Health information technology contributions rise in 1st quarter

2 recent reports recommend soaring investor interest in the healthcare data technology sector, citing high progress rates for its agencies and quick transformation in the industry, leaving contributors in search of information technology solutions.

Investor interest in healthcare information technology is larger than ever, with venture capital funding reaching the $1.4 billion in the 1^st quarter of the year 2016, in accordance to information from Mercom Capital Group.

A latest Mercom report on venture funding and mergers indicates that private equity and corporate venture capital in the region of healthcare data technology and digital health sector increased 27%, compared with $1.1 billion in contribution in the fourth quarter of the year 2015.

The progress is even more spectacular when compared with the similar quarter of 1^st year. Mercom stated that investment in the first 3 months was 74% more than in the first 3 months of the year 2015.

Almost 146 deals were reported in the latest quarter, compared with 145 in the last 3 months of the year 2015.

“The health IT region is off to an influential start this year, with important funding activity led by wearables, data analytics and telemedicine,” stated Raj Prabhu, CEO and co-founder of Mercom.

“Data analytics and telemedicine agencies reached a primary milestone, each crossing $1 billion in funding increased to date,” he added.

The greatest percentage increase in contribution came in agencies serving healthcare businesses. Healthcare practice-centric companies got 42% of the funding in the 1^st quarter of the year 2016, increasing $569 million in 49 deals; that was 58% more than the sector raised in the 4^th quarter of the year 2015. Consumer-focused companies got $796 million in 97 deals, about 12% more than the segment raised in the 4^th quarter of the year 2015.

In accordance to Mercom, agencies in the wearable or sensors sector increased $260 million in the 1^st quarter; data analytics companies got $197 in VC funding; telemedicine companies received $171 million; developers of mHealth apps got $120 million; and industries in the consumer health data and education space, got $100 million.

The top VC deals in the 1^st quarter involved Flatiron Health, Jawbone, a wearable technology company, $165 million; Healthline Media, a consumer health website developer, $95 million; a cloud-based cancer research industry, $165 million; and Health Catalyst, a data warehouse and analytics company, $70 million.

Mercom, which also informs on merger and acquisition activity in the sector, pointed out 58 M and A transactions in the healthcare IT sector in the 1^st quarter of the year 2016, the greatest reported number of such transactions ever reported by Mercom. By contrast, there were 53 transaction in the 4^th quarter of the year 2015.

The Top 2 revealed merger and acquisition transactions were the $2.75 billion acquisition of MedAssets by the company Pamplona Capital Management, the $2.6 billion achievement of Truven Health Analytics by IBM, the $140 million acquisition of CenTrak by Halma, the $950 million acquisition of Netsmart Technologies by Allscripts, and the $119 million acquisition of Medical Director by Affinity Equity Partners.

However, a report from the company of Berkery Noyes, an investment banking firm, claimed that merger and acquisition activity in the healthcare IT segment increased to $17.1 billion in 2015, up 4% compared with $16.4 billion in the year 2014. The transactions increased 15% in the year2015, compared with the last year.

Transitions done by reform, price pressures, and changes in the roles of contributors and payers, and increased regulation also are motivating merger and acquisition activity.