In 2012, the mHealth sector saw venture capital investments reach $907.7 million, with Q3 and Q4 seeing significantly lower financing than the first two quarters, according to a report released Tuesday by Mobile Health Market News.
Report data pegs investments during the fourth quarter of 2012 at $200.7 million, a six percent decrease from the third quarter.
The biggest mHealth deals of 2012 include Insight Venture Partner's $40 million Series A financing to Austin, Texas-based Kinsser Software, which creates Web-based software and healthcare applications for the home health industry, in March; and Qualcomm's $25.5 million investment in mobile health company Telcare in August.
For Q4, the leading subsector was healthcare information technology (health IT) which accounted for 45 percent of mHealth investment dollars during the quarter. Healthcare IT also led the other subsectors for the year capturing just under 46 percent of investment.
Healthcare monitoring garnered the second highest venture capital in 2012, as well as in Q4, seeing more than $191 million for the year (21 percent of total capital) and $62.4 million in the fourth quarter (31 percent of total capital).
“Investors are exhibiting caution when it comes to putting money into products and services that directly impact patient care,” said Alpidia Barraza, research director, Mobile Health Market News, in a press release. “Of the 120 disclosed investments in 2012, 50 percent were five million or under, hence I suspect they are keeping their investments in these companies smaller while they test the waters and wait out the regulatory uncertainty.”
Report findings show that with the exception of Q2, quarter-on-quarter investments were relatively stable in 2012, both in terms of the value of investment and the number of deals ranging from a low of $163.3 million in Q1 to a high of $213 million in Q3.
The second quarter accounted for 36 percent of investment for the year with $330 million going into some 39 deals. A bulk of that capital, officials say, is from the $100 million investment that Castlight Health secured.
“We expect that many people will be disappointed that investment in the mHealth space did not continue on the trajectory it started out on in the first half of the year,” said Cassie Arnold, managing editor of Mobile Health Market News, in a statement. “However, we think a more stable investment environment is better for the industry in the long run.”