HIT Venture Capital Funds Saw Huge Gains in 2011

Jan. 18, 2012
Mercom Capital Group, llc, an Austin-Texas-based communications and consulting firm, released its annual and fourth quarter merger and acquisition (M&A) and funding report for the healthcare technology sector for 2011. According to Mercom, nearly half a billion dollars came into the sector through venture capital investment compared to $211 million in 2010.

Mercom Capital Group, llc, an Austin-Texas-based communications and consulting firm, released its annual and fourth quarter merger and acquisition (M&A) and funding report for the healthcare technology sector for 2011.  According to Mercom, nearly half a billion dollars came into the sector through venture capital investment compared to $211 million in 2010.

“2011 was a great year for Healthcare IT companies in terms of financial activity,” Raj Prabhu, managing partner of Mercom Capital Group, said in a statement. “Several factors, including strategic acquisitions, consolidation and increasing market share, played a role in the increased M&A activity in the sector.”

Health information management companies received most of the disclosed venture capital funding in 2011, totaling $336 million in 30 deals.  Personal health record companies raised $83.3 million in 12 deals. The top venture capital funding deal in 2011 was $75 million, in a Series C round, raised by online doctor appointment startup ZocDoc.

Other top VC funding deals were $27 million raised by Awarepoint, a provider of real-time location systems, $27 million raised by ABILITY network, a web-based healthcare network, followed by $23 million raised by Humedica, a clinical informatics company and $23 million raised by Practice Fusion, a web-based EMR company (Practice Fusion also raised another $6 million in additional funding in 2011).

Merger and acquisition (M&A) activity was robust in 2011 with 104 recorded transactions totaling $6 billion, compared to $4 billion in 85 transactions in 2010.  Health information management (HIM) companies accounted for most of the M&A transactions with 61 transactions, followed by 19 transactions for revenue cycle management (RCM) companies and 16 transactions for service providers. In terms of dollars, RCM companies accounted for $3.9 billion, followed by HIM companies with  $1.9 billion. 

The top M&A transaction in 2011 was the acquisition of Emdeon, a provider of revenue and payment cycle management and clinical information exchange solutions, by Blackstone Capital Partners for $3 billion.

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