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Exclusive: Arsenal and McKesson back OncoHealth

Sarah Pringle
May 9, 2022

Illustration: Aïda Amer/Axios

OncoHealth, an oncology-dedicated digital health company, scored strategic investments from Arsenal Capital Partners and McKesson (NYSE: MCK), the parties tell Axios exclusively.

Why it matters: The breadth of cancer treatment options continues growing, increasing complexity around clinical pathways and higher drug costs. Meanwhile, the oncology care management model remains outdated and ripe for innovation.

What they’re saying: Atlanta’s OncoHealth is the only player tackling the market's many pain points, which also include supply-demand provider imbalance and removing friction between payors and oncologists, Arsenal partner John DiGiovanni says.

  • There are standalone utilization management businesses, virtual care tools and a host of “unicorns” in real-world evidence, but “nobody is doing all of these things cohesively and complementary" like OncoHealth, DiGiovanni says.
  • "There are a lot of point solutions that dabble around the edges of various aspects of this,” CEO Rick Dean adds. OncoHealth’s mission? Do it all.

Details: Arsenal, advised by Evercore, took a majority stake in OncoHealth, with McKesson assuming a significant minority position.

  • "We weren't out shopping the business," Dean says, but Arsenal approached OncoHealth with a like-minded vision, preempting a formal process.
  • The McKesson partnership enables OncoHealth to collaborate further with Ontada, its oncology technology and insights arm, and its U.S. Oncology Network.

How it works: OncoHealth's platform offers payors and providers insights into their overall cancer drug spend and provides second opinions on drug reimbursements.

  • Offering the only digital prior authorization platform exclusively for oncology, OncoHealth helps health plans determine if a patient is on the right drug with the right efficacy and toxicity profile and then examines if the patient can afford it.
  • The FDA has approved 285-plus new cancer indications since 2017, making it hard for health plans and providers "to keep up with all the new science that is happening," Dean says.

Yes, and: "The natural extension of that is to reinvent the care management model the health plans have used for a decade or more,” Dean says.

  • OncoHealth in March unveiled Iris, a digital telehealth service connecting oncology experts with patients throughout the treatment journey.
  • Using Iris, patients receive personalized virtual care, physical symptom management, and 24/7 access to oncology nurses and mental health therapists.
  • While there are many cancer apps, Dean believes Iris is the first of its kind. “I don’t see anyone doing what we’re doing with respect to actually providing medical advice."

State of play: An internal Arsenal report expects the market opportunity to surpass $300 billion by 2025.

  • Large payors like Anthem and Cigna have acquired tools around utilization management, but Iris's independence may appeal to other payors, Dean says.
  • Likewise, OncoHealth isn't tied to any particular EHR, enabling it to better follow the patient journey, he says: “We think the longitudinally and quality [of data] becomes much richer.”

Flashback: OncoHealth in May 2020 collected $28 million in Series C funding from Baird Capital, Oak HC/FT, McKesson Ventures and The Blue Venture Fund.

  • Its customer base has grown 500%-plus over the last three years, with top-line growth of 45% year over year.
  • OncoHealth today works with 16 health plans, 9,200 providers, and five life science partners.

What’s next: Dean says growth plans include digital expansion and moving into the employer market, where cancer management is a top spend.

  • Its M&A agenda will be driven by strengthening its real-world evidence product for life science customers, enabling the shift toward value-based oncology care, and cancer care in the home.
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