Category: Startups

K Health Raises $59M for Chat-First Care

Posted on by Jason Barry

K Health is the latest startup to deploy the “battlefield tactic” of raising an unlabeled funding round to help scale its platform, locking in $59M and a new strategic investment from Cedars-Sinai.

K Health’s been moving quickly since rolling out its AI-enabled symptom checker in 2018, raising $330M, expanding to 48 states, and seeing over 10M patients interact with its chatbot.

  • CEO Allon Bloch told Forbes that the K Health platform aims to be the antidote to “Dr. Google” by ingesting user symptoms then stacking them up against its database of millions of patient visits to suggest possible diagnoses.
  • The chatbot itself doesn’t give medical advice, but gives patients the option of having a human doctor take over the chat after providing them with potential diagnoses and a summary of the conversation. Over 70% of users reportedly opt for a chat-based visit.

That might sound similar to Babylon and Zipnosis, but K Health licensed its original dataset from HMO Maccabi in its native Israel, where patients tend to stick with the same payor most of their lives and thus provide a rare longitudinal view of clinical and outcomes data.

  • K Health reportedly did $52M in revenue last year (margins currently still in the red), around 40% of which was direct-to-consumer and the rest was through enterprise contracts. 

The next chapter of K Health’s journey is to build up its roster of hospital clients to serve as a “digital practice partner,” starting with its new investor Cedars-Sinai.

  • Cedars-Sinai will be using K Health for virtual primary care, and by the end of the year expects to have an app co-developed to triage new patients to the system’s physicians.

The Takeaway

One of the more interesting pieces of K Health’s funding announcement was Cedars-Sinai’s input into where K Health fits into its broader digitization strategy. While the health system excels in complex areas such as transplants and neurosurgery, primary care remains difficult to tackle due to physician shortages and burnout. These logistical challenges are the exact problems that K Health looks to address, and they’re also challenges that are far from exclusive to Cedars-Sinai.

Rock Health H1 2023 Funding Recap

Posted on by Jason Barry

Rock Health’s H1 2023 digital health funding report confirmed the writing on the wall. We’re in a new market cycle, so it’s time to buckle up for fewer rounds, lower check sizes, and a smaller cohort of sector investors.

Here’s the first half of the year by the numbers:

  • US digital health funding totaled $6.1B across 244 rounds ($24.8M average)
  • Q2 contributed only $2.5B across 113 rounds (Q1 saw $3.6B across 131 rounds)
  • Unprecedented 41% of H1 rounds weren’t tagged with a series or round label
  • 12 mega-rounds over $100M accounted for 37% total funding 

If the funding trend makes one thing clear, it’s that H1 2023 began to separate the best from the rest in Startup Land. (Chart: Funding Trend)

  • We’re now on pace for the lowest funding year since 2019, and the fact that only 555 investors participated in digital health fundraises in H1 2023 (down from 775 in H1 2022) is another confirmation that we’re in the beginning of a new cycle.

Despite the slowdown, H1 counted 12 mega-rounds comprising 37% of total funding, and the $185M average check size rivaled the $188M seen during 2021’s peak mania (Chart: Mega-Rounds). Investors are now competing to crown the next class of household-name startups, particularly in three transformation areas: 

  • VBC enablement (Strive Health $166M, Arcadia $125M, Vytalize Health $100M)
  • Non-clinical workflows – bonus points for “Shift” in name (Shiftkey $300M, ShiftMed $200M, MedShift $108M)
  • At-home care (Author Health $115M, Monogram Health $375M)

The other major story from H1 was the staggering 41% of digital health rounds that were “unlabeled,” the highest share since 2011 (Chart: Unlabeled Raises). Most founders raise unlabeled capital for one of two reasons, both surefire signs of the times:

  • To delay haircuts to previously-established valuations
  • To avoid bad PR associated with a down round or a smaller-than-expected lettered raise

The Takeaway

The new funding cycle naturally brings growing pains, and the stopgap cure for those pains has been the unlabeled rounds that Rock Health referred to as “a battlefield tactic, not a long-term strategy.” When we eventually see the return of lettered funding rounds, Rock Health makes the case that founders should reset their valuations to match truly sustainable profitability and growth targets, which would ultimately position them for better long-term success.

