Scoop: Health startup Olive AI plans asset sale as clients depart
Health care automation startup Olive AI intends to sell a significant portion of its products and services to sibling company Rotera, per current and former employees and documents seen by Axios.
Why it matters: Once considered the darling of health system automation, Olive's had a difficult year amid questions about its software's efficacy and executive departures. The divest to Rotera would effectively eliminate Olive's health systems product line, which represents 15-30% of its overall business.
- The assets for sale include Olive's tools for population health management and those for the 340B program, which mandates drug discounts for Medicaid and Medicare.
Yes, and: Ten of Olive's health system customers gave notice between July and October that they would either terminate or not renew their Olive contracts.
- Departing customers include SureScripts, HMS Holdings Corp and TransUnion, according to the sources and additional documents seen by Axios.
- Per previous Axios reporting, Olive had roughly 80 health system customers in April. (The company has repeatedly told Axios it has 200 customers.)
Details: In documents seen by Axios, Olive outlined plans to sell the assets to Rotera in exchange for a share of its revenue. The share amount could not be learned.
- The sale would impact seven of Olive's customers including Essentia Health, Gundersen Health System, Premier Health and TriHealth, per the documents and sources.
- Rotera, a health automation startup built out of Olive Ventures (the company's venture arm), has previously partnered with Olive. Its CEO and founder is a former Olive VP.
Catch up fast: In the summer of 2021, Olive collected $400 million in Series H funding in a round led by Vista Equity Partners and joined by Intermountain Ventures, Tiger Global, Base10 Partners and other undisclosed investors.
- Axios in April published an investigation alleging Olive — valued at $4 billion— promises to save hospitals millions of dollars with its software but the tools don't deliver, based on documents and interviews with 16 people.
- In July, Olive CEO Sean Lane announced in a company-wide email the company would shift its strategy by narrowing its offerings. The company also laid off 450 people that month.
- Last month, Olive abruptly fired its chief finance officer and chief product officer, the company later confirmed to Axios.
What they're saying: An Olive spokesperson told Axios in an email the customer departures are not surprising given the company's recent strategy shift. They did not respond to questions about the planned asset sale.
- "As with any business transformation, we expected to see customer attrition, specifically from customers whose needs no longer align with Olive’s product roadmap," they said.