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Report: Record Year for Venture Capital, Mergers and Acquisitions in Health IT

January 29, 2013
by Gabriel Perna
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According to a report  from the Austin, Texas-based Mercom Capital Group, a communications and consulting firm, healthcare IT venture capital (VC) funding totaled nearly $1.2 billion in 163 deals in 2012, compared to $480 million in 49 deals in 2011 and $211 million in 22 deals in 2010.

“While the focus of funding has been in the Health Information Management [HIM] category, which covers technologies on the Healthcare Practice side, there is significant investment and funding going into companies that engage the consumers—like mobile health, telehealth, personal health and social health,” Raj Prabhu, managing partner of Mercom, said in a statement. “The HIT sector really took off in 2012; the deal count tripled and number of investments doubled compared to 2011.”

Mercom pointed to Castlight Health, which has an application that enables comparisons of doctors, hospitals and medical procedures based on price and quality, as having the top deal of 2012, as it raised $100 million. Other top deals were for $58 million for 23andMe, a personal genetics company that helps with the understanding of wellness and disease prevention through its personal genome service, $50 million for GoHealth, an online portal that helps compare and shop health insurance coverage, $40 million for Kinnser Software, a provider of clinical support to home health companies, and $34 million for Practice Fusion, a provider of free web-based electronic medical records (EMR).

The top investors that participated in VC funding rounds in 2012 were: Connecticut Innovations, Founders Fund, Merck Global Health Innovation Fund, Qualcomm, and West Health Investment Fund, all with four deals each.

In addition, the report looked at merging and acquisitions in 2012, noting there was 163 transactions totaling approximately $7 billion in 2012. McKesson was the most active acquirer with four transactions and most of the activity was centered on HIM companies. Roper Industries $1.4 billion acquisition of Sunquest Information Systems, a provider of diagnostic information technology and clinical and anatomic laboratory software solutions, was the top deal of the year.  

This report has similar findings to one that came recently from startup accelerator firm, Rock Health, which had $1.4 billion invested in digital health companies last year. That report is here.

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