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Digital health, a category that was virtually nonexistent five years ago, has exploded in recent years and shows the potential to remake the way healthcare is delivered worldwide.
Rock Health, the digital health incubator, tallies digital health investments and reports that the sector took in just over $4 billion in 2014. That's more than double the 2013 total of approximately $2 billion that represented a 30% increase over 2012.

So what is all of this exponential growth buying? My firm, Fenwick & West, does a monthly analysis of the largest private investments in the digital health sector. While wearable fitness trackers and calorie counting apps have caught the imagination of the public, they account for a relatively small portion of the dollars invested in the space.

In 2013 and years prior, most of the capital was going to more conventional healthcare IT (HCIT) infrastructure companies, including electronic medical record (EMR) vendors and big data/population health plays. This is not surprising since the HCIT subsector is capital intensive and was spurred by the Affordable Care Act (ACA) that, among other things, calls for greater interoperability among providers.

In contrast, last year, while there was still plenty of money going to healthcare infrastructure providers, half of the top ten investments went to diagnostic or therapeutic companies. In 2013 there were only two diagnostic or therapeutic companies among the top ten investees.

The other big difference we saw in 2014 related to the size of the investment rounds.


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Large tech companies have been virtually lining up to announce their foray into the digital health space recently. Industry analysts have long suspected that an incumbent industry with a strong customer base could come in and disrupt the nascent mHealth sector. Retail, fashion, financial, and ISP companies have all been considered potential disrupters. Now it