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Healthcare IT firms picked up $4.6 billion in venture cash in 2015, Mercom says

Guahao, NantHealth, ZocDoc among companies that reeled in the most investor cash.
By Bernie Monegain

Venture capital funding for health information technology totaled $4.6 billion in 574 deals in 2015, according to Mercom Capital Group, a global communications and consulting firm that keeps tabs on VC investments.

The total was slightly below 2014’s record $4.7 billion in 670 deals, but Mercom officials said it was still a big year for the sector.

Total corporate funding in health IT companies including debt and public market financing – including IPOs – came to $7.9 billion in 2015, up slightly compared to $7.8 billion in 2014, according to Mercom’s report.

[Also: Digital health tops $4.3 billion in funding in 2015]

Since 2010, the sector has received $13.4 billion in VC funding in 2,050 deals and almost $7 billion in debt and public market financing, including IPOs, bringing the total funding for the sector to $20.4 billion.

“After an incredible run from 2010-2014, VC funding into health IT companies leveled off last year,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group, in a statement.

“We are beginning to see a slowdown in early stage deals, a sign the sector is beginning to mature,” he added. “We are also seeing funding trends shift from practice-focused to consumer-focused technologies and products.”   Apart from innovative technologies and solutions, Prabhu said, business and revenue models are becoming more important.

The top VC funding rounds in 2015 were:

  • Chinese company Guahao – $394 million,
  • NantHealth – $200 million round,
  • ZocDoc – $130 million
  • Virgin Pulse – $92 million
  • Practo – $90 million 
  • Collective Health – $81 million 
  • Health Catalyst – $70 million.

Practice-centric companies raised more than $1.5 billion in 171 deals in 2015, down from $2.4 billion in 234 deals last year. Top funded areas included data analytics companies with $294 million, followed by clinical decision support companies with $220 million and practice management solutions companies with $183 million.

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Consumer-centric companies grossed about $3.1 billion in 403 deals, up from $2.3 billion in 436 deals last year. Mobile health companies raised the most funding with more than $1.1 billion. Most of the funding within the mHealth category went to mHealth apps with $750 million and Wearables/Sensors with $277 million. Rating and comparison shopping companies received more than $1 billion followed by Telehealth companies with $468 million.

Merger and acquisition activity, meanwhile was flat year-over-year. Top five disclosed M&A transactions were:

  • $1 billion acquisition of Merge Healthcare by IBM
  • $910 million acquisition of Altegra Health by Emdeon
  • $500 million acquisition of Virtual Radiologic Corporation by MEDNAX
  • $475 million acquisition of MyFitnessPal by Under Armour
  • $400 million acquisition of CECity by Premier

There were seven digital health IPOs this year, raising $2.2 billion. Fitbit raised $841.2 million, followed by Inovalon with $600 million, Press Ganey Associates with $256 million, Evolent Health with $225 million, Teladoc with $180 million, MINDBODY with $100.1 million and Adherium with $25.6 million.

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