Venture capital (VC) funding in the Health IT sector, including private equity and corporate venture capital, totaled US$1.25bn in 177 deals in Q3 2016 compared to US$1.6bn in 140 deals in Q2 2016. So far this year, more than US$4.2bn has been raised in 463 deals, well north of the US$3.6bn raised during the same period in 2015.
“International funding deals continue to be strong, especially in China boosting overall totals,” said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.
“2016 is on pace to be the best fundraising year for the sector,” he said.
There were 118 VC funding deals involving U.S. companies in Q3 2016 and 59 deals with companies from other countries around the world. In Q2 2016, 108 VC funding deals were recorded in the U.S. and 32 in the rest of the world.
There were 87 deals that were US$2mn or below, including 47 Accelerator/Incubator deals in the third quarter of 2016. This is a significant increase from Q2 2016 when there were just 43 deals that totaled US$2mn or below with only 12 Accelerator/Incubator deals.
Healthcare consumer-centric companies raised US$851mn in 128 deals, accounting for 68 percent of the total US$1.25bn raised in Q3 2016 compared to US$1.2bn in 95 deals in Q2 2016. Healthcare practice-centric companies secured 32 percent of the funding with US$404mn in 49 deals, compared to the US$360mn raised in 45 deals in Q2 2016.
The top funded areas were mHealth apps with US$253mn, Telemedicine companies with US$220mn, Practice Management Solutions companies with US$82mn, Consulting companies with US$77mn, Mobile Wireless with US$75mn, Wearables and Sensors with US$74mn, Remote Monitoring with US$65mn and Payer Solutions companies with US$50mn.
The top VC deals for Q3 2016 included: Meet You, provider of a social, health, and fertility tracking app for women which raised US$151mn; Accolade, developer of a mobile app for professional health concierge services, secured US$70mn; Neusoft Xikang Healthcare Technology, provider of a remote health monitoring device for individuals and families, which raised US$64mn; ClearCare, provider of an online software platform for the home care industry, secured US$60mn; InstaMed, a Healthcare Payments Network that simplifies every healthcare clearinghouse and payment transaction for providers and payers all in one place, raised US$50mn; and Specialists On Call (SOC), a provider of specialty physician consultations to acute care hospitals via telemedicine, raised US$50mn.
A total of 309 investors participated in Healthcare IT deals in Q3 2016 with 13 investors participating in multiple rounds. Bessemer Venture Partners and Canaan Partners were on top with three deals each.
There were 53 M&A transactions (16 disclosed) involving Healthcare IT companies in Q3 2016, compared to the same number of transactions (seven disclosed) the previous quarter. Merger and acquisition activity was led by Mobile Health Apps with eight transactions, Practice Management Solutions companies tallied five, and Data Analytics, Population Health Management, and Remote Monitoring companies had four transactions apiece.
The top disclosed M&A transaction was the US$2.35bn acquisition of Press Ganey Associates by EQT Equity fund EQT VII. Other large transactions included: Thoma Bravo which acquired Imprivata for approximately US$544mn and took the company private; Atos acquired Anthelio Healthcare Solutions from its shareholders Actis and McLaren Health Care Corporation for an enterprise value of US$275mn; Evolent Health’s acquisition of Valence Health for US$145mn; Loblaw Companies acquired QHR Corporation for US$132mn; and iHealth Labs’ acquisition of eDevice for US$106mn.