Health IT funding reached $858 million in venture capital funding in 163 deals making it the highest dollar amount raised by the sector in a single quarter to date, according to a new report by Mercom Capital Group, LLC. The comprehensive report featuring a total of 464 companies and investors showed a 154 percent increase compared to the $337 million raised in Q4 2013.
The top 5 Health IT VC deals in Q1 2014 include:
- $89 million raise by Dedalus Group, a Healthcare IT systems company providing software solutions for clinical, general practices, and hospitals, from Hutton Collins and other investors.
- $77.5 million raise by MedHOK, a provider of a single platform for care, quality and compliance for health plans, pharmacy benefits managers and other risk-bearing entities by facilitating real-time information sharing, from Bain Capital Ventures and Spectrum Equity;
- $50 million raised by MINDBODY, a provider of scheduling and business management software for health and wellness companies from investors including Bessemer Venture Partners, Institutional Venture Partners, Catalyst Investors, W Capital Partners, and Montreux Equity Partners
- $41.4 million raise by Clarity Software Solutions, a provider of on-demand document management and communications delivery solutions for the health insurance industry, from North Bridge Growth Equity
- $41 million raised by Health Catalyst, a provider of healthcare data warehousing from Sequoia Capital, Norwest Venture Partners, Kaiser Permanente Ventures, Sorenson Capital, CHV Capital, and Partners HealthCare System.
Top Health IT Sectors
Healthcare practice-focused technology companies received half of all VC investments in the first quarter of 2014, with $460 million in 60 deals. Areas that received the most funding under this category were Practice Management with $124 million in eight deals, Health Information Exchange with $78 million in two deals, and Data Analytics with $43 million in seven deals.
Consumer-focused companies received $398 million in 103 deals, with the majority of the funding going into the Mobile Health category ($198 million in 61 deals). Telehealth companies received $79 million in 14 deals and Scheduling, Rating & Shopping companies received $66 million in six deals.
Mergers and acquisitions (M&A) activity in the Healthcare IT sector
There were a total of 53 M&A transactions with only six of which were disclosed for a combined total of $4.7 billion, compared to 44 transactions in Q4 2013. Health Information Management companies saw the most M&A activity this quarter with 18 transactions, followed by Service Providers with 13, and Mobile Health companies with eight. The largest disclosed transactions include:
- The $4.4B acquisition of MultiPlan, a company that manages claims processing and provides healthcare cost management solutions through its network and analytics-based technology platform, by Starr Investment Holdings, an investment firm focused on long-term investments, and Partners Group, a private markets investment management firm.
- The $130 million divestiture of HealthTronics, a provider of EHR for urology practices, from specialty healthcare company Endo Health Solutions to Altaris Capital Partners, an investment firm focused on the healthcare industry. Semiconductor chip maker Intel Corporation acquired Basis Science, a provider of wearable device technologies for health and wellness applications, for nearly $100 million.
- The $16.15 million acquisition of Health Care Compliance Strategies, a company providing online compliance training for healthcare organizations, by HealthStream, a provider of workforce development and research/patient experience solutions for the healthcare industry
- The $6.5 million acquisition of Unibased Systems Architecture, a provider of patient access solutions including enterprise scheduling and surgery management software, by Streamline Health Solutions, a provider of enterprise content management and business analytics solutions for healthcare organizations.
- Vocera Communications, a provider of point-of-care communication solutions, acquired mVisum, a provider of alarm management technology solutions for health systems, for $3.5 million.
Q1 2014 IPOs
Castlight Health, a provider of healthcare transparency solutions, brought in $204 million through its IPO in March and Everyday Health, a provider of digital health and wellness solutions launched an IPO that raised $100 million for a combined $304 million.
To learn more about the report, visit: http://store.mercom.mercomcapital.com/products-page/healthcare-it-reports/hit-q12014-funding-report/
