SOURCE: Mercom Capital Group

Mercom Capital Group

April 06, 2015 16:59 ET

VC Funding in Health IT / Digital Health Drops With $784 Million Raised in Q1 2015, Reports Mercom Capital Group

AUSTIN, TX--(Marketwired - Apr 6, 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 the first quarter of 2015. Mercom's comprehensive report covers deals of all sizes across the globe.

Venture capital (VC) funding in the Digital Health / Health IT sector dipped by about 35 percent, with $784 million (M) in 142 deals compared to $1.2 billion (B) in 134 deals in Q4 2014. Announced debt and public market financings in the sector amounted to $975M in seven deals in Q1 2015 including one IPO, bringing total corporate fundraising to almost $1.8B.

Health IT / Digital Health companies have raised almost $10B in VC funding since 2010.

"Funding fell across the board with the exception of Mobile Health, which was the bright spot this quarter. There was also significant M&A activity in the first quarter for mHealth companies. We have already seen 10 M&A transactions in Q1 compared to 21 in all of last year, which bodes well for exits in Mobile Health," commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.

Chart: Mercom Healthcare IT VC Funding Q1 2014-Q1 2015

Healthcare practice-centric companies raised $347M in 44 deals in Q1 2015 compared to $568M in 43 deals in Q4 2014. Areas that received the most funding under this category were Data Analytics companies with $92M, Data Warehousing companies with $70M, Health Insurance Exchange companies with $38M, EHR/EMR companies with $36M, and Practice Management Solutions companies with $34M.

Consumer-centric companies raised $437M in 98 deals this quarter compared to $643M in 91 deals in Q4 2014. Mobile Health (mHealth) companies continued to attract the most VC funding bringing in $282M in 56 deals, most going to mHealth Apps with $220 million. Telehealth companies secured $65M while Rating and Comparison Shopping companies brought in $47M.

There were 65 early-stage deals under $2M in Q1. Seed stage accelerator/Incubator deals have slowed with only six deals last quarter and 16 this quarter.

Top VC funding deals in Q1 2015 were the $70M raise by Health Catalyst, the $55M raised by Ayasdi, the $40M each secured by Advance Health and ClassPass, the $38M raised by Collective Health, and the $30M raised by Practo.

Chart: Mercom Healthcare IT Top VC Deals in Q1 2015

A total of 288 investors and four accelerators/incubators participated in Healthcare IT deals this quarter. Investors with the most funding deals this quarter included GE Ventures with four, followed by Rock Health and Kaiser Permanente Ventures.

Globally, U.S. companies raised $716M in 123 deals, in addition to eleven other countries.

There were 56 M&A transactions (14 disclosed) in the Health IT sector in Q1 2015 compared to 52 transactions (nine disclosed) in Q4 2014. In terms of disclosed transactions, Mobile Health came out on top with $578M.

Chart: Mercom Top 5 Disclosed Healthcare IT M&A Transactions in Q1 2015

Announced debt and public market financing in Health IT rose to $975M in seven deals this quarter. There was one Digital Health IPO, Inovalon, for $600M.

There were a total of 546 companies and investors covered in this comprehensive report.

To learn more about the report, visit:  http://store.mercom.mercomcapital.com/product/q1-2015-healthcare-it-funding-and-ma-report/

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: http://www.mercomcapital.com. To get our market intelligence reports, visit: http://mercomcapital.com/market_intelligence.php.