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Exclusive: Definitive Healthcare to buy analytics startup Populi for $52M cash

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Illustration: Tiffany Herring/Axios

Health care analytics company Definitive Healthcare is paying $52 million in cash to acquire health insights startup Populi, Definitive CEO Robert Musslewhite tells Axios exclusively.

Why it matters: Claims-based medical analytics firms operate in a saturated market — and more data means more control, as health care organizations look to expand their consumer base and boost profits.

Details: Definitive Healthcare's cash purchase includes the potential to pay Populi up to an additional $28 million, tied to performance milestones.

  • With a market cap of $1.7 billion, Framingham, Massachusetts-based Definitive Healthcare (Nasdaq: DH) last week posted expected Q2'23 revenues of $61 million, a quarterly net loss of roughly $11.6 million. The company's projected adjusted EBITDA was $17.2 million.
  • Farmington, Connecticut-based Populi, meanwhile, has remained private since its founding in 2020, raising just $6 million in seed funding, per PitchBook data.
  • Yet while Populi is small — employing fewer than 50 people, per Musslewhite — it maintains a database of 180 billion health care and consumer transactions.

How it works: While both companies offer analytics and marketing tools to life science and health care organizations, Populi had a better-developed provider-facing segment than Definitive Healthcare, which only recently started selling into the category.

  • Selling to providers "requires more custom working of the data to create the visualizations they like to use — they like to see it cut by geography, view physicians independently and connected to hospitals, etc.," Musslewhite says.

What's next: Definitive Healthcare plans to make acquisitions a regular habit for the foreseeable future, Musslewhite says.

  • "We'd like to make one to two per year," with a focus on companies with a unique and proprietary data set and capabilities that "accelerate us is an area where we couldn't or wouldn't build it ourselves," he says.
  • "The market's been a little tough lately with private valuations remaining aspirationally high, but we think that'll normalize," Musslewhite adds.

The intrigue: A week before making the acquisition of Populi public, Definitive Healthcare laid off 4% of its workforce (roughly 40 employees) — its second round of downsizing since January, when it cut 6% of staff, per the Boston Business Journal.

  • "We've been behind for the year on our growth projections and have had a tough sales year," says Musslewhite. "In particular, we've had lower retention rates and higher churn. We're behind, and we needed to make that adjustment."

Context: Musslewhite says the idea to acquire Populi came after some of its initial sales to providers. "It was clear they wanted the data," he says.

  • Providers "want to understand other markets," says Musslewhite. "Which physicians are doing what? Or if they're looking to acquire a practice, what are its dynamics? Who are the competitors in that market? And they want visibility into keeping patients in their network."

State of play: Claims-based medical analytics firms continue to attract the interest of VC and public market investors.

  • Ostro, which guides consumers and clinicians to drugs and devices, last November collected $45 million in Series B funding.
  • Kyruus, a provider of search and scheduling tools for providers, in April raised $10 million in unlabeled financing after closing a $42 million Series D in 2020.
  • Veeva Systems (Nyse: VEEV), which offers a variety of data and customer management tools to life sciences companies, has a market cap of $31.17 billion.
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