Healthcare companies attracted $776 million in venture capital in this year's first quarter, continuing a strong trend, a new survey shows.
A total of 166 healthcare companies received venture money between January and March, according to Price Waterhouse. The firm reports healthcare investments as part of a quarterly survey on venture capital activity.
Much of the quarter's healthcare venture financings-from seed capital to buyouts-helped capitalize healthcare service companies. A total of 79 service-sector companies drew $428.4 million in venture money during the quarter. By comparison, 48 service companies received $218.6 million in the year-ago period.
Companies that serve the elderly remained a favorite investment. They've been frequent beneficiaries of venture money in previous surveys. Cherry Hill, N.J.-based Brandywine Senior Care, which specializes in post-acute services ranging from skilled nursing to home healthcare, received $32 million. Some $5.4 million went to Oak Brook, Ill.-based Security Health Providers, which operates an information service to help seniors find alternative living arrangements. Boston's Frontier Group, which operates a network of post-acute services, received $12 million.
Jonathan Sherwin, Frontier's chief executive officer, says the recent investment provides money for acquisitions and working capital. But before sealing the deal, Frontier had to assure its venture backers that the company is prepared to deal with the federal government's proposed move to prospective payment for post-acute services.
Disease management firms also attracted capital. Chapel Hill, N.C.-based InteCardia, which specializes in cardiology, drew $18 million in a second-round financing. Accountable Oncology Associates, an Alexandria, Va.-based provider of cancer management services, netted $500,000.