DexCare Lands $75M to Merchandise Care

Posted on by Jason Barry

Healthcare consumerization is all the rage, and not many startups are driving it forward faster than DexCare, which just landed $75M in Series C funding just two years after spinning out from Providence.

The round brings DexCare’s total funding to $146M as it looks to help health systems attract new patients, capture more downstream revenue, and control costs to fuel growth.

How does DexCare achieve this holy trinity of value propositions? By allowing providers to “merchandise their care” and manage both sides of the access problem.

  • On the front-end, DexCare helps generate demand by making the right care more discoverable through search engines and provider websites. The platform matches patients to best-fit providers, settings, and care modalities, then facilitates seamless appointment booking.
  • On the back-end, DexCare manages workforce supply by forecasting demand and monitoring staff utilization, then precisely coordinates scheduling across service lines / modalities to optimize capacity and operational costs.

DexCare already reaches more than 57M patients across all 50 states, but the additional funding will continue to accelerate its expansion while building out its product portfolio.

  • Since the spin out, DexCare reports that it’s boosted new-patient bookings by 30%, generated 20% cost reductions per patient encounter, and increased downstream revenue for its partners by a whopping 8x multiple. 
  • Those are some pretty impressive stats, and the fact that DexCare was able to raise an oversubscribed round in a tough funding environment seems to back them up.

The Takeaway

Although the “digital front door” tag might be overplayed, DexCare’s platform really lives up to the title. Providers are still investing heavily in the infrastructure to capture a new generation of hybrid-care-first consumers, and last time we checked frontline workers were still burned out. DexCare is well positioned to capitalize on both trends, and its value proposition will only resonate louder if hospitals continue to struggle with financial and workforce challenges.

XRHealth and Amelia Virtual Care Merger

Posted on by Jason Barry

The extended reality (AR/VR) market has a new XR therapeutic powerhouse after XRHealth and Barcelona-based Amelia Virtual Care announced plans to merge into a new company capable of addressing both physical and mental health issues.

The combined company will retain the XRHealth branding as it becomes the largest XR therapeutics platform in the world, used by over 2,500 physicians globally and generating $7M+ in annual revenue.

XRHealth operates virtual therapeutic care rooms that allow patients with complex conditions (i.e. Parkinson’s, MS, chronic pain, fibromyalgia) to receive treatment from a medical professional without having to leave their homes.

  • Since its founding in 2016, XRHealth has raised $35M and counts XR hardware manufacturers such as LG and HTC among its shareholders. 
  • XRHealth isn’t in the hardware business, but the platform is compatible with most commercially available devices. XRHealth CEO shared a nice look at how far that tech’s come recently.

Amelia Virtual Care takes a different approach, offering a VR platform with over 140 environments intended to treat anxiety, OCD, ADHD, and different phobias through systematic desensitization or Virtual Reality Exposure Therapy (VRET).

  • VRET sessions last around 20 minutes, and physicians can access the content library for a monthly subscription “like a Netflix for mental health professionals.” 

In an interview with PlantaDoce, Amelia CEO Xavier Palomer acknowledged that a difficult funding environment makes partnerships more necessary than ever, and that the merger will help consolidate costs and offer bundles between their clients.

  • Palomer went on to say that the combined company now expects to break even in 2024, and that “nuestros objetivos concuerdan con un posible salto al parqué en 2025” – which if your Castilian’s a little rusty means we could have a Nasdaq debut in a couple years.

The Takeaway

After an early adopter craze led to a decent sized bubble in extended reality tech, a growing body of clinical evidence and strategic mergers like XRHealth are setting the stage for a new wave of growth… not to mention extended reality is one catalyst away from really breaking mainstream. By combining XRHealth’s virtual care rooms with Amelia’s VRET content library, the new XRHealth is making sure it’s positioned as well as possible to catch that wave when it gets here.

