Mercom Capital Group Reports Third Quarter 2011 Funding and M&A Activity for Healthcare IT

Venture Capital (VC) funding in the healthcare IT sector in Q3 2011 more than tripled with $220 million in 18 deals compared to $66 million in six deals in the previous quarter. VC funding for the same quarter last year came to $62 million in seven deals. Fifty-three different investors participated in these funding rounds.

“It was the best quarter in terms of both VC funding and M&A activity in the healthcare IT sector since the first quarter of 2010. It is encouraging to see that a lot of these funding rounds were early stage deals,” commented Raj Prabhu, Managing Partner at Mercom Capital Group.

Top VC funding rounds included a $75 million raise by ZocDoc, $27 million by Awarepoint , $20.1 million by CareCloud, $20 million by One Medical Group and $20 million by SeeChange Health. M&A activity in the healthcare IT sector surged this quarter amounting to $4.7 billion in 37 transactions compared to $703 million in Q2 2011.

Major M&A transactions included the acquisition of Emdeon by Blackstone Capital Partners for $3 billion, Vantage by General Dynamics for $960 million, Sage Healthcare by Vista Equity Partners for $320 million, PayFlex by Aetna for $202 million and M*Modal by MedQuist Holdings for $130 million.

By way of technology, health information management companies were involved in most funding and M&A transactions this quarter.

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UPDATE: VC funding and number of investors updated October 12, 2011.