Capital Group, llc, a global communications and consulting firm, today released
its report on funding and mergers and acquisitions (M&A) activity in the
Healthcare Information Technology (IT) sector for the third quarter of 2014.
Mercom’s comprehensive report covers deals of all sizes in Healthcare IT across
Venture capital (VC) funding
in the sector came to $956 million
raised in 212 deals globally, a decline of 46 percent in terms of dollars
compared to the massive $1.8 billion in 161 deals raised in Q2 2014, a rare
quarter. However, Q3 2014 was still the second highest quarter for VC funding
since 2010. Total VC funding year-to-date adds up to $3.6 billion.
The quarter was
dominated by over a 100 funding deals of less than $2 million. There were 252 investors
that participated this quarter including angels, VCs, private equity, and corporate VCs. The
quarter also included 12 accelerators/incubators.
“Healthcare IT saw another
big fundraising quarter in Q3 with almost $1 billion raised. Companies from
countries outside of the United States, accounted for a record 21 percent share
of the funding. While consumer-centric
companies attracted the majority of the funding this quarter, M&A has been a different
story with the majority of the deals involving practice-focused companies,”
commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.
technologies received 65 percent of all
VC investments in the third quarter of 2014, with $623 million in 140 deals
compared to $678 million in 100 deals in Q2 2014. Areas that received the most
funding under this category were Mobile Health with $345 million in 82 deals,
followed by Telehealth, which had its best quarter, with $101 million in 16
deals, Personal Health with $85 million in 24 deals, Social Health with $70
million in three deals, and Scheduling, Rating & Shopping with $23 million
in 15 deals.
received $333 million in 72 deals
in the third quarter of 2014, compared to $1.1 billion in 61 deals in Q2. Under
this category, the areas that received the most funding were Revenue Cycle
Management with $75 million in eight deals, and Data Analytics with $71 million in 19 deals.
The Top 5 VC funding deals in Q3 2014
were the $70 million raise by DXY (Ting Ting Group), an online healthcare
community for medical institutions and healthcare providers in China, from
Tencent Holdings Limited, a provider of comprehensive internet services in
China, followed by the $52 million raise by Proteus Digital Health, a developer
of products and services integrating medicines with ingestible sensors,
wearable sensors, mobile and cloud computing. Teladoc, a telehealth company
that provides 24/7 access to medical care for adults and children experiencing
non-emergency medical issues via phone, secure online video, mobile app or
private, walk-in kiosk, raised $50.3 million from Jafco Ventures, FLAG Capital
Management, Greenspring Associates, Mellon and QuestMark Partners, Cardinal
Partners, HLM Venture Partners, Kleiner Perkins Caufield and Byers, New Capital
Partners, and Trident Capital. Chunyu, a Chinese mobile healthcare app company
that connects patients and doctors, raised $50 million from China International
Capital Corporation (CICC), Rushan Venture Capital under DunAn Holding Group,
Pavilion Capital run by Temasek, and BlueRun Ventures, and HealthEdge, a
provider of a cloud-based or on-site integrated financial, administrative and
clinical software platform for healthcare payers focusing on medical claims and
benefits management brought in $30 million.
Globally, U.S. companies
raised $760 million from 174 deals. Companies from 18 other countries
participated in funding in Q3 2014, compared to 13 in the second quarter. With
almost $200 million raised in 38 deals, countries outside of the United States
accounted for about 21 percent of the fundraising this quarter, the largest
share since we started tracking funding activity in 2010.
In the United States, 54
deals came out of California, followed by New York which recorded 17 deals, Texas
and Massachusetts with 11 deals each, and Pennsylvania with eight deals.
Among cities, San Francisco Bay Area had the highest number of funding deals with 46, followed by New York with 17.
There were 55 M&A transactions in Q3 totaling $4.7 billion, compared
to 57 transactions totaling $2.2 billion in Q2 2014. While consumer-centric
companies dominated the fundraising, M&A was a different story with 46 of
the 55 transactions involving practice-focused companies, accounting for all of
the disclosed $4.7 billion. Consumer-centric companies saw just nine M&A transactions.
Of the top
M&A transactions, the largest was the $2.7 billion acquisition of TriZetto,
a provider of healthcare IT software and solutions that help payers and
providers work more efficiently, by Cognizant, a multinational information
technology, consulting and business process outsourcing company. This was
followed by the $1.3 billion acquisition of Siemens’ health information
technology business unit, Siemens Health Services, by Cerner, a provider of
healthcare information technology solutions. Conifer Health Solutions, a
provider of business process management solutions for healthcare providers and
subsidiary of Tenet Healthcare Corporation, acquired SPi Healthcare, a provider
of healthcare revenue cycle management and physician billing services, for $235
million. Another top disclosed transaction was the $142 million acquisition of Sg2,
a provider of healthcare market intelligence, strategic analytics and clinical
consulting services, by MedAssets, a healthcare performance improvement company.
Announced debt and
public market financing in Healthcare IT amounted to $28 million in four deals
in Q3 2014, compared to a massive $1.5 billion in five deals in Q2 2014.
were a total of 584 companies and investors mentioned in this report.
learn more about the report, visit: http://store.mercom.mercomcapital.com/product/q3-2014-healthcare-it-funding-report/
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