DHW Q&A: More Care, Less Friction With Medallion

Posted on by Jason Barry

With Derek Lo
CEO, Medallion

In this Digital Health Wire Q&A, we sat down with Medallion CEO Derek Lo to discuss the emergence of virtual care and how to overcome the friction it brought with it.

Derek founded Medallion in 2020 to help healthcare companies automate credentialing, licensing, and compliance for their provider networks. He’s since helped scale Medallion into one of the largest provider network management companies in the US, with over 300 customers and $85M in funding.

Let’s kick things off with some background on Medallion. Can you share a little about the company and your platform?

First and foremost, Medallion exists to improve access for patients – to allow them to receive care where they want it and in the most cost effective way. Virtual care is here to stay, tons of studies are showing that both physicians and patients support it, but with that comes a whole new problem set.

A major component of that is licensing and making sure that telehealth providers can operate efficiently, but the second piece is insurance.

The multi-payor system in the US creates immense complexity, whether it’s claims and the entire revenue cycle industry, or more in our world: credentialing, enrollment, contracting, negotiation. All of these processes are wrapped around taking insurance as a provider.

That’s really what we’re trying to cut down on. We’re aiming to remove as many of these friction points as possible.

To fill in some more color on the platform, what are some of the ways that you remove this friction?

Like I mentioned, Medallion’s main goal is to automate away all of these operational and regulatory compliance tasks that companies have to do just to run their business. That starts with creating a system record for their provider data, so we’ve built our own CRM from the ground up.

What that’s allowed us to do is build different product lines on top of that, automations that tackle various operational pain points in those two main buckets of licensing and insurance.

On the licensing side, that includes things like getting new state licenses, maintaining and renewing licenses, continuing education tracking – all to help with network operations. On the insurance side, that’s where we’re removing friction by helping establish contracts with new payors, followed typically by enrollment, or in some cases, delegated credentialing.

There’s also a huge need for ongoing support with things like roster management, where provider groups have to share their rosters so everyone can track who’s in-network. That’s still a very manual process that a lot of companies are doing with spreadsheets, same goes for sanctions monitoring and compliance. That’s where we come in.

Looking at Medallion’s growth, it seems like plenty of companies share those pain points. How do you guide the direction of a company that’s growing so quickly?

I think a big part of leadership is finding a way to focus on the top one or two problems at any given moment, and being able to drill down on those problems that are right in front of you.

In one way, building a company is just a long sequence of decisions that plays out over many years. It’s the quality of those decisions, in aggregate, that ultimately decides how successful the company is.

There are obviously external factors – a great example being the SVB crisis – but even those are just another decision along the way. It’s our job to make sure that we get those decisions correct and back them with execution.

What’s a misconception that people have above provider management or credentialing?

At the end of the day, if you talk to any healthcare CEO, these functions are a cost center for their organization. They’re a strategic priority, but only because they’re a key gateway to revenue. Yet for that reason alone, people understand that they’re super important to get right.

We talk to companies all the time where things aren’t running optimally, so they’re worried about leaving revenue on the table because they aren’t getting credentialed fast enough, or claims are getting kicked back because enrollment wasn’t done correctly, and so forth.

It’s really important to tackle these problems, not only because of the missed revenue, but because solving them truly makes an impact in terms of growing efficiently, seeing more patients, and ultimately providing better care.

If Medallion had a secret sauce that you could share with other founders, what would that be?

I don’t think there’s necessarily a magic ingredient, but the biggest thing would have to be the execution component we were talking about earlier. That involves doing deep thinking on the market, and really focusing on the customer above all else

What does the customer need? What are their business problems? How are those problems being solved today? How could they be solved in an optimal scenario?

Every day we try to be as thoughtful as possible about how those answers align with what we’re doing and how we’re trying to serve those needs. We also have a fantastic team, so if we can keep focusing on what I just mentioned, in literally as many decisions as possible, then we’ll get a lot of decisions right in the long run. 

For more on Medallion, head over to their website or swing by booth #1831 at HIMSS.

Brave Raises $40M for Medicaid Mental Health

Posted on by Jason Barry

Serve a large need. Serve it at scale. Serve it well. It’s a popular playbook for many mental health startups, but Brave Health is looking to put a twist on the model with $40M in Series C funding.

