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
10:51 AM

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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