Health Care IT Venture Capital Funding Reaches $1.17 Billion in 2012: Report

 
 
By Brian T. Horowitz  |  Posted 2013-02-01 Email Print this article Print
 
 
 
 
 
 
 

Health care IT venture capital funding more than doubled in 2012, with close to $1.2 billion raised compared with $480 million in 2011, according to a Mercom report.

Health care IT investing continues to grow robustly as the industry saw nearly $1.2 billion in venture capital funding in 2012, more than double the VC funding of $480 million in 2011, according to a report by the Mercom Capital Group.

The Jan. 28 report shows that the most deals occurred in the fourth quarter, the biggest number since Mercom began tracking VC deals in 2010.

VC deals in health care IT tripled from 2011. In 2012, 163 venture-capital deals occurred, compared with 49 deals in 2011 and 22 deals in 2010.

The focus of funding has been in the health information management (HIM) category, according to Raj Prabhu, Mercom's managing partner.

"We are especially seeing a lot of funding going into technology that engages consumers like mobile, telehealth, social health and personal health," Prabhu told eWEEK in an email. "This a big trend coming out of 2012."

Electronic health record (EHR) and revenue cycle management companies have also been active with VC deals.

The top VC deal in 2012 was Castlight Health, which raised $100 million. Castlight provides a mobile health care shopping tool for Apple iOS and Android that allows employees to compare services from doctors, hospitals and medical procedures based on price and quality.

In the second-biggest VC deal, 23andMe, a personal genetics company, raised $58 million. The company provides a personal genome service to increase understanding of wellness and disease prevention.

Meanwhile, online portal GoHealth, which offers a health insurance comparison-shopping tool, raised $50 million. A clinical support provider for home health companies, Kinnser Software raised $40 million, and EHR company Practice Fusion raised $34 million.

In addition, 2012 was a strong year for health care mergers and acquisitions, particularly for practice-management companies, according to Mercom. Sixteen practice-management companies participated in merger and acquisition deals, 15 clinical decision support companies were involved in deals and 16 EHR vendors signed M&A agreements.

EHR specialist McKesson acquired four companies in 2012. It bought medical products and services vendor PSS World Medical, pharmaceutical company Drug Trading Co., medical imaging software company PeerView and MED3000, a health care management and tech services company.

The top health IT M&A deal in 2012 was lab software company Roper Industries' acquisition of diagnostic IT software company Sunquest Information Systems for $1.4 billion. The second-biggest deal was Veritas Capital's purchase of Thomson Reuters' health care data and analytics software for $1.25 billion. In third place, JPMorgan Chase unit One Equity Partners bought MModal, a developer of clinical transcription software, for about $1.1 billion.

Meanwhile, drug discovery and research firm Piramal Healthcare bought consulting company Decision Resources Group for $635 million, and Science Applications International acquired health IT consulting group MaxIT Healthcare for $473 billion.

As health care IT ventures look to raise funds, a crowd-funding site called Health Tech Hatch provides a way to raise money and seek mentorship and feedback from medical experts as they develop new companies and products in the field.

In 2012, tech companies invested $1.4 billion in digital health companies, a 45 percent jump from 2011, health care tech accelerator Rock Health revealed in its "2012 Year-End Funding Report."

 
 
 
 
Brian T. Horowitz is a freelance technology and health writer as well as a copy editor. Brian has worked on the tech beat since 1996 and covered health care IT and rugged mobile computing for eWEEK since 2010. He has contributed to more than 20 publications, including Computer Shopper, Fast Company, FOXNews.com, More, NYSE Magazine, Parents, ScientificAmerican.com, USA Weekend and Womansday.com, as well as other consumer and trade publications. Brian holds a B.A. from Hofstra University in New York.

Follow him on Twitter: @bthorowitz

 
 
 
 
 
 
 
 
 

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