The first half of 2016 was the strongest on record for digital health companies. According to StartUp Health, there was nearly $4 billion invested in over 150 early stage deals. For 1H16, the top digital health investment category was patient/consumer experience at $958 million, or nearly 25% of invested capital. StartUp Health notes that over 7,600 startups around the world are working on digital health. And that’s just the startups.
One of the more sobering facts about our healthcare system is not only its sheer size, but how the spending spreads across various age groups. The U.S. spends over $3.0 trillion, or 17% of its GDP, on healthcare. That compares with about 11% for Germany and France. But if we look at spending across various age groups, the U.S. spend is about the same percentage of GDP for people under 60-65.
We’re feeling pretty good about 2016. The m&a market in the dozen+ information technology sectors that we follow and sometimes lead is strong. We’re busy. Demand is high for companies that check all the boxes: unique products that address very large markets, defensible market leadership, high recurring top-line growth, substantial profit leverage, strong management, etc. High demand often translates to high values. We recently advised on a sale at more than 30x EBITDA.
In the dynamic world of healthcare, the sheer magnitude of innovations and the capital behind actualizing the vision of our entrepreneurs is enough to keep us fully occupied. We continue to see significant activity in the areas of value based reimbursement, consumerism, mobility and informatics. These technologies aim for the double play of increasing quality while reducing costs. At the same time, we see a Black Swan lurking in the background which is not getting the attention it deserves. Clinical Quality Language (CQL) will spur the creation of a whole new set of players and may propel our industry to a new level of automation and efficiency.
A few weeks ago, like many of our colleagues in our industry, we put on our comfortable shoes and trotted along the long aisles of the exhibit halls at HIMSS in Las Vegas. We visited many booths, and talked to multiple vendors, regulators and clients. Here are a few of our key takeaways.