VC investments, mergers for healthcare IT skyrocket

Venture capital funding and mergers and acquisitions activity in the healthcare IT sector both saw record numbers in the second quarter of 2014, according to a new report from Mercom Capital Group.

VC funding saw $1.8 billion raised with 161 deals, more than double the $861 million raised in the first quarter of the year--a 104 percent increase, according to the report.

"It was a quarter of several milestones" Raj Prabhu, CEO and co-founder of Mercom Capital Group, said in an announcement. "It was the first billion dollar fundraising quarter for the healthcare IT sector, which has now raised almost $7 billion in venture funding since 2010. M&A deals were also at their highest levels this quarter."

So far this year, according to Mercom, the sector has raised $2.6 billion, compared to more than $2.2 billion in all of 2013.

The first quarter of 2014 also saw funding grow at "an astonishing pace," with the sector raising about $520 million more than the quarter before, according to Mercom's April report.

There was also an increase in M&A transactions in the health IT sector, with 57 in Q2 compared to 54 in Q1, according to the report. Health IT management companies saw the most M&A activity--they completed 20 transactions.

One reason for an increase in mergers and acquisitions could be attributed to a rise in consolidations among hospitals and IT companies--which are expected to grow this year in the wake of the Affordable Care Act, according to a survey by Bass, Barry & Sims.

To learn more:
- check out the announcement

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