CB Insights: 2015 U.S. Digital Health Exits on Pace to Surpass 2014

Fitbit and Veeva Systems’ billion-dollar IPO exits have energized the digital health sector.

2014 was a record-breaking year: total fundraising in the digital health industry reached $3.5 billion. That same year saw a surge in initial public offerings (IPOs), suggesting that investment exits in 2015 could surpass those of the previous year. CB Insights has recently released relevant data analyzing current investment exit activities in this sector in the United States.

In recent years, the number of investment exits in the U.S. digital health sector has begun to rise.

In 2011, there were only six investment exits in this sector; by 2013, that number had risen to 23, and reached 30 in 2014, including four major IPOs: Care.com, Imprivata, Everyday Health, and Castlight Health. Castlight Health’s IPO was among the three largest “unicorn” IPOs since 2010.(Note: Refers to companies valued at over $1 billion in both private and public markets), with a market capitalization of $1.4 billion. The company primarily serves U.S. enterprises, providing cloud-based software that helps them control healthcare costs, functioning as a price-comparison tool in the healthcare sector.

Viewed on a quarterly basis, the recent uptick in investment exit activity becomes more apparent. 2015, like the previous year, has been a period of highly active exits, with 15 deals recorded by the second quarter.

However, IPO activity has remained lukewarm. The first and only one since 2015 is Fitbit’s IPO in Q2.

The largest acquisition from 2015 to the present is Under Armour's $475 million purchase of MyFitnessPal.

M&A transactions in 2015 may surpass last year’s levels, particularly as medical device and pharmaceutical companies actively expand into the internet healthcare sector to support their product portfolios. Coupled with enterprises seeking entry into internet healthcare and internet healthcare companies aiming to achieve growth through acquisitions, these factors are expected to stimulate investment exit activities this year.

CB Insights also provided a ranking of exits from digital health investments over the past five years. Veeva and Fitbit ranked first and second, respectively, and were two of the few “unicorn” companies among them. Fitbit, which focuses on wearable devices, was valued at $4.1 billion during its IPO in the second quarter of 2015. Its stock price continued to rise thereafter, reaching a market capitalization of $8 billion by September 22, 2015.

Veeva Systems, a cloud services provider for the life sciences industry that went public in 2013, has overtaken Fitbit to claim the top spot on the ranking. Its $4 million venture capital raise during its IPO journey appears modest within the digital health sector, yet it makes Veeva stand out as quite unique on the list.

Compiled by Chen Xin
Editor: Mo Renying