Venture capital funding for health IT companies continues at a furious pace reaching $956 million in the third quarter of 2014 with total VC funding year-to-date adding up to $3.6 billion, according to Mercom Capital Group.

Though that amount is about half of the $1.8 billion raised in the record-breaking second quarter of this year, Q3 2014 had a record number of venture VC deals—212 compared to 161 in Q2 2014— the second highest quarter for VC funding since 2010. Overall, funding for health IT has now reached nearly $7.6 billion in 1,344 deals during the past four years.

The biggest VC funding deal in Q3 2014 was the $70 million raised by DXY, an online healthcare community for medical institutions and healthcare providers in China, from Tencent Holdings Limited, a Chinese provider of comprehensive internet services.

Among consumer-centric companies, the mobile health category remained the favorite among VC investors during Q3 2014 raising $345 million in 82 deals, followed by telehealth with $101 million in 16 deals, personal health with $85 million in 24 deals, social health with $70 million in three deals, and scheduling, rating and shopping with $23 million in 15 deals.  

However, the firm says it’s not all good news. During Q3 2014, practice-centric health IT companies raised $333 million in 72 deals, a significant drop compared to $1.1 billion in 61 deals in Q2 2014. Mercom reports that most of the practice-focused funding went to the health information management category, which received $220 million in 64 deals.

On the positive side of the ledger, Mercom also reports that merger and acquisitions activity in the health IT sector is at its highest level in terms of dollars since the firm began its tracking in 2010 with $4.7 billion (12 disclosed transactions) in Q3 2014 versus $2.2 billion in 12 disclosed transactions in Q2 2014. The largest M&A transaction during Q3 was the $2.7 billion acquisition by Cognizant of payer software vendor TriZetto.

In July, Rock Health—which funds and supports early stage healthcare companies—reported that digital health funding reached $2.3 billion in the first half of 2014, an unprecedented level of venture capital exceeding the 2013 total. The most popular VC-backed category—payer administration—was under the radar last year with only $47 million in funding, but it saw a whopping 354 percent growth as payers increasingly turned to technology for improved solutions and cost savings, according to Rock Health.

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