Sword Health CEO Virgílio “V” Bento

Startups

Sword Health Lands $130M, Unveils Phoenix AI

Sword Health is officially on a hot streak, and it’s only going to keep turning up the heat with $130 million in fresh funding and a new AI care specialist named Phoenix.

At a time when many startups are taking down rounds – at lower valuations – to secure more capital, Sword just did a mic drop round. It’s valuation spiked 50% to a cool $3 billion.

• Sword expects to be profitable before the end of the year, and said it didn’t need any financial help to get there.

• Besides the valuation refresh, Sword also wanted to give its employees some long-awaited liquidity. That’s why $100 million of the funding was secondary (shares from employees) and the other $30 million is reportedly locked away “generating nice interest.”

Founded in 2014, Sword pairs motion tracking technology with in-house clinicians to deliver virtual physical therapy programs for muscle and joint issues. 

• Employers and health plans have flocked to digital musculoskeletal solutions to help members manage pain from home while avoiding opioids and costly surgeries, attracting competition from both well-funded giants (Hinge, Omada) and agile startups (Kaia, Vori).

Sword’s next chapter will focus on finishing the pre-IPO puzzle, and it just locked in one of the most important pieces: Phoenix, an AI care specialist that chats with patients during sessions to assess how they’re feeling and provide real-time feedback.

• As patients move through the exercises, Phoenix factors in medical history and verbal feedback to deliver optimal sessions within the human clinician’s pre-set parameters.

• It then summarizes the performance data to identify trends and surface actionable insights, making it easier for clinicians to optimize patient progress.

The icing on the cake? The Peterson Health Technology Institute highlighted Sword in an impeccably timed report on the clinical advantages of virtual MSK solutions as an effective alternative to in-person care – a glowing review compared to their harsh critique of digital diabetes programs.

The Takeaway

It sends a clear signal when a company raises nine figures just to flaunt its valuation and show its employees some love. Sword is in peak form as it gears up for an initial public offering, and it sounds like we could see a move as early as 2025 if the IPO market continues to rise from the ashes.

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The Wire

• Telehealth Legislation Tracker: Healthcare law firm Foley & Lardner LLP released a comprehensive tracker of telehealth legislation changes from 2019 to 2024. Although 43 states already had telehealth laws in 2019, the pandemic prompted 17 states to pass new reimbursement parity rules to level the playing field with in-person care. One of the patchiest remaining legal areas is remote patient monitoring, and while 24 states now mandate RPM coverage, the lack of an in-person equivalent for these services means they’re rarely covered by broader telehealth laws that don’t include specific provisions.

• Sware Series B: The FDA requires new safety validations every time life sciences and medical device companies update important software, a labor-intensive requirement that Sware just raised $6M in Series B funding to help streamline. Sware’s Res_Q platform uses AI to automate a wide range of validation processes – including IT, manufacturing, and lab systems – within a single system that intelligently flags high risk needs to help prioritize workloads.

• AI Chat Market Map: Elion delivered yet another top tier market map in its weekly newsletter, this time for the AI Conversational Chat category. Although healthcare chat solutions have been around for a while, the dawn of LLMs led to an explosion of companies tackling new use cases that were out of reach for rule-based chatbots. Elion breaks down 25+ vendors by their “digital front door” or “clinical workflow” capabilities, and has some great competitive analysis hiding behind the “View More” button on the category page.

• Doctors Don’t Mind Trading Favors: It turns out Twitter might not be the best place to find unbiased health advice, even from physicians. A JAMA study found that 93% of physicians who endorsed a prescription drug or medical device on Twitter received financial compensation from the manufacturer, usually in the form of speaking or consulting fees. The average incentive was over $27,400, which added up to an eye-popping $2.46B in 2022. The good news is that 61% of the endorsements were labeled as sponsored testimonials, but the bad news is that the other 39% failed to disclose any compensation.

• Ada Doubles Down on Expansion: Ada Health sounds like it had a big year, and it’s bringing on some fresh talent to keep the momentum going. During 2023, the care navigation company achieved profitability on the back of a 260% revenue increase, driven by a growing partner roster that includes Jefferson Health, Novartis, and Bayer. Ada is now looking to “double down” on expansion with the help of its new Chief Product Officer Nick Altebrando and SVP of Business Development Yury Rozenman.

• AvaSure + CLEW: AvaSure is teaming up with clinical surveillance company CLEW to drive early detection of critical care patient deterioration and ensure timely interventions can prevent complications from escalating. AvaSure’s open Virtual Care Ecosystem allows partners to leverage its audio/visual infrastructure to quickly deploy new solutions, such as CLEW’s AI predictive analytics that anticipate deterioration based on real-time patient physiology.

• Sluggish Q1 for Private Funding: Investors’ newfound enthusiasm for healthcare IPOs doesn’t seem to be translating to the private funding market, at least not as of the end of Q1. The latest Pitchbook data shows that healthcare IT companies raised $1B in venture capital funding across 74 rounds in the first quarter, which leaves cumulative VC funding over the past 12 months 11.9% lower than the previous year. Private equity was even more constrained, with just 23 investments in Q1 and a trailing 12 month total that’s down 25.7%.

• Health Catalyst Acquires Carevive: Health Catalyst acquired oncology tech company Carevive Systems, which offers cancer treatment solutions and applied analytics to support providers with everything from care planning and coordination to trial screening and remote patient monitoring. The acquisition strengthens Health Catalyst’s ability to support cancer treatment / process improvement and gives it “new insight” into patient-reported outcomes and oncology registry data.

• Virtual Cardiometabolic Care Benefits: A study in the American Journal of Managed Care modeled the long-term benefits of four virtual-first cardiometabolic programs (obesity, hypertension, diabetes, hypertension + diabetes) by combining real participant data with simulated reductions in downstream complications. The model showed that sustained improvements to weight, hemoglobin A1c, and blood pressure would reduce disease onset by 2% to 10% over 5 years, slashing medical expenditures by $5,221 to $7,756 in the process.

• Walmart Stops the Bleeding: Endpoints News apparently wasn’t a fan of the ambiguous corporate speak in Walmart’s press release for its clinic closures, so it decided to get the inside scoop on the factors that drove the decision. Anonymous sources revealed that Walmart Health lost $230 million last year alone, due in part to a failed pivot to value-based care and the fact that it “underinvested in marketing to the point that even in-store shoppers weren’t aware of the clinics.” Not only did Walmart fall a bit short of its 1,000 clinic masterplan with just 51 locations, it also reportedly attracted only 932 Medicare Advantage patients out of its goal of 9,600.

• Lung Screening and EHRs: Researchers writing in JAMA Network Open were able to significantly boost lung cancer screening rates through EHR reminders sent to providers and patients. In 1.9k people eligible for screening, researchers said they were able to close gaps in screening compliance – defined as completion of either screening, a shared decision-making session, or opportunistic screening from chest CT scans – from a rate of 16% at baseline to 47% after two interventions.

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