SOURCE: Mercom Capital Group

Mercom Capital Group

April 14, 2016 09:00 ET

Healthcare IT Has Strong First Quarter With $1.4B in VC Funding, Reports Mercom Capital Group

AUSTIN, TX--(Marketwired - Apr 14, 2016) - Mercom Capital Group, llc, a global communications and research firm, released its report on funding and mergers and acquisitions (M&A) activity for the Healthcare Information Technology (IT) / Digital Health sector for Q1 2016. The report covers deals of all sizes globally.

Venture capital (VC) funding, including private equity and corporate venture capital, increased 27 percent quarter over quarter, coming in at $1.4B (billion) in 146 deals compared to $1.1B in 145 deals in Q4 2015; it was also up 74 percent year over year. Corporate funding including VC, Debt and Public Market Financing for Q1 2016 was $1.5B.

Chart: Healthcare IT VC Funding Q1 2015 - Q1 2016

"The Health IT sector is off to an impressive start this year with significant funding activity in the first quarter led by wearables, data analytics and telemedicine. Data analytics and telemedicine companies reached a significant milestone, each crossing $1B in funding raised to date. Health IT public companies, meanwhile, continued to underperform," commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.

Healthcare practice-centric companies raised $569M (million) in 49 deals compared to $360M in 44 deals in Q4 2015. Consumer-centric companies raised $796M in 97 deals compared to $711M in 101 deals in Q4 2015.

Top Funded Health IT Technologies in Q1 2016
Wearables: $260M
Data Analytics: $197M
Telemedicine: $171M
mHealth Apps: $120M
Consumer Health Information/Education: $100M

There were 53 deals at or below $2M, including 14 Accelerator and Incubator deals.

The top VC deals included the $175M raised by Flatiron Health, $165M raised by Jawbone, $95M raised by Healthline, $70M raised by Health Catalyst and the $46M raised by inviCRO, and $40M raised by higi.

Chart: Healthcare IT - Top VC Funding Rounds in Q1 2016

A total of 318 investors, including three Accelerators / Incubators, participated in Healthcare IT deals this quarter; 27 investors participated in multiple rounds. Chicago Ventures, Jazz Venture Partners, Jump Capital, Lux Capital, Sequoia Capital, Social Capital, Tribeca Venture Partners and UPMC were involved in three each.

Health IT VC funding deals were spread across 16 countries in Q1.

There were two IPOs this quarter; Oneview Healthcare and Senseonics together accounted for $91.5M.

There were 58 M&A transactions in the Health IT sector this quarter compared to 53 transactions in Q4 2015. This quarter had the highest recorded number of M&A transactions in a single quarter.

mHealth apps companies were involved in the most M&A transactions with nine, followed by Practice Management companies and Personal Health companies with seven each, Data Analytics companies with five, EHR companies with four and Telemedicine companies with three.

The Top 5 disclosed M&A transactions were the $2.75B acquisition of MedAssets by Pamplona Capital Management, the $2.6B acquisition of Truven Health Analytics by IBM, the $950M acquisition of Netsmart Technologies by Allscripts, the $140M acquisition of CenTrak by Halma, and the $119M acquisition of MedicalDirector by Affinity Equity Partners.

Chart: Top 5 Healthcare IT M&A Transactions in Q1 2016 By Disclosed Amount

There were a total of 615 companies and investors covered in this report.

Our report does not include Bioinformatics deals.

To learn more about the report, visit: http://bit.ly/MercomHITQ12016

About Mercom Capital Group
Mercom Capital Group is a global communications and research firm focused on healthcare information technology, cleantech and financial communications. Mercom advises companies on new market entry, custom market intelligence and strategic decision-making. Visit: www.mercomcapital.com. To get our market intelligence reports, visit: www.mercomcapital.com/market_intelligence.php.