Global healthcare IT sector raised $1.6 bn in Q2 2016: Mercom

China topped the list bringing in $733 mn in three deals, accounting for 46% of total funding

Led by the Chinese companies, global healthcare IT sector raised $1.6 billion in 140 deals in the three months ending June, up 33% compared a year ago period, said a report by research firm Mercom Capital Group, llc on Wednesday.

With healthcare IT companies raising $1.4 billion in 146 deals in the first quarter of the year, the first half of 2016 saw a total of $3 billion funding in 286 deals,  a 50% increase compared to nearly $2 billion raised during the same period in 2015.

Healthcare IT VC funding in the second quarter of 2016 originated from 12 countries worldwide, the report said.

China topped the list bringing in $733 million in three deals, accounting for 46% of total funding. Funding fell sharply in the United States by almost 40% sequentially, marking it the lowest funding quarter for American health IT companies since Q1 2015. Meanwhile, Chinese companies for the first time emerged as the top Healthcare IT funding recipients, the report noted.

“The big reason for the jump in VC funding was record fundraising by Chinese companies. This is the first time since 2010 that Health IT companies in the US have been outraised by other countries,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group. “This quarter is likely an outlier, but it is also a sign that investors and companies should pay close attention to Digital Health markets around the world.” 

The top funded areas in Q2, according to the data collated by Mercom, were mHealth apps with $779 million, data analytics companies with $234 million, wearables and sensors with $129 million, mobile wireless with $75 million and wellness with $60 million.

There were 43 early-stage deals at or below $2 million, including 12 accelerator and incubator deals. A total of 282 investors, including three accelerators/incubators, participated in healthcare IT deals in the second quarter of 2016, with 20 investors participating in multiple rounds. Khosla Ventures was involved in four deals.

The top disclosed M&A transactions in Q2 2016 included Veritas Capital’s acquisition of Verisk Analytics' healthcare services business for $820 million; MedData’s acquisition of Cardon Outreach for $400 million; Nokia acquiring Withings for $191 million and Teladoc’s acquisition of HealthiestYou for $125 million.

 

Some of the notable Indian transactions in Q2 2016 were Gurgaon-based online price shopping and drug delivery company 1 mg, previously known as HealthKartPlus, raising $16 million in funding from Maverick Capital Ventures, Sequoia India and Omidiyar Network, health and fitness mobile app HealthifyMe raising $6 million in funding from IDG Ventures India, Inventus Capital and Blume Ventures, Bangalore-based developer of patient-centric telemedicine apps for medical consultations DocsApp raising $1.2 million from Japanese venture capital firm Rebright Partners and angel Investors Anand Rajaraman and Venky Harinarayan and Bangalore-based online counselling and emotional wellness platform securing $1.2 million in funding from SAIF Partners and along with few angel investors among others.