learn more about the report, visit: http://store.mercom.mercomcapital.com/product/2014-q4-healthcare-it-funding-report/.
Capital Group, llc, a global communications and consulting firm, released its annual
report on funding and mergers and acquisition
(M&A) activity for the Healthcare Information Technology (IT)/Digital Health sector in 2014.
Mercom’s comprehensive report covers deals of all sizes globally.
capital (VC) funding in the Health IT sector more than doubled in 2014, coming
in at $4.7 billion in 670 deals compared to $2.2 billion in 571 deals in 2013.
The sector also brought in $2.1 billion in debt and public market financing
including six IPOs, bringing the total corporate funding raised in the sector
in 2014 to almost $7 billion.
funding increased in Q4 2014 with $1.2 billion in 134 deals compared to $956
million in 212 deals in Q3 2014.
“The Digital Health sector had another phenomenal fundraising year. In the five years
since we started tracking funding data, the sector has raised $8.8 billion in VC
funding and another $3.6 billion in public market and debt financings bringing
the total to $12.4 billion - largely driven by the HITECH and Affordable Care
Act. However, the enthusiasm in the sector shown by the VC community was not
quite matched by the public markets when you look at market performance of
companies that went the IPO route in 2014,” commented Raj Prabhu, CEO and
Co-Founder of Mercom Capital Group.
companies raised $2.4 billion in 234 deals in 2014, including Clinical Decision
Support companies with $517 million, followed by Data Analytics companies with $367
million and Population Health Management companies with $247 million.
companies raised $2.3 billion in 436 deals. Mobile Health (mHealth) companies were the
largest recipient of VC funding bringing in $1.2 billion - within mHealth most funding
went to Wearables with $526M and mHealth Apps with $507M. Telehealth companies
received $369 million, Rating and Comparison Shopping companies brought in $288
areas with significant YoY growth:
mHealth apps: 341%
Rating and comparison shopping: 216%
Data analytics: 146%
The top two VC funding
rounds in 2014 were raised by NantHealth which brought in $320 million and $135
million in two separate deals; Flatiron Health raised $130 million; this was
followed by Alignment Healthcare which raised $125 million. Proteus Digital
Health came in next with its $120 million raise (they also raised $52 million
in another deal bringing its total to $172 million for 2014); China's Guahao.com
raised $100 million; Dedalus Group raised $89 million; and American Well
brought in $81 million.
total of 732 investors were involved in funding rounds for Healthcare IT
companies in 2014. The top VC investors were Khosla Ventures and The
Social+Capital Partnership with nine deals each, followed by Kleiner Perkins
Caufield & Byers and Sequoia Capital with seven deals each.
investors in the sector from the past five years were Khosla Ventures with 21
deals, The Social+Capital Partnership with 18, Kleiner Perkins Caufield &
Byers with 17, Sequoia Capital with 12 and Andreessen Horowitz with 10 deals.
were 120 accelerator and incubator deals in 2014 compared to 139 in 2013. Top
accelerator/incubator seed investors were Blueprint Health, Rock Health, Y
Combinator, DreamIt Ventures, Sprint Accelerator, The Iron Yard and XLerate
record 29 countries participated in Health IT VC funding activity this
year. In the United States, California led Digital Health fundraising with 174
deals followed by New York with 50, Massachusetts with 33, Florida with 22, and
Texas with 21.
were 219 M&A transactions in the Health IT sector in 2014 compared to 165
transactions in 2013, with 21 companies making multiple transactions during the
of the M&A activity has been around larger, more established
practice-focused companies. Even though Mobile Health related apps and wearables
are getting significant funding, we have not seen a game-changing Instagram or
WhatsApp-type transaction yet in the sector,” continued Prabhu.
Cycle Management companies led M&A activity with 28 transactions followed by
Practice Management with 24 and Mobile Health with 21.
the last five years, 121 companies have made multiple acquisitions including
IMS Health with eight, CompuGroup Medical, Emdeon, iMedx and Quality Systems
with seven each, and both McKesson and PracticeMax with six companies apiece.
Cerner, GE Healthcare, Nuance Communications and The Advisory Board Company
each acquired five companies.
The Top 5
disclosed M&A transactions included the $4.4 billion acquisition of MultiPlan by
Starr Investment Holdings and Partners Group, the acquisition
of TriZetto by Cognizant for $2.7 billion, and the $1.3 billion acquisition of Siemens’ health information
technology business unit, Siemens Health Services, by Cerner. This was followed by Vista Equity Partners’ acquisition of Advanced
Computer Software for $1.14 billion, and the $550 million acquisition of
ABILITY Network by Summit Partners.
were six Digital Health IPOs in 2014, raising a total of $1.8 billion. IMS
Health raised $1.3 billion, followed by Castlight Health with $204 million,
Everyday Health with $100 million, Orion Health with $98 million, Imprivata
with $86 million and Connecture with $53 million.
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