This document provides an overview of the Israeli digital health sector, including statistics on funding and deals. It notes that Israel has experience in relevant technologies like sensors, algorithms, encrypted communications and cloud computing. The healthcare system has mandated electronic medical records for 22 years. Israeli digital health startups are mostly early-stage, with limited revenue generation so far. Funding of startups in this sector has increased dramatically since 2009. The document concludes with tips for digital health startups, such as quantifying the value proposition to attract funding from pharmaceutical companies seeking to enter digital health.

1. mHealth Israel:
Israeli Digital Health Overview
Levi Shapiro
Partner
Veritas Digital Health Fund

2. Healthcare Spending in the US

3. Health Spending in Era of Payment Reform

4. Fragmentation is GREAT for Startups

5. Obamacare States See Increase in Efficiency

6. Health IT Funding & Deals

7. Investment +987% since 2009; 91% YoY

8. Deals: Digital Health vs. Biotech / Pharma

9. Emphasis on Diagnosis, Monitoring, Protection
Frost& Sullivan, 2014

10. Confidential 10
• Mandatory EMRs for 22 years
• Israel leads in relevant technologies:
• Sensors
• Algorithms
• Encrypted communications
• Cloud
• Personalized medicine
• Chronic disease management tools
• Inter-Operability IT
Can Israel Lead HIT Innovation?

11. Israeli Digital Health Startups by Stage
Source: DFJ Tamir Fishman, 2013

12. Israeli Digital Health Startups = Limited Revenue
Source: Levi Shapiro / IVC, 2014

13. Funding of Israeli Digital Health Startups
Source: Levi Shapiro / IVC, 2014

14. # Israeli Digital Health Startups, 2005-2014
Source: Levi Shapiro / IVC, 2014

15. What Does This Mean for Startups?
15

16. Tip 1: Play Nice with Partners

17. Opternative: Online Eye Exam
Referral tool to drive visits to local optometrists
and opthomologists
Case Study
Raised $2 Million
Fifteen full time employees
Launched product in 2014
Company Highlights
People world-wide who receive
an eye exam each year
2.4 BILLION
75 PERCENT
Savings when using Opternative
over an in-person exam
People world-wide need exams
but cannot afford or access care
700 MILLIONBusiness Model

18. Tip 2: Quantify the Value Proposition (Pilots)
- Pilot program with Newton Wellesley Hospital
- Collected and shared information that helped win NWH as reference customer
- Validation from NWH enabled new client wins
EarlySense Uses signal-processing technology to
provide a contact-free and early detection patient
supervision system
Case Study
Raised $28 Million in funding
Sixty full time employees
Profitable from operations
Company Highlights

19. 19 Contents are proprietary and confidential.
Tip 2: Quantify the Value Proposition (Savings)
Helps organizations and physicians actively manage
contracts and reduce regulatory risk. A mobile app
engages physicians to record work, while a back-end
portal provides support across the organization
Ludi ensures hospitals manage physician-hospital
agreements so the expectations of the agreement
are fulfilled and regulatory risks are decreased
Case Study
Raised $1.1 Million in funding
Four full time employees
Company Highlights
Average law suit cost due to
inadequate documentation of
physician contracts
$19 MILLION
70 PERCENT
Organizations requiring
physicians to log their time
Organizations using formal
contracts for medical
directorships
77 PERCENT

20. 20 Contents are proprietary and confidential.
Tip 2: Quantify the Value Proposition (Efficiency)
Doctor’s offices can identify scheduled patients who are
at-risk for not showing up to their appointments and
intelligently schedule additional appointments
SmartScheduling Brings an airline load
scheduling approach toward doctors visits
Case Study
Revenue positive
Chosen for athenahealth’s internal accelerator program
Utilized in over 30 physician offices
Company Highlights
Doctors currently overbook
their schedules in an effort to
balance no-show patients
1 IN 2
$19 MILLION
Reduced revenue per clinic due
to patients missing
appointments
Average no-show rate for
outpatient clinics
20 PERCENT

21. Tip 3: Follow the Money- Pharma Struggles with Digital

22. Ann.
Date Target Acquiror CE Mark
FDA
Approval
Transaction
Value
LTM
Revenues
TEV / NTM
Revenue
%
Up-front
07/14/14   ~200 NA NA 100.0%
06/30/14   375 NA NA 100.0%
05/27/14   ~305 55 NA ~75.0%
04/02/14   320 80 NA 100.0%
12/04/13   193 49 NA 100.0%
05/23/13 Targeted Therapies
Business Unit
  200 48 3.5 100.0%
10/23/12   165 NA NA 84.8%
04/05/12   321 68 3.6 100.0%
03/19/12   314 30 10.0 84.1%
11/21/11   413 NA NA 81.8%
11/09/11   313 82 2.8 100.0%
07/27/11   293 NA NA 100.0%
07/07/11   452 65 7.0 100.0%
09/20/10   444 0 NA 43.6%
07/12/10   433 94 3.8 100.0%
06/16/10   335 54 5.0 100.0%
05/05/10   210 56 3.0 100.0%
12/16/09   785 100 NA 100.0%
11/09/09   489 117 NA 100.0%
10/26/09   200 NA NA 65.5%
09/28/09   267 100 1.9 100.0%
Mean: $340 $67 4.2x 91.8%
Median: $314 $65 3.5x 100.0%
Tip 4: Sell The Dream
Pre-FDA Approval M&A Transactions
Source: Capital IQ.
(1) $40 million equity investment and has the option to acquire Spinal Modulation for up to $300 million plus certain revenue-based milestones following U.S. commercialization
(2) Includes $150 million potential CVR upon FDA approval. Does not include $1,050 million of potential CVR payments in six years post-approval. Revenue multiples only reflect $150 million in upfront payment.
($Millions)
Post-FDA Approval M&A Transactions