Figures bode well for health IT investment
2011 was a big year for investment in healthcare IT companies, with $US6 billion in mergers and acquisitions activity recorded, according to US consulting firm Mercom Capital Group.
In its annual report for the healthcare technology sector for 2011, Mercom found that almost half a billion dollars came into the sector through venture capital investment compared to $211 million in 2010 (all figures in US dollars).
“Several factors, including strategic acquisitions, consolidation and increasing market share, played a role in the increased M&A activity in the sector,” Mercom managing partner Raj Prabhu said.
The figures, which only include US deals barring one involving Japanese diagnostic imaging provider Toshiba Medical Systems, show that health information management companies received most of the disclosed VC funding in 2011, totalling $336 million in 30 deals, while personal health record companies raised $83.3 million in 12 deals.
Mercom found that the top VC funding deal in 2011 was $75 million raised by online doctor appointment start-up company ZocDoc.
Other top VC funding deals were $27 million raised by RTLS provider Awarepoint, $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.
Merger and acquisition (M&A) activity was robust in 2011 with 104 recorded transactions totalling $6 billion, compared to $4 billion in 85 transactions in 2010, Mercom found.
Health information management (HIM) companies accounted for most of the M&A transactions with 61, 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.
Other top M&A transactions were the $960 million acquisition of Vangent, a provider of health information technology and business systems to federal agencies and the $273 million acquisition of Vital Images, a provider of advanced visualisation and analysis software for physicians, by Toshiba Medical Systems.
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