For the first time in a long time, venture capital funding in healthcare IT suffered a drop off, Mercom Capital Group, an Austin Texas-based research firm, reported.
The research firm reported that the total venture capital funding in the first quarter of 2015 was $784 million in 142 deals compared to $1.2 billion in 134 deals in Q4 2014 and $858 million in 163 deals in Q1 2014. While the end of the year to beginning of a new year drop off isn’t totally unexpected or unprecedented, the year-over-year decrease is the first time since the decade began venture capital funding in health IT has seemed to taper off. Since 2010, Mercom reports that the health IT sector has raised more than $10 billion.
Healthcare practice-centric companies raised $347 million in 44 deals in Q1 2015 compared to $568 million in 43 deals in Q4 2014. Consumer-centric companies raised $437 million in 98 deals this quarter compared to $643 million in 91 deals in Q4 2014. There was one exception to the drop off.
“Funding fell across the board with the exception of mobile health (mHealth), which was the bright spot this quarter. There was also significant M&A activity in the first quarter for mHealth companies. We have already seen 10 M&A transactions in Q1 compared to 21 in all of last year, which bodes well for exits in mobile health,” Raj Prabhu, CEO and Co-Founder of Mercom Capital Group, said in a statement.
Health Catalyst, a Salt Lake City-based analytics firm and former Healthcare Informatics up and comer, garnered the largest VC deal of 2015 thus far with a $50 million investment. A data analytics company, Invalon, went public and raised $600 million.
While VC funding was down, mergers and acquisitions were up. There were 56 deals in Q1, compared to 52 of Q4 of last year and 53 last year at this time. The largest was MyFitnessPal, a mobile health app, being bought by UnderArmour.