Venture capital (VC) funding in the Healthcare IT sector witnessed 168 funding deals in the second quarter of 2013 as against 104 deals in the first quarter. According to a report by communications and consulting firm Mercom Capital Group around $623 million was raised in the sector quarter in the Healthcare IT sector.
The report also said the sector witnessed a rapid growth in funding and the VC was going from practice-focused technologies towards consumer-focused technologies. During the second quarter consumer-focused companies received around $416 million in 112 deals which is twice the amount of funding compared to practice-focused companies. In the second quarter of 2013 practice-focused companies received $207 million in VC funding from 56 deals.
Raj Prabhu, CEO of Mercom Capital Group said: “VC funding in Healthcare IT is now on pace to exceed $2 billion in 2013.
What the government financial incentives did to spur EHR adoption and practice-focused technologies, open data is doing for consumer-focused companies that turn data into usable applications and services.”
According to Mercom's report on funding and mergers and acquisitions (M&A) activity, Proteus Digital Health, a digital health feedback system provider, raised $45 million to make it the largest recipient of funding in the quarter. Meanwhile, lifeIMAGE, a network for securely sharing medical images and related health information, raised the second highest amount $35.6 million in the Series C round.
Some of the other players which raised funding during the quarter are Blue Health Intelligence, a healthcare data and analytics company, it raised $35.5 million, WorldOne received $35 million in funding and Watermark Medical, raised $32.2 million.
The report also said a total of 161 investors participated in Q2 2013 including accelerators, incubators and crowd-funding platforms compared to 108 different investors in Q1 2013. Eleven investors participated in multiple funding rounds in Q2 2013. Ascension Health Ventures was the most active investor, and participated in three deals.
The remaining top investors participated in two deals apiece. They includes BlueCross BlueShield Venture Partners, AIB Seed Capital Fund, Cardinal Partners, Enterprise Ireland, Galen Partners, Khosla Ventures, Lemhi Ventures, Milestone Venture Partners, New Enterprise Associates, and SV Angel.
M&A activity in the Healthcare IT sector dropped in Q2 2013 with 30 transactions of which only two were disclosed compared to Q1 2013, with 46 M&A transactions of which only five were disclosed. Health information management companies attracted the most acquirers with 14 transactions followed by service providers with seven acquisitions and mobile health with three in Q2 2013, the report added.
The two disclosed M&A transactions in Q2 2013, included Jawbone, expanding its long line of recognizable wearable devices, which acquired BodyMedia, a maker of wearable health tracking devices, for more than $100 million. The other was Instem, a provider of IT applications to the early development healthcare market, which acquired Logos Holdings, a provider of full-service electronic data capture for clinical research organizations, along with its subsidiaries Logos EDC Solutions and Logos Technologies, for $7.7 million.