Mobile health companies led the way to a record year for healthcare IT companies seeking venture capital, according to a new report from consulting firm Mercom Capital Group. They received almost a quarter of the $2.2 billion that VCs put into the health IT sector in 2013.
That’s not quite double the $1.2 billion that VCs invested in 2012, but it was done through more than twice as many deals – 571 in 2013, compared to 163 in 2012. The most recent total included 139 incubator and accelerator deals, Mercom noted.
What’s interesting is that the deals were nearly evenly split (by value) between consumer-facing and enterprise-focused companies. B2B companies Evolent Healthcare and Practice Fusion had some of the biggest deals of the year, but so did Fitbit and Proteus Digital Health.
In contrast to the jump in investments, merger and acquisition activity in the sector remained nearly flat with 165 transactions, according to Mercom. That’s surprising because it got off to such a good start last year, and analysts have predicted that health IT will see heavy consolidation over the next five years.
However, Mercom noted that 16 companies made multiple acquisitions. Health information management companies, like Allscripts and Vitera Healthcare Solutions, were the heaviest M&A players.
A similar funding report for digital health put together by Rock Health noted that the industry will be watching closely for exits in 2014, as several prominent companies have amassed hundreds of millions of dollars in investor capital over the last three years.
