Mercom: Digital health funding hits $1.6B in Q1 2017

Mercom numbers

After Rock Health, we have another set of digital health funding and M&A figures to share, this time brought to us by Mercom Capital Group. Unlike Rock’s numbers, Mercom’s report covers deals of all sizes from across the globe — not just those in the U.S.

Said report suggests that the amount of cash invested in digital health companies has almost doubled quarter-over-quarter (QoQ), going from $845 million in 159 deals in Q4 2016 to $1.6 billion in 165 deals. Year-on-year, VC funding was also up compared to Q1 2016 when nearly $1.4 billion was raised in 146 deals. In total, the sector has reached $20 billion in VC funding since 2010.

“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,” Raj Prabhu, CEO and Co-Founder of Mercom Capital Group, said in a statement.

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. On the other hand, with 65 percent of the funding, consumer-centric companies brought 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 ($315 million), Mobile/Wireless ($230 million), Data Analytics ($193 million), Population Health Management ($115 million), Telemedicine ($112 million), and Social Health Network ($102 million). The top VC deals were: Hudong Feng Technology ($200 million), Alignment Healthcare ($115 million), PatientsLikeMe ($100 million), Nuna ($90 million), and PointClickCare ($85 million).

There were 65 early round deals, including 14 Accelerator and Incubator deals. These deals were backed by 306 investors (including four accelerators/incubators) — compared to 340 investors in Q4 2016, of which two were accelerators/incubators.

When it comes to M&A, Mercom recorded 49 transactions (seven disclosed) in the Healthcare IT sector in Q1 2017, compared to 42 transactions (11 disclosed) in Q4 2016. Most M&A activity was around Practice Management Solutions companies (6 deals), followed by Apps and Data Analytics (5 each), and Consulting and Telemedicine (4 each).

The top disclosed M&A transactions were: $1.1 billion acquisition of CoverMyMeds by McKesson, Eliza Corporation’s $170 million acquisition from Parthenon Capital Partners by HMS Holdings, Castlight Health’s $134 million buy of Jiff, and HCI Group for $110 million by Tech Mahindra