Brave’s strategy differs from employer-focused mental health providers like Lyra and Headspace in its commitment to Medicaid members, no easy path considering only a third of psychiatrists accept new Medicaid patients.

To serve this population, Brave employs nearly 200 behavioral health providers and supports them with a tech stack that’s one part teletherapy tool and one part engagement platform.

  • These providers offer virtual counseling, therapy, and psychiatry, while the priority is to get Medicaid patients referred to mental health services into care as quickly as possible.
  • This engagement component is key. Brave boasts an 80% contact success rate and has received 23k referrals this year alone through partnerships with payors and hospitals.

The fresh funding will be used to help Brave expand beyond the 18 states in which it currently operates, and to accelerate the activation of more value-based contracts.

  • After entering its first VBC contract with Molina Healthcare of Texas earlier this year, Brave’s now signed two others to push the total number of lives it could potentially cover under risk-based arrangements to over one million.
  • It’s also likely that we’ll see Brave double down on partnerships with other startups in the Medicaid space, building off of existing relationships with MedArrive (in-home care) and Doula Network (maternal mental healthcare).

The Takeaway

Brave’s “you can’t treat who you can’t reach” approach is fairly unique among its cohort of VC-favorite mental health startups, but its focus on Medicaid sets it even further apart from competition. By taking ownership of getting members into treatment as well as their care journey, Brave seems well-positioned to deliver results for both health plans and the patients they serve.

Redesign Health Closes $65M to Launch Startups

Posted on by Jason Barry

Launching a healthcare company is hard. Launching dozens of them is even harder, but that’s exactly what Redesign Health is setting out to do with $65M in Series C funding.

Redesign isn’t a venture capital firm, although it’s funded more digital health startups than most VCs. It’s not an accelerator, yet it’s launched more early-stage companies in its four years of existence than post pure startup studios.

Then what is it? Good question. Redesign’s team consists of roughly 300 analysts that  “accelerate the healthcare innovation cycle” by researching sectors, identifying challenges, then assembling companies to pursue solutions.

  • The “assembling companies” piece is every bit as hands-on as you might imagine. Redesign funds the initial product development, handles the branding, and even installs the leadership team.
  • By bringing everything in-house, the idea is that Redesign can eliminate many of the barriers that healthcare founders usually face, allowing them to deliver outsized value… and shareholder returns.

Redesign takes an equity stake in every company it launches, a fact well-known to its Series C investors like CVS Ventures, General Catalyst, and UPMC Enterprises.

  • Since 2018, Redesign has launched over 40 companies, including home-health startup MedArrive, cancer-care platform Jasper Health, and mental health company UpLift. 
  • The latest funding will go toward Redesign’s own platform that helps its portfolio companies tackle repeatable processes, and innovation agreements with its Series C investors will ensure that they’re able to co-build companies using the technology.

The Takeaway

Healthcare startups have high upfront capital costs, steep inflection points between business stages, and difficulty recruiting the seasoned executives needed to reach scale. Although there isn’t a magic wand that can be waved to make those problems disappear, we’re guessing that Redesign’s startups see smoother sailing than most.

It’s a unique model that’s hard to put in a box (especially one the size of a DHW top story), but Redesign’s portfolio of already-launched startups and its eye-popping $1.7B valuation seem to suggest that it’s a model that’s working.

Mental Health Startup Alma Raises $130M

Posted on by Jason Barry

Digital health’s recent momentum saw another boost this week as mental health startup Alma hauled in a massive $130M Series D round. Between the return of nine-figure funding rounds and a new string of mega-acquisitions, it’s almost starting to feel like 2021 again. 

Alma helps mental health practitioners manage their practices and contract with payors, equipping them with teletherapy software, automated billing and scheduling tools, as well as a directory to help patients find in-network providers.

  • The platform is offered through a $125/mo membership, which allows clients to keep all earnings generated from patient visits. Over the past 12 months, Alma has tripled the size of its network to 8,000 providers licensed to practice in all 50 states.
  • Nearly 40% of providers in Alma’s network self-identify as Black, Hispanic, or Asian, and the company said that one of its main goals with the fresh funding will be to connect its diverse clinicians to underserved patient populations.

