SOURCE: Mercom Capital Group

Mercom Capital Group

October 15, 2014 10:00 ET

Healthcare IT Sector Attracts $956 Million in VC Funding in Q3 2014, Reports Mercom Capital Group

AUSTIN, TX--(Marketwired - Oct 15, 2014) - Mercom Capital Group, llc, a global communications and consulting firm, today released its report on funding and mergers and acquisitions (M&A) activity in the Healthcare Information Technology (IT) sector for Q3 2014. Mercom's comprehensive report covers deals of all sizes in Healthcare IT across the globe.

Venture capital (VC) funding in the sector came to $956 million (M) in 212 deals globally, a decline of 46 percent in terms of dollars compared to the massive $1.8 billion (B) in 161 deals raised in Q2 2014, a rare quarter. However, Q3 2014 was still the second highest quarter for VC funding since 2010. Total VC funding year-to-date adds up to $3.6B.

The quarter was dominated by over 100 funding deals of less than $2M. There were 252 investors that participated this quarter including 12 accelerators/incubators.

Chart: Healthcare IT VC Funding Q32014

"Healthcare IT saw another big fundraising quarter in Q3 with almost $1B raised. Companies from countries outside of the U.S., accounted for a record 21 percent share of the funding. While consumer-centric companies attracted the majority of the funding this quarter, M&A has been a different story with the majority of the deals involving practice-focused companies," commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.

Consumer-focused technologies received 65 percent of all VC investments in the third quarter of 2014, with $623M in 140 deals compared to $678M in 100 deals in Q2 2014. Areas that received the most funding under this category were Mobile Health with $345M in 82 deals, followed by Telehealth, which had its best quarter, with $101M in 16 deals, Personal Health with $85M in 24 deals, Social Health with $70M in three deals, and Scheduling, Rating & Shopping with $23M in 15 deals.

Practice-centric companies received $333M in 72 deals in the third quarter of 2014, compared to $1.1B in 61 deals in Q2. Under this category, the areas that received the most funding were Revenue Cycle Management with $75M in eight deals, and Data Analytics with $71M in 19 deals.

The Top 5 VC funding deals in Q3 2014 were the $70M raise by DXY (Ting Ting Group), from Tencent Holdings Limited, followed by the $52M raise by Proteus Digital Health. Teladoc raised $50.3M, Chunyu brought in $50M, and HealthEdge raised $30M.

Chart: Healthcare IT Top VC Deals Q32014

Globally, U.S. companies raised $760M from 174 deals. With almost $200M raised in 38 deals, countries outside of the United States accounted for about 21 percent of the fundraising this quarter, the largest share since we started tracking funding activity in 2010. In the United States, 54 deals came out of California, followed by New York which recorded 17 deals.

There were 55 M&A transactions in Q3 totaling $4.7B, compared to 57 transactions totaling $2.2B in Q2 2014. While consumer-centric companies dominated the fundraising, M&A was a different story with 46 of the 55 transactions involving practice-focused companies, accounting for all of the disclosed $4.7B. Consumer-centric companies saw just nine M&A transactions.

Of the top M&A transactions, the largest was the $2.7B acquisition of TriZetto by Cognizant, followed by the $1.3B acquisition of Siemens' health information technology business unit, Siemens Health Services, by Cerner. Conifer Health Solutions acquired SPi Healthcare for $235M and MedAssets acquired Sg2 for $142M.

Chart: Top Healthcare IT M&A Transactions Q32014

There were a total of 584 companies and investors mentioned in this report.

To learn more about the report, visit: http://store.mercom.mercomcapital.com/product/q3-2014-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 research 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. Mercom's communications division helps companies and financial institutions build powerful relationships with media, analysts, 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.

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