SOURCE: Mercom Capital Group

Mercom Capital Group

January 15, 2015 13:56 ET

Another Record Breaking Year for Healthcare IT as VC Funding More Than Doubles in 2014 With $4.7 Billion, Reports Mercom Capital Group

AUSTIN, TX--(Marketwired - Jan 15, 2015) - 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 2014. Mercom's comprehensive report covers deals of all sizes globally.

Venture capital (VC) funding in the Healthcare IT sector more than doubled in 2014, coming in at $4.7B (billion) in 670 deals compared to $2.2B in 571 deals in 2013. The sector also brought in $2.1B in debt and public market financings including six IPOs, bringing total corporate funding in 2014 to almost $7B.

VC funding increased in Q4-2014 with $1.2B in 134 deals compared to $956M in 212 deals in Q3-2014.

Chart: Mercom Healthcare IT VC Funding 2010-2014

"The Healthcare IT sector had another phenomenal fundraising year. In the five years since we started tracking funding data, the sector has raised $8.8B in VC funding and another $3.6B in public market and debt financings bringing the total to $12.4B - largely driven by the HITECH and Affordable Care Act. However, the enthusiasm in the sector shown by the VC community was not quite matched by the public markets when you look at market performance of companies that went the IPO route in 2014," commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.

Practice-centric companies raised $2.4B in 234 deals in 2014, including Clinical Decision Support companies with $517M (million), followed by Data Analytics companies with $367M and Population Health Management companies with $247M.

Consumer-centric companies raised $2.3B in 436 deals. Mobile Health (mHealth) companies were the largest recipient of VC funding bringing in $1.2B. Telehealth companies received $369M, and Rating and Comparison Shopping companies brought in $288M.

Notable technology areas with significant YoY growth:

  • mHealth apps: 341%
  • Telehealth: 297%
  • Rating and comparison shopping: 216%
  • Data analytics: 146%
  • Wearables: 136%

The top two VC funding rounds in 2014 were raised by NantHealth which brought in $320M and $135M in two separate deals; Flatiron Health raised $130M; Alignment Healthcare raised $125M; Proteus Digital Health raised$120M (they also raised $52M in another deal Min 2014); China's Guahao.com raised $100M; Dedalus Group raised $89M; and American Well raised $81M.

Chart: Mercom Top VC Funding Rounds in 2014

A total of 732 investors were involved in funding rounds for Healthcare IT companies in 2014. The top VC investors were Khosla Ventures and The Social+Capital Partnership with nine deals each, followed by Kleiner Perkins Caufield & Byers and Sequoia Capital with seven deals each.

There were 120 accelerator and incubator deals in 2014 compared to 139 in 2013. Top accelerator/incubator seed investors were Blueprint Health, Rock Health, Y Combinator, DreamIt Ventures, Sprint Accelerator, The Iron Yard and XLerate Health.

A record 29 countries participated in Healthcare IT VC funding activity this year. There were 219 M&A transactions in sector in 2014 compared to 165 transactions in 2013, with 21 companies making multiple transactions during the year.

Revenue Cycle Management companies led M&A activity with 28 transactions followed by Practice Management with 24 and Mobile Health with 21.

The Top 5 disclosed M&A transactions included the $4.4B acquisition of MultiPlan by Starr Investment Holdings and Partners Group, the acquisition of TriZetto by Cognizant for $2.7B, the $1.3B acquisition of Siemens Health Services, by Cerner, Vista Equity Partners' acquisition of Advanced Computer Software for $1.14B, and the $550M acquisition of ABILITY Network by Summit Partners.

Chart: Mercom Top 5 Healthcare IT M&A Transactions in 2014 by Disclosed Amount

There were six Healthcare IT IPOs in 2014, raising a total of $1.8B. IMS Health raised $1.3B, followed by Castlight Health with $204M, Everyday Health with $100M, Orion Health with $98M, Imprivata with $86M and Connecture with $53M.

Learn about the report: http://store.mercom.mercomcapital.com/product/2014-q4-healthcare-it-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's consulting division advises companies on new market entry, custom market intelligence and overall strategic decision-making. Mercom's public relations division helps companies build powerful relationships, media, analysts, government decision-makers, local communities and strategic partners. http://www.mercomcapital.com.

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