News | January 13, 2014

VC Funding In Healthcare IT Sector Reaches New Heights With $2.2B In 2013

Mercom Capital Group, llc, a global communications and consulting firm, released its annual report  on funding and mergers and acquisition (M&A) activity for the Healthcare Information Technology (IT) sector in 2013.

Venture capital (VC) funding in the Healthcare IT sector almost doubled in 2013, totaling $2.2B in 571 deals compared to $1.2B in 163 deals in 2012. The deal count included 139 accelerator and incubator deals. The sector also raised $648M in debt and public market financings, bringing total corporate funding raised by the sector in 2013 to almost $3B. VC funding dropped in Q4 2013 with $337M in 147 deals compared to $737M in 151 deals in Q3.

“After record fundraising totals in 2013, Healthcare IT companies have now received $4B in venture funding since 2010,” said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group. “Mobile health companies led the way in 2013 as the technology transformation of the healthcare industry continues.”

Overall in 2013, consumer-centric companies raised $1.1B. Mobile Health companies were the largest recipient of VC funding, raising $564M. Personal Health companies received $198M and Social Health companies brought in $166M.

Practice-centric companies also raised $1.1B in 2013. Areas that received the most funding under this category were Population Health with $179M, Electronic Medical Record/Electronic Health Record (EMR/EHR) with $166M and Practice Management with $162M.

The Top 5 VC funded companies in 2013 were: Evolent Health, a population health management services organization that integrates technology, tools and on-the-ground resources to support health systems in executing their population health and care transformation objectives, which raised $100M; Practice Fusion, a web-based EMR provider, which raised $85M in two deals; Fitbit, a fitness and health tracker company, which brought in $73M – also in two deals; MedSynergies, a provider of revenue and performance management solutions to healthcare providers, which raised $65M; and Proteus Digital Health, a provider of a digital health feedback system, which raised $45M. 

There were 466 investors involved in funding rounds for Healthcare IT companies in 2013. The top VC investors were Khosla Ventures and The Social+Capital Partnership with eight deals each, followed by Norwest Venture Partners with seven deals, and Kleiner Perkins Caufield & Byers with six deals.

Within the United States, California led Healthcare IT fundraising with 134 deals followed by New York with 48, Massachusetts with 39, Texas with 29, and Tennessee with 26. A total of 43 states had at least one deal in 2013.

M&A activity in the Healthcare IT sector remained flat in 2013, with 165 transactions compared to 163 transactions in 2012. There were 44 M&A transactions in Q4 2013. There were 16 companies that made multiple acquisitions in 2013.

Health Information Management (HIM) companies saw the most M&A activity in 2013 with 76 transactions, followed by Revenue Cycle Management companies with 25.

The Top 5 disclosed M&A transactions included the $850M acquisition of Passport Health Communications, a provider of technology solutions and services that help hospitals and healthcare organizations streamline business operations and secure payment for their services,  by Experian, a global information services company; the acquisition of Greenway Medical Technologies, a Revenue Cycle Management and EHR company by Vitera Healthcare Solutions, a provider of EHR and practice management software, for $644M; athenahealth’s $293M acquisition of Epocrates, a developer of a medical application for clinical content, practice tools, and health industry engagement at the point of care; Allscripts’ $235M acquisition of dbMotion, a developer of a data normalization platform for multiple electronic health records; Zotec Partners’ $200M acquisition of Medical Management Professionals, a medical billing and practice management company; and Medtronic’s $200M acquisition of Cardiocom, a provider of integrated clinical telehealth services.

There were two Healthcare IT IPOs in 2013, raising a combined total of $195M. Benefitfocus, a provider of cloud-based benefits software, raised $131M, and Covisint, provider of a cloud engagement platform for creating and enabling new mission-critical external business processes, raised $64M.

For more information, visit http://store.mercom.mercomcapital.com/products-page/healthcare-it-reports/hit-2013-annual-and-q4-funding-report/.

About Mercom Capital Group
Mercom Capital Group, llc, is a global communications and consulting firm focused on healthcare information technology (HIT), cleantech and financial communications. 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 consulting division advises companies on new market entry, custom market intelligence and overall strategic decision-making. Mercom’s communications division helps companies and financial institutions build powerful relationships with media, analysts, government decision-makers, local communities and strategic partners. For more information about Mercom Capital Group, visit: http://www.mercomcapital.com. To get a copy of Mercom’s popular market intelligence reports, visit: http://mercomcapital.com/market_intelligence.php.

Source: Mercom Capital Group