Healthcare Still Commanding Major Money from Investors in First Part of 2017

The second highest quarter ever for the spending in the digital health has been recorded during the first portion of 2017, Mercom Capital Group says. A global communications and research firm said in its report in April that funding and mergers and acquisitions (M&A) activity for the healthcare information technology and digital health sectors saw venture capital (VC) funding, including private equity and corporate venture capital, almost doubled quarter-over-quarter, coming in at $1.6 billion in 165 deals compared to $845 million in 159 deals in Q4 2016.

VC funding in Q1 2017 also was up compared to the same period a year ago, when nearly $1.4 billion was raised in 146 deals. The digital health sector has received $20 billion in VC funding since 2010, the firm says, and total corporate funding in health IT companies, including VC, debt and public market financing, came to $1.8 billion compared to $1 billion in Q4 2016.

“Digital health funding is off to a fast start this year and there was no visible ‘Trump effect’ on investments in the sector, at least in the first quarter, and publicly-traded digital health companies actually fared much better in Q1 than last year,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group, in a statement.

Detailing the report, healthcare practice-centric companies received 35 percent of the funding in Q1 2017, raising $574 million in 50 deals compared to $261 million in 42 deals in Q4 2016.

Consumer-centric companies received 65 percent of the funding this quarter, bringing in $1 billion in 115 deals compared to $584 million in 117 deals in Q4 2016.

The top funded areas in Q1 2017 were:

  • Appointment booking at $315 million
  • Mobile wireless at $230 million
  • Data analytics at $193 million
  • Population health management at $115 million
  • Telemedicine at $112 million, and
  • Social health network at $102 million.

Mercom also reports that there were 65 early round deals, including 14 accelerator and incubator deals.

  • The top VC deals this quarter included:
  • $200 million raised by Hudong Feng Technology (Haodaifu)
  • $115 million raised by Alignment Healthcare
  • $100 million raised by PatientsLikeMe
  • $90 million raised by Nuna, and
  • $85 million raised by PointClickCare.

A total of 306 investors participated in funding deals in Q1 2017 compared to 340 investors in Q4 2016. Health IT VC funding deals were spread across 19 countries this year so far.

The Mercom report follows two other reports suggesting the health IT investor segment is still quite hot. Healthcare Dive points out that StartUp Health tracked 124 deals totaling $2.5 billion and Rock Health reported a bit more than $1 billion spread across 71 deals. A strong quarter.

Rock Health put investments ahead of 2016 but behind 2015.

“The reports are overall good news for an industry that has been keeping a watchful eye on the White House. There was worry that the President Donald Trump's administration's focus on changing the Affordable Care Act would create enough uncertainty to lower investments and create a risk-averse climate,” Healthcare Dive said.

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Scott Rupp

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Scott E. Rupp is a writer and an award-winning journalist focused on healthcare technology. He has worked as a public relations executive for a major electronic health record/practice management vendor, and he currently manages his own agency, millerrupp. In addition to writing for a variety of publications, Scott also offers his insights on healthcare technology and its leaders on his site, Electronic Health Reporter.

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