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Digital Diagnostics collects $75M in KKR-led funding

Aug 23, 2022
Animated illustration of eyes in binary code.

Illustration: Shoshana Gordon/Axios

Digital Diagnostics, which uses autonomous AI to revolutionize how diseases are detected at the point-of-care, raised $75 million in a KRR-led funding round, the parties tell Axios exclusively.

Why it matters: Exacerbated by today's labor shortages, specialist care faces a patient access and affordability problem, leaving many chronic conditions undiagnosed.

  • Digital Diagnostics is tackling this problem with technology that mimics physician decision-making during the diagnostic process, CEO John Bertrand says.
  • Applying automation, it lifts the burden on specialists and increases health equity, enabling even a junior member in a given health care setting to participate in early diagnosis and preventative care, he adds.

Details: KKR is investing in the Series B round through its Health Care Strategic Growth strategy, joined by Cedar Pine, Kinderhook, 8VC, Optum Ventures, OSF Ventures, Gundersen Lutheran, Edward - Elmhurst Health Venture Capital, and the University of Iowa.

  • The Coralville, Iowa-based company has now raised more than $130 million to date.
  • Ali Satvat, global head of KKR Health Care Strategic Growth, and Stephen Weiss, managing director of Cedar Pine joined the board.

Zoom in: The startup's roots are in eye care, with it IDx-DR platform used to detect diabetic retinopathy — the No. 1 cause of blindness in individuals with diabetes.

  • While 37 million and growing patients have diabetes in the U.S. — 80% of which will develop this disease over their lifespan — only 15% of this patient population is tested, per the World Health Organization.
  • The large unmet need for diabetic retinopathy detection is not only widely understood, but scientific and clinical evidence proves early intervention leads to improved patient outcomes and reduced health spend, Bertrand and Satvat say.

The big picture: Eye care is just the tip of the iceberg.

  • "You can, in a sense, rinse and repeat this in different use cases once you're armed with the approach," says Satvat.
  • Digital Diagnostics has identified more than 200 disease states that fit this paradigm — and where it believes its technology is applicable, Bertrand adds.
  • The company, for example, entered skin cancer detection through its 2020 acquisition of 3Derm Systems.

By the numbers: Digital Diagnostics' technology is distributed in 12 countries and counting, including about 500 health care sites in the U.S. alone.

  • By the end of next year, Bertrand expects that footprint to grow to 1,500 to 2,000 sites spanning four-plus continents.

What's next: The funding will support those plans to scale, both from a product innovation standpoint and commercial traction and distribution standpoint.

  • Digital Diagnostics has a pipeline of 17 algorithms for other disease detections actively in development, Bertrand notes.

State of play: AI's role in health care has predominately focused on back-office processing and administrative functions, but few are in frontline diagnostics, the CEO says.

  • Digital Diagnostics, for its part, aims to "work within the [existing] system," Bertrand says.
  • This appreciation of health care's various constituents stood out to Satvat, who says he has looked and passed on other health care-focused AI opportunities lacking this mindfulness.

Of note: KKR in 2021 co-led a $125 million-plus Series C funding in Paige, an AI-based diagnostic software company.

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