Health IT venture capital funding on rise

Venture capital (VC) funding in the health IT sector hit $1.8 billion during the second quarter of 2014, according to a report from Texas-based consulting firm Mercom Capital Group.  

This funding, which represents 161 deals, is more than double the $861 million raised during Q1 2014. The cumulative $2.6 billion raised so far this year has already exceeded the $2.2 billion raised in all of 2013, the report found.

Practice-centric companies received 61 percent of all VC investments in Q2 2014, with $1.1 billion in 61 deals. Consumer-centric companies received $678 million in 100 deals, with most funding supporting the mobile health sector.

"It was a quarter of several milestones. It was the first billion dollar fundraising quarter for the healthcare IT sector, which has now raised almost $7 billion in venture funding since 2010,” said Mercom Capital Group CEO and Co-founder Raj Prabhu in a statement.  

Top deals over $100 million in Q2 were:

• $135 million raised by NantHealth from Kuwait Investment Authority and BlackBerry;
• $130 million raised by Flatiron Health from Google Ventures, First Round Capital and Laboratory Corporation of America;
• $125M raised by Alignment Healthcare from General Atlantic; and
• $120M raised by Proteus Digital Health.

Mercom also reported a record number of health IT merger and acquisition transactions during Q2 2014, which added up to a total of 57 transactions. Twenty of these transactions involved health information management companies. The largest merger and acquisition was the $550 million leveraged buyout of ABILITY Network by Summit Partners, which was followed by the $532.5 million acquisition of Evolution1 by WEX, a provider of corporate payment solutions, according to Mercom.