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Home Guahao.com Tops Global Health IT Funding in Q3 2015 with $394M Raise, Files for IPO

Guahao.com Tops Global Health IT Funding in Q3 2015 with $394M Raise, Files for IPO

Oct 23, 2015 16:20 CST Updated 16:20

Venture Capital Activity Returns to Normal After Decline in First Half of 2015


Mercom Capital Group is a global communications and research firm. Recently, Mercom Capital Group released its report on financing and mergers and acquisitions (M&A) activity in the healthcare information technology (IT)/digital health sector for the third quarter of 2015, covering transactions of varying sizes worldwide and encompassing 551 companies and investors. VCBeat has compiled the key highlights from the report to provide you with a quick overview of the financing and M&A landscape in Q3 2015.

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Venture Capital Landscape


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In Q3 2015, venture capital financing (including private equity and corporate venture capital) in the healthcare IT sector increased by 32% quarter-over-quarter, reaching $1.6 billion across 148 deals; by comparison, the figures for Q2 2015 were $1.2 billion and 139 deals. Debt and public market financing raised a total of $495 million in this sector, comprising 9 transactions that included two IPOs. The total capital raised by publicly traded companies and those going public (including venture capital, debt, and public market financing) amounted to $2.1 billion in Q3 2015.

Since 2015, venture capital funding has reached $3.57 billion, surpassing the $3.53 billion recorded during the same period last year. “After a sluggish start to the year, venture capital inflows into healthcare IT companies have begun to rebound,” commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group. “Companies in the ‘ratings, scheduling, and comparison shopping’ sector have experienced their best fundraising quarter since we began tracking financing activity.”

Healthcare practice-focused companies raised $357 million across 42 deals, compared with 41 deals and $473 million in Q2 2015. Consumer-focused companies raised $1.2 billion across 106 deals, compared with 98 deals and $727 million in Q2 2015.

“Ratings, Booking, and Comparison Shopping” companies were the category that attracted the most venture capital investment this quarter, with a total of 15 deals raising $728 million. They were followed by mobile health companies, which completed 59 deals and raised $319 million; among these, mobile health apps secured $206 million, while wearable devices/sensors raised $88 million. Next were personal medical and health companies, which raised $114 million across 17 deals. Medical practice management companies raised $72 million in 5 deals. Telemedicine companies raised $65 million in 14 deals, while data analytics companies raised $61 million in 14 deals. There were 69 early-stage deals valued at under $2 million, including 22 accelerator/incubator deals.

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  • Guahao.com, an online medical information portal dedicated to providing appointment scheduling services for patients in China, topped the venture capital deal rankings this quarter, raising a total of $394 million.


  • Next is the U.S. online doctor appointment platform ZocDoc, which raised a total of $130 million;


  • Indian healthtech startup Practo, a developer of physician search engines for appointment booking and provider ratings as well as practice management software, has raised a total of $90 million;


  • Kareo, a cloud-based medical office software designed for small medical practice providers; Grand Rounds, which helps patients find the best-matched physicians and obtain second opinions; and Remedy Partners, a developer of bundled payment solutions for government payers, health insurers, and self-funded employers—these three U.S. startups have raised $55.4 million, $55 million, and $50 million, respectively.



A total of 285 investors invested in the healthcare IT sector this quarter, including six accelerators/incubators, with 20 investors participating in multiple funding rounds. The investors with the highest number of financing transactions were Lux Capital, Rock Health, Sequoia Capital, Tencent Holdings, and Zaffre Investments, each completing three deals. Another 15 investors each participated in two deals.

Globally, U.S. companies raised $934 million across 121 deals. The next 14 countries—including Australia, Belgium, Canada, China, Estonia, Finland, Germany, India, Israel, Japan, Malaysia, the Netherlands, Singapore, and the United Kingdom—recorded $648 million in venture capital transactions, accounting for 40% of the quarter’s total. This marks the highest quarterly funding volume for companies outside the United States since Mercom began tracking financing activity in this sector. Within the United States, California led with the highest number of deals at 33, followed by New York with 18, while Massachusetts and Pennsylvania recorded 9 and 8 deals, respectively.

Debt and public market financing in the medical IT sector that had already been announced fell to $495 million, with 9 deals; the figures for Q2 2015 were $1.9 billion across 9 deals. There were two IPOs this quarter, raising a total of $206 million, including $180 million by telemedicine company Teladoc and $25.6 million by Adherium, an asthma inhaler with an internet-enabled app.

M&A Activity


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There were 57 mergers and acquisitions (M&A) transactions in the healthcare IT sector this quarter, with details disclosed for 11 of them. In Q2 2015, there were 53 transactions, with 8 disclosed. Practice-centric companies accounted for the vast majority of M&A deals, totaling 39, while consumer-centric companies were involved in 18 transactions. Twenty-nine health information management (HIM) companies and nine internet healthcare companies were acquired.

Since 2015, consumer-centric companies have cumulatively completed 42 M&A transactions. “Consumer-centric health IT companies have long captured the majority of venture capital investment, yet they have lagged behind practice-centric companies in M&A activity. This quarter, consumer-centric companies recorded 18 M&A deals, marking the highest number of transactions in a single quarter for this segment. If this trend continues, it is bound to have a positive impact, as an IPO is not necessarily the only path to success,” Prabhu further commented.

The top five disclosed M&A transactions are detailed in the table below.

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Topping the list is IBM’s $1 billion acquisition of Merge Healthcare, a provider of medical imaging equipment. Headquartered in Armonk, New York, Merge Healthcare states that its technology is used by more than 7,500 healthcare sites across the United States. IBM plans to integrate Merge Healthcare’s technology into its Watson supercomputing business through this acquisition. Previously, IBM had acquired two startups, Phytel and Explorys, to bolster its Watson Health Cloud initiative, and in July of this year, it announced a strategic partnership with CVS, the largest pharmacy retailer in the United States.

Ranked second was Emdeon’s $910 million acquisition of Altegra Health, which develops analytics tools for payers and most providers. As a healthcare software and technology services provider, Emdeon will integrate Altegra Health’s risk adjustment and quality analytics capabilities with its own revenue cycle management (RCM) methodologies and payment solutions. This integration will enable Emdeon to better and more accurately guide healthcare organizations into a new era characterized by transactional insurance models and value-based medical billing.

Ranking third is Premier, which acquired the cloud-based data analytics platform CECity for $400 million. Like Premier, CECity also focuses on performance management and improvement, value-based payment reporting, and professional education. Both companies share a clear mission: to provide higher-quality, more cost-effective healthcare services to hospitals and other medical institutions.

Cardinal Health ranked fourth, acquiring a 71% stake in naviHealth, a provider of post-acute care coordination and payment program package management, for $290 million.

In fifth place, Adidas acquired fitness app developer Runtastic for $240 million. Adidas’ rival Nike has already taken the lead in the fitness tracking sector. Nike partnered with Apple to develop the Nike+ running program for iPod and iPhone, and launched the Nike+ FuelBand smart fitness tracker in 2012. Given that Runtastic currently has 70 million active users, this acquisition will help Adidas enhance the competitiveness of its products in the wearable smart device market.

Summary Directory of Domestic and International Investment and Financing Reports

Compiled by Chen Xin
Editor: Mo Renying