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Venture Capital Funding in Healthcare IT Sector reaches new heights with $2.2B in 2013 - report

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January 16
6:30 PM 2014

Venture capital (VC) funding in the Healthcare IT sector almost doubled in 2013, totaling $2.2B in 571 deals compared to $1.2B in 163 deals in 2012, according to Mercom Capital Group, llc The deal count included 139 accelerator/incubator deals. The sector also raised $648M in debt and public market financings, bringing total corporate funding raised by the sector in 2013 to almost $3B. VC funding dropped in Q4 2013 with $337M in 147 deals compared to $737M in 151 deals in Q3.

"After record fundraising totals in 2013, Healthcare IT companies have now received $4B in venture funding since 2010," said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group. "Mobile health companies led the way in 2013 as the technology transformation of the healthcare industry continues."

Overall in 2013, consumer-centric companies raised $1.1B. Mobile Health companies were the largest recipient of VC funding, raising $564M. Personal Health companies received $198M and Social Health companies brought in $166M.

Practice-centric companies also raised $1.1B in 2013. Areas that received the most funding under this category were Population Health with $179M, Electronic Medical Record (EMR)/Electronic Health Record (EHR) with $166M and Practice Management with $162M.

The Top 5 VC funded companies in 2013 were: Evolent Health, which raised $100M; Practice Fusion, which raised $85M in two deals; Fitbit, which brought in $73M -- also in two deals; MedSynergies, which raised $65M; and Proteus Digital Health, which raised $45M.

There were 466 investors involved in funding rounds for Healthcare IT companies in 2013. The top VC investors were Khosla Ventures and The Social+Capital Partnership with eight deals each, followed by Norwest Venture Partners with seven, and Kleiner Perkins Caufield & Byers with six.

Within the United States, California led Healthcare IT fundraising with 134 deals followed by New York with 48, Massachusetts with 39, Texas with 29, and Tennessee with 26. A total of 43 states had at least one deal in 2013.

M&A activity in the Healthcare IT sector remained flat in 2013, with 165 transactions compared to 163 in 2012. There were 44 M&A transactions in Q4 2013. There were 16 companies that made multiple acquisitions in 2013.

Health Information Management companies saw the most M&A activity in 2013 with 76 transactions, followed by Revenue Cycle Management companies with 25.

The Top 5 disclosed M&A transactions included the $850M acquisition of Passport Health Communications by Experian; the acquisition of Greenway Medical Technologies by Vitera Healthcare Solutions for $644M; athenahealth's $293M acquisition of Epocrates; Allscripts' $235M acquisition of dbMotion; Zotec Partners' $200M acquisition of Medical Management Professionals; and Medtronic's $200M acquisition of Cardiocom.

There were two Healthcare IT IPOs in 2013, raising a combined total of $195M. Benefitfocus raised $131M and Covisint raised $64M.

You can learn more about the report here

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