News

Public Market Financing Growth, Healthcare M&A Data Released

By Jacqueline DiChiara

Initial public offerings (IPOs), consumer-based initiatives, and mobile funding declines are shaping the current revenue cycle landscape, according to a new report from Mercom Capital Group on healthcare information technology (IT) funding and mergers and acquisitions (M&A) fact sheet.

“In the Healthcare IT sector, companies reached an inflection point with more money being raised through IPOs than venture capital this quarter,” states Raj Prabhu, Mercom Capital Group’s CEO. “Growth in public market financing is an encouraging sign for companies in this sector as it opens up another avenue for funding and an exit path for investors,” Prabhu adds.

Regarding VC Funding, Mercom Capital confirms the following:

  • Q2 2015: $1.2 billion in 138 deals

  • Q1 2015: $784 million in 142 deals

  • 2014 Annual: $4.7 billion in 670 deals

  • Q4 2014: $1.2 billion in 134 deals

  • Q3 2014: $956 million in 212 deals

  • Q2 2014: $1.7 billion in 159 deals

Similarly, the top VC Funded Deals in Q2 2015 are reported as follows:

  • NantHealth raised $200 million from Allscripts.

  • Virgin Pulse raised $92 million, from Insight Venture Partners and Virgin Group.

  • Doctor on Demand raised $50 million, from Tenaya Capital, Qualcomm Ventures, Dignity Health, Anne Wojcicki, Venrock, Shasta Ventures and Sir Richard Branson.

  • MDLIVE raised $50 million from Bedford Funding.  

  • Scanadu raised $35 million from Fosun International, Tencent Holdings, China Broadband Capital, Iglobe Partners, Relay Ventures, Redmile Group, Ame Cloud Ventures and Three Leaf Ventures.

“Consumer-focused companies had a strong showing in Q2, accounting for 60 percent of total HIT funding this quarter with $724 million dollars,” Prabhu says, referring to 97 total transactions. “Out of those companies, Personal Health/Wellness companies saw their best quarter to date with $209 million. Telehealth, and Rating and Comparison Shopping companies also achieved their highest level of funding in a single quarter.”

Q2 2015 VC funding by technology is listed as follows:

  • HIM: $391 million in 33 deals

  • Mobile Health: $214 million in 37 deals

  • Personal Health: $209 million in 20 deals

  • Telehealth: $152 million in 18 deals

  • Scheduling, Rating & Shopping: $149 million in 20 deals

  • Service Providers: $63 million in 6 deals

  • Security: $19 million in 2 deals

  • Social Health: $100,000 in 2 deals

The top disclosed M&A transaction, says Mercom Capital Group, was MEDNAX’s acquisition of Virtual Radiologic Corporation (vRad) for $500 million. Coming in second was Towers Watson’s acquisition of Acclaris for $140 million. Third, The Citadel Group acquired PJA Solutions for $45 million, confirms Mercom Capital Group.

Regarding corporate M&A transactions, Mercom Capital Group reports the following:

  • Q2 2015: $775 million in 53 transactions (8 disclosed)

  • Q1 2015: $1.4 billion in 56 transactions (14 disclosed)

  • 2014 Annual: $13.4 billion in -220 transactions (39 disclosed)

  • Q4 2014: $1.8 billion in 52 transactions (9 disclosed)

  • Q3 2014: $4.7 billion in 56 transactions (12 disclosed)

  • Q2 2014: $2.2 billion in 57 transactions (12 disclosed)

“Funding for Mobile Health companies continues to follow a slow and steady decline, consistently decreasing every quarter since Q2 2014,” maintains Prabhu. “The decline in funding is due mostly to a decrease in funding for mobile fitness apps while practice focused apps have gained.”

FitBit led the way in terms of the mobile health initiative, raising over $841 million through its IPO into June of 2015, confirms Mercom Capital Group. Evolent Health raised $225 million during this time; MINDBODY raised over $100 million.