While venture capital investment in healthcare as a whole is apparently down to its lowest in five quarters, things are looking up for the folks in health IT.
Continuing on a positive trend that started in the third quarter of 2011, the health IT sector drew strong interest from venture capitals in the first quarter of 2012 that resulted in 27 deals worth $184 million, according to a new report from global communications and consulting firm Mercom Capital Group. That’s the highest number of deals recorded since the firm began collecting data in the first quarter of 2010.
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Forty-six different VCs invested in healthcare IT, with $103 million going to health information management companies that include Kinnser Software and Healthx. Health information management companies also accounted for 15 of the 34 M&A transactions recorded. Personal health record companies received the second-highest chunk of change at $32 million.
Despite strong venture capital interest, merger and acquisition activity has outpaced VC funding transactions in healthcare IT over the past two years by almost 2-to-1, which, according to Mercom Managing Partner Raj Prabhu, is a good sign for the industry. “A robust M&A environment is providing investors and the industry with liquidity and viable exit options because it gives investors and the industry liquidity and viable exit options,” he said in a press release.
In 2011, healthcare IT attracted $633 million in venture capital, according to figures from Dow Jones VentureSource. It’s poised to beat that number this year if investments keep up at this pace.
