited to just one’s own fitness or diet. The medical mobile app space is heating up – with new medical apps springing up almost weekly. Among the most useful is Micromedex an easy to use pharmaceutical reference, which includes features like dosage recommendations. UpToDate is a great app for those studying medicine and looking to keep up with the news. John Hopkins ABX Guide allows the user to search for in-depth information on a variety of medications. Search a drug and see a list of recommended doses, side effects, restrictions and more.

Red Cross First Aid is another great app, that guides you through everyday accidents from asthma attacks or broken bones. MyChart is giving the power back to the patient, providing access to medical records on your phone at any time.

Digital health is huge right now, with start-ups springing up almost daily. Practo an India-based startup announced earlier this year, that they had raised around $55 million, taking their total to $180 million. Practo is working to improve access to healthcare in emerging markets. Their platform has 2 facets, firstly, connecting patients with healthcare providers and secondly, offering incredible data and business intelligence to its business partners.

Eko Devices have manufactured a noninvasive sensor that can be sued to monitor cardiac output. The noninvasiveness of the device is particularly key for the monitoring of cardiac conditions, as the heart is already compromised. Oncora Medical is taking advantage of the big data and machine learning to make oncology treatments more personalized. Pager who offers an app for on-demand house call services is making waves in telemedicine, last week announcing the appointment of a new CEO Walter Jin.

Many companies are making significant waves in digital healthcare. There is plenty for investors and venture capitalists to keep an eye on going into 2017 and beyond.

So why this excitement over digital healthcare?  

The market of medical devices has traditionally been influenced by physician preference in regards to big ticket items such as artificial joints or pacemakers. Over the past decade, this has begun to shift towards digital devices. Venture capital investment is an early indicator of shifts in any industry.

Despite the presidential transfer of power creating an atmosphere of uncertainty, in particular over the future of the Affordable Care Act, 2016 has been hailed a ‘breakout year’ for digital healthcare funding, with $8 billion invested in more than 500 startups according to StartUp Health. Mobile technology was the big winner with $3.1 billion dollars funding 437 deals.

“Top-funded areas in 2016 included mobile apps at $1.3 billion, wearable sensors with $592 million, data analytics at $574 million, telemedicine with $528 million, mobile healthcare infrastructure and services at $228 million and wellness with $218 million.“ Internet Health Management

Overall, 2016 was a great year for digital healthcare investment, with a total of 1,115 investors participating in funding rounds in healthcare IT. Top investors include Khosla Ventures, GE Ventures, and BlueCross BlueShield Ventures. Among health, IT investors were over 100 newcomers, including Amazon Alexa Fund and Amgen Venture. Amazon’s fund providers up to $100 million is venture capital funding across a variety of industries. The fund invested in infant activity tracker Owlet Baby Care, a clear indicator of its potential to expand outside of just infant tracking. The so-called ‘Smart Sock’ measures temperature, heart rate and the amount of sleep. Amgen Ventures entered the Health IT market in a big way in 2016, investing in Akili Interactive Labs, alongside Merck Ventures. Akili has developed a unique platform that uses video games to detect early stage cognitive decline. This could be vital for diseases such as Alzheimer’s, where early diagnosis and treatment is key.

2016 also saw the emergence of philanthropic movements like the Chan-Zuckerberg initiative entering the digital healthcare arena. In January, the initiative announced its move to acquire Meta, an AI, and machine learning platform. Meta looked to bring AI and machine learning into the medical world, with a focus on oncology. IBM Watson is another big name that made waves in 2016 with its work in oncology. Using cognitive computing, IBM is looking to ignite digital transformation in healthcare.

There was also 4 digital healthcare IPOs in 2016 of a $234 million value: Nanthealth, Tabula Rasa Healthcare, Oneview Healthcare and Senseonics. PointClickCare announced yesterday that they are considering IPO following the raising of $85 million in new funding. Their cloud-based EHR is designed for senior care, which considering that the baby boomers are approaching retirement, there is huge potential for this platform over the coming year. In 2016, the company’s revenues exceed $160 million – 28% growth year-on-year. This is an IPO to watch for in 2017.

Healthcare incubators are also on the up! These companies are supporting entrepreneurs and aiding startups in the fight for funding and investment. Blueprint Health, for example, based here in New York invested $20k annually in health IT, providing not only funding but also mentorship.

Investors predict that funding in this area will remain strong into 2017. Hot areas to watch include data analytics, telemedicine, connected fitness, patient engagement and behavioral health.

“The genie’s out of the bottle and regardless of what happens with health reform, there’s a wave of activity and a wave of investment into companies that are focusing on those solutions.” Unity Stoakes, StartUp Health.

The excitement around digital health is not limited to the United States. In 2016, China recorded $1.1 billion of investment in the first half of the year alone!

What are the benefits of digital healthcare?

The buzz around digital healthcare is undeniable. The opportunity to leverage data, machine learning, cloud computing, telemedicine, social platforms and more to become patient-centric is huge. Not only do these technologies put the patient first, and will disrupt healthcare and the clinic, the potential to reduce the cost of treatment and individualize medicine is truly exciting.

Healthcare is looking to more traditionally consumer-driven industries for digital transformation tips. This may give consumer-oriented investors a leg up in digital healthcare investing.

Digital Diary is headed to Dallas. Join us April 4-5, 2017 to discuss the latest in digital health at Digital Healthcare Transformational Assembly featuring the panel discussion From Connected Health to Digital Health, moderated by Brian Ahier, Director of Standards and Government Affairs Medicity and Interoperability & HIE WorkgroupMedicity, HIT Policy Committee.

Other top sessions include The New Era of the On-Demand Patient: How Technology and Data Shape Digital Marketing in Healthcare, Digitization and Mobility are Revolutionizing the Practice of Medicine and Embracing the Chief Marketing Officer and Chief Digital Officer Relationship.

For more information, visit The Millennium Alliance Digital Healthcare Transformational Assembly page >>

Digital Healthcare Transformation

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