SOURCE: Mercom

Mercom

October 14, 2015 10:00 ET

Healthcare IT Venture Capital Funding up 32 Percent With $1.6 Billion in Q3 2015, Reports Mercom Capital Group

VC Funding Activity Back on Track After Lagging in 1H 2015

AUSTIN, TX--(Marketwired - Oct 14, 2015) - 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 Q3 2015. The report covers deals of all sizes globally.

Venture capital (VC) funding in the Health IT sector increased 32 percent quarter over quarter, to $1.6B (billion) in 148 deals compared to $1.2B in 139 deals in Q2 2015. Debt and public market financing came to $495M (million) in nine deals including two IPOs. Total corporate funding for the sector including VC, Debt and Public Market Financing raised by publicly traded companies and IPOs for Q3 2015 came to $2.1B.

Chart: Healthcare IT VC Funding Q3 2014-Q32015

VC funding has reached $3.57B for 2015 year-to-date, comparable to the $3.53 billion raised during the same period in 2014.

"VC funding into Healthcare IT companies bounced back this quarter after a slow start this year," commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group. "Rating, Booking and Comparison Shopping companies had their best fundraising quarter since we began tracking the category."

Healthcare practice-centric companies raised $357M in 42 deals compared to $473M in 41 deals in Q2 2015. Consumer-centric companies raised $1.2B in 106 deals this quarter compared to $727M in 98 deals in Q2 2015.

The top VC funded category this quarter was Rating, Booking & Comparison Shopping which brought in $728M in 15 deals. Mobile Health companies were second with $319M in 59 deals, with mHealth Apps receiving $206M and Wearables/Sensors receiving $88M. Personal Health and Wellness companies accounted for $114M in 17 deals, followed by Practice Management Companies with $72M in five deals. Telehealth companies raised $65M in 14 deals and Data Analytics companies raised $61M in 14 deals.

There were 69 early-stage deals at or below $2M, including 22 Accelerator/Incubator deals.

The top VC deals this quarter included the $394M raised by Guahao, the $130M raised by ZocDoc, the $90M raised by Practo, the $55.4M raised by Kareo, the $55M raised by Grand Rounds (previously ConsultingMD), and the $50M raised by Remedy Partners.

Chart: Healthcare IT Top VC Deals in Q3 2015

A total of 285 investors including six Accelerators/Incubators participated in Healthcare IT deals this quarter, 20 participated in multiple rounds. Lux Capital, Rock Health, Sequoia Capital, Tencent Holdings, and Zaffre Investments had three deals apiece.

Globally, U.S. companies raised $934 million in 121 deals. Fourteen other countries recorded deals amounting to $648 million or about 40 percent of VC funding this quarter, the largest share of funding for companies outside the U.S. since Mercom began tracking the sector.

There were two IPOs in Q3. Teladoc's $180M and Adherium's $25.6M.

There were 57 M&A transactions (11 disclosed) in the Health IT sector this quarter compared to 53 transactions (eight disclosed) in Q2 2015. M&A activity increased among consumer-focused companies with 18 deals this quarter.

Chart: Top 5 Disclosed Healthcare IT M&A Transactions in Q3 2015

There were 551 companies and investors covered in this comprehensive report.

To learn more about the report, visit: bit.ly/MercomHITQ32015

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: mercomcapital.com/market_intelligence.php.