Mercom Capital Group Reports First Billion Dollar Quarter For Healthcare Information Technology Sector: VC Funding Doubled Over Q1 With $1.8B In Q2 2014

Mercom Capital Group, llc, a global communications and consulting firm, recently released its report on funding and mergers and acquisitions (M&A) activity in the Healthcare Information Technology (IT) sector for the second quarter of 2014. Mercom’s comprehensive report covers deals of all sizes in Healthcare IT across the globe.

Venture capital (VC) funding in the sector more than doubled with $1.8B raised in 161 deals, a 104 percent increase compared to the $861M raised in Q1 2014. Ten of those deals were for more than $50M each.

The $2.6B raised so far this year has already exceeded the $2.2B raised in all of 2013. There were 263 investors that participated in these funding rounds, with 58 angel investors including some well-known celebrities and entrepreneurs. The quarter also included 30 corporate venture capitalists.

Chart: Healthcare IT VC Funding Q2 2014
“It was a quarter of several milestones. It was the first billion dollar fundraising quarter for the sector which has now raised almost $7B in venture funding since 2010. Healthcare IT funding rounds have now crossed 1,000. We are also seeing Mobile Health companies continue to outraise other technologies, and have now brought in over a billion dollars since 2010,” commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.

Practice-centric companies received 61 percent of all VC investments in the second quarter of 2014, with $1.1B in 61 deals. Areas that received the most funding under this category were Practice Management with $220M in eight deals, Data Analytics with $204M in nine deals, Population Health Management with $144M in four deals.

Consumer-centric companies received $678M in 100 deals, with the majority of the funding again going into the Mobile Health category ($401M in 45 deals). Within Mobile Health, $129M went to 23 companies developing Apps, $226M went to 17 companies developing Wearables. Personal Health companies received $115M in 23 deals and Scheduling, Rating & Shopping companies received $61M in 12 deals.

There were 38 early-stage deals under $2M in Q2.
The top VC funding deals over $100M in Q2 2014 were the $135M raise by NantHealth, a cloud-based healthcare IT company delivering care through a single integrated clinical platform, from the sovereign wealth fund, Kuwait Investment Authority and BlackBerry, the $130M raise by Flatiron Health, a developer of a cloud-based business and clinical intelligence oncology data platform, from Google Ventures, First Round Capital and Laboratory Corporation of America, the $125M raised by Alignment Healthcare, a provider of population health management solutions, from General Atlantic, and the $120M raise by Proteus Digital Health, a developer of products and services integrating medicines with ingestible sensors, wearable sensors, mobile and cloud computing, from undisclosed institutional investors in the United States, Europe and Asia

Chart: Healthcare IT Top VC Deals (over $100M)
Globally, U.S. companies raised $1.6B from 140 of the $1.8B total and 161 deals. Thirteen other countries recorded at least one deal apiece.

In the United States, 47 deals came out of California, followed by New York which recorded 12 deals, Massachusetts with eight deals, and Texas and Tennessee with seven deals each. Among cities, San Franciso had the highest number of funding deals among cities with 18 followed by New York with 11. In terms of dollars the order was reversed with New York coming out on top with $247M, followed by San Francisco with $206M.

There were a record number of M&A transactions in the Healthcare IT sector in Q2 2014, with 57 transactions (12 disclosed) compared to 54 transactions (six disclosed) in Q1 2014. Health Information Management companies saw the most M&A activity this quarter with 20 transactions, followed by Revenue Cycle Management and Service Providers with 11 transactions each, and Mobile Health and Personal Health companies with six transactions each.

Of the Top 5 M&A transactions, the largest was the $550M leveraged buyout of ABILITY Network, a provider of web-based workflow solutions that aid clinical and administrative tasks for acute and post-acute healthcare providers, by Summit Partners, a growth equity investment firm. This was followed by the $532.5M acquisition of Evolution1, a provider of payment solutions to healthcare companies, by WEX, a provider of corporate payment solutions. St. Jude Medical, a medical device company, acquired privately held CardioMEMS, provider of a wireless sensing and communication technology designed to improve management of chronic cardiovascular diseases, for nearly $450M. Other top disclosed transactions were the $225M acquisition of ISG Holdings, which through its subsidiaries, provides medical bill review and managed care programs for the workers compensation industry, by Xerox, followed by the $150M acquisition of Corventis, provider of a wearable technology with a focus on cardiovascular devices used for remote patient monitoring, by Medtronic, a medical-device company.

Chart: Top 5 Disclosed Healthcare It M&A Transactions in Q2 2014
Announced debt and public market financing in Healthcare IT amounted to $1.5B in five deals in Q2 2014, compared to $343M in six deals in Q1 2014.

There were two Healthcare IT IPOs in Q2 2014, bringing in a combined $1.4B. IMS Health, a provider of information services and technology for the healthcare industry, raised $1.3B through its IPO in April and Imprivata, a provider of authentication and access management security solutions for the healthcare industry launched an IPO that raised $86.3M.

Total corporate funding in the Healthcare IT sector, including VC, accelerator/incubator, debt, and public market financing, in Q2 2014 came in at $3.3B.

There were a total of 549 companies and investors mentioned in this report.

To learn more about the report, visit: http://store.mercom.mercomcapital.com/products-page/healthcare-it-reports/q2-2014-healthcare-it-funding-report/

About Mercom Capital Group
Mercom Capital Group, llc, is a global communications and consulting firm focused on Healthcare IT, cleantech and financial communications. Mercom’s consulting division advises companies on new market entry, overall strategic decision-making, and provides custom market research. Mercom delivers highly respected industry market intelligence reports covering Healthcare IT, Solar Energy, Wind Energy and Smart Grid. Our reports provide timely industry happenings and ahead-of-the-curve analysis specifically for C-level decision making. Mercom’s communications division helps companies and financial institutions build powerful relationships with media, analysts, local communities and strategic partners. For more information, visit http://www.mercomcapital.com.