- Health IT vendors have been raking in the dough at record levels, Mercom Capital says in a new report, charting the booming industry’s first $1 billion quarter in venture capital (VC) funding and smashing totals from the entirety of 2013. Population health management, clinical analytics, mHealth, and practice management companies were among the most popular with investors, who see ample opportunity for health IT products to supplement EHRs, improve patient outcomes, and address operational gaps in struggling healthcare organizations.
“It was a quarter of several milestones. It was the first billion dollar fundraising quarter for the healthcare IT sector which has now raised almost $7 billion in venture funding since 2010. Merger and acquisition (M&A) deals were also at their highest levels this quarter, while mobile health companies continued to outraise other technologies,” said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.
The $2.6 billion raised by health IT companies this year has already outstripped last year’s total of $2.2 billion says the report. In the second quarter, ten deals were worth more than $50 million each, with practice management companies scooping up 61% of all VC investment. Eight practice management deals totaled $220 million, while data analytics vendors snagged $204 million in nine deals and four population health management deals produced $144 million.
Consumer-centric products such as mHealth apps and wearable mobile health device manufacturers were equally popular, sharing $678 million in 100 deals during Q2. Whether or not wearable devices will truly catch on with the majority of patients, investors were optimistic about the market for wristbands and other “quantified self” devices, which have the potential to revolutionize the way patients interact with their providers and with their own personal health information. Seventeen wearable device companies raised $226 million in funding for the quarter, while $129 million went to 23 companies developing apps.
The biggest deals of the quarter were very large indeed. Google Ventures made waves in May by contributing significantly to the $130 million raised by Flatiron Health, a cloud-based data analytics provider, but the firm was topped by the $135 million gathered by NantHealth, which offers an integrated clinical platform, from investors such as BlackBerry. Other significant deals include $125 million raised by Alignment Healthcare, a population health management vendor, and $120 million for Proteus Digital Health, a pioneer in the wearable sensor market.
In addition to venture capital investment, two major initial public offerings (IPOs) took place in the second quarter. IMS Health, an information services and technology provider raised $1.3 billion through the process, while Imprivata, an authentication and access management security company, took in $86.3 million.