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In its Q1 2019 digital health funding report Rock Health noted that investment in digital health companies leveled off in the first quarter after a record-setting 2018. At $986 million, investment in the first three months of the year was down 21 percent from the fourth quarter of 2018, when it hit $1.2 billion

But the leveling off in funding is more likely linked to an overall decrease in venture investment than to any weakness in the fundamentals of the digital health sector.

The PwC/CB Insights MoneyTree Report Q1 2019 states that global venture funding dropped 22 percent in the first quarter over the last quarter of 2018—from $67 billion in Q4 to $52.2 billion in Q1. U.S. venture investment overall dropped even more in Q1, from $38.7 billion to $24.6, or 36 percent. As a result, digital health venture investment is either even with or outperforming the market as a whole.

Mega-Deals, Unicorns and Even IPOs

The first quarter saw one outsized deal for $500 million and three others for $100 million or more. And as Rock Health pointed out, two digital health unicorns emerged in the first quarter: meditation app developer Calm (a Fenwick client) took in an $88 million Series B financing and Health Catalyst, a data analytics platform provider, received a $100 million investment.

Health Catalyst is also among the digital health companies that are reported to be queuing up to go public. The IPO window for digital health has been shut for the past two and a half years, but the wait may soon be over. Rock Health predicts a number of other companies may be testing the waters for an IPO.

If these public offerings are successful, digital health investors will be energized and those who have enjoyed exits will have their coffers replenished with an infusion of cash that will once again be available for investment.

Funding Men’s Health, Women’s Health and More

There were eight rounds of over $50 million in the first quarter. They include two companies headquartered outside the U.S., a preferred provider organization, an online platform that sells men’s health products, a telemedicine platform that provides prescription birth control to women and a digital therapeutics company, in addition to Healthcare Catalyst and Calm mentioned above.

The largest round, at $500 million went to Clover Health, a preferred provider organization. The Series E round was funded by Greenoaks Capital Partners.

Doctolib, a platform that connects patients and doctors across France and Germany, took in a late-stage round of $174.76 million. Accel, Bpifrance, Eurazeo, General Atlantic and Kernel Investissements participated in the round.

Health Catalyst, mentioned above as a newly minted digital health unicorn, received a Series F investment. The round was led by OrbiMed, with Kaiser Permanente Ventures, Norwest Venture Partners, Sands Capital Ventures, Sequoia Capital and UPMC Enterprises also participating in the round.

Hims, which operates an online platform to sell wellness products for men, also received a $100 million investment. Investors in the round were not disclosed.

Calm, another new digital health unicorn mentioned above, received a Series B investment that was led by TPG Growth and included CAA Ventures, Insight Venture Partners and Sound Ventures.

Halodoc, a telemedicine company based in Indonesia, took in a $65 million Series B round that was led by UOB Venture Management. Blibli.com, InvestIdea, Korea Investment Partners, Openspace Ventures, Singtel Innov8 and The Clermont Group participated in the round.

A $64 million Series C round went to Pear Therapeutics, developer of a software-based digital therapeutics platform. Temasek Holdings led the round and 5AM Ventures, Arboretum Ventures, Blue Water Life Science Fund, Bridge Builders Collaborative, EDBI, JAZZ Venture Partners, Novartis and Trustbridge Partners participated.

The Pill Club rounds out list of top digital health investments in Q1. The telemedicine service focused on making it easier for women to obtain birth control, received a $51 million Series B round that was led by VMG Partners and included ACME Capital, Base10 Partners, GV and Shasta Ventures.

After an investment climate in 2018 that at times bordered on “frothy,” it should not come as a surprise that the pace of investment has slowed in the most recent quarter. But large rounds are still getting done and the IPO window is opening—all positive signs that the digital health sector’s fundamentals are sound.