Originally founded in 2018, Alma’s taken a pretty interesting path to end up at its current managed services membership model.

  • The company started as a coworking space for therapists prior to the pandemic, then began adding support tools to make its users’ lives easier as it evolved into an MSO.
  • Now Alma is aggregating those independent therapists into its own provider network that it can leverage to negotiate directly with payors.

The Takeaway
At a time when payors are clamoring to improve access to mental healthcare, Alma’s unique approach to provider enablement and payor negotiations seems like it might be part of the solution. Alma is only the third mental health startup to raise a $100M+ round so far this year, following Lyra Health and Brightline.

Osmind Raises $40M for Breakthrough Mental Health Therapies

Posted on by Jason Barry

Severe mental health disorders are complicated problems to solve, and the legacy documentation systems used by most psychiatrists don’t do much to help the rate of progress. Electronic health record startup Osmind raised $40M in Series B funding to equip psychiatrists with tools to better manage complex patients, while also starting to fill the data gap in research for breakthrough therapies.

On the surface, Osmind offers an EHR tailored to clinicians serving patients with treatment-resistant mental health conditions like severe depression and PTSD.

  • The Osmind EHR supports clinical and administrative functions with features that streamline charting workflows, automate outcome tracking, and drive engagement.
  • An integrated mobile app enables patients to record their thoughts and feelings in between visits, giving providers a clearer view of their patients’ overall well-being. 

The back end of Osmind’s platform is equally as important as the EHR. A real-world evidence engine takes the granular data from the EHR and makes it available to researchers studying breakthrough mental health treatments such as ketamine and psychedelics.

  • While other companies like Flatiron Health and Verily also leverage anonymized patient data to influence therapy design, Osmind has quickly compiled a leading dataset to help translate this strategy to the mental health arena.
  • Earlier this year, Osmind partnered with Stanford University School of Medicine to publish the largest-ever real-world data study on ketamine infusion therapy as a treatment for depression.

The fresh funding will be used to expand Osmind’s team as well as the types of data its software can capture to advance a wider range of clinical trials and therapies.

The Takeaway

Mental health startups have proliferated over the past few years, but few have focused on breakthrough treatments for the millions of patients who have tried and failed multiple other options. Osmind’s new funding will allow it to better help these patients, not with direct clinical care, but by supporting the providers and researchers already serving them.

Health AI, Unicorns, and Stretched Valuations

Posted on by Jason Barry

In recent years, digital health has been a hot-bed of innovation as companies tackle healthcare inefficiencies with new technology, but the rapidly climbing valuations are causing many to wonder: how much higher can they go?

Healthcare AI raises $8.5b in 2021.

According to a report from CBInsights, private healthcare AI companies have raised $8.5b through the first three quarters of the year, surpassing 2020’s full-year total of $6.6b.

  • Q3 2021 was healthcare AI’s strongest quarter ever ($3.2b raised across 149 rounds)
  • Top areas of focus include remote patient monitoring, decentralized clinical trials, and home diagnostics.
  • AI startups account for approximately 40% of year-to-date digital health funding

Unicorns are no longer endangered.

The term “unicorn” used to indicate that a young company was a successful outlier with a $1b+ valuation, but has recently been diluted as more startups earn the designation.

  • CBInsights now counts the total number of “unicorns” at 925 globally, including 13 healthcare AI companies that received the title just last quarter.
  • When the term unicorn was coined in 2013, there were fewer unicorns than there are “decacorns” with a $10b+ valuation today (45).
  • Devoted Health currently has the highest healthcare company valuation ($12.6b).

How much higher can valuations go?

Digital health companies scaled quickly during the pandemic by taking on outside investment to keep up with the surge in demand, which sent private valuations soaring. Many of these valuations were based on the size of the total addressable market, driven more by potential than current revenue. If these companies fail to capture share, or if health-tech adoption declines as the pandemic wanes, then these expectations might be hard to meet and we could start to see some moderation.

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