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PE firm WindRose buys Redesign Health VBC startup CardioOne, invests $100M

Illustration of a woman's hands making a heart shape over a red siren light.

Illustration: Gabriella Turrisi/Axios

WindRose's acquisition of startup CardioOne this week marks another exit from firm Redesign Health — and proves value-based cardiac care is central to PE investors.

Why it matters: Heart care is the nation's single largest driver of health care spending and a major target area for the ongoing shift to VBC.

Catch up quick: WindRose is taking a majority stake in CardioOne and investing an additional $100 million into the company.

Behind the scenes: After its seed, CardioOne was out looking to raise its Series A, but got connected with WindRose through one of the firm's portfolio companies, CardioOne CEO Jasen Gundersen tells Axios.

  • WindRose-backed Healthmap Solutions CEO Eric Reimer introduced Gundersen to WindRose managing partner Oliver Moses.

How it works: Based in Houston, CardioOne offers cardiology clinics tech tools to support value-based contracting and practice and people operations.

  • The management services organization works with independent cardiology practices who retain their ownership and tax ID number, per Gundersen.

What's next: CardioOne could expand its scope of services into areas like imaging, disease detection, and ambulatory surgical centers, Gundersen and Moses say.

  • "We're really looking at it as: As the physician, what are the tools I want to bring to my patients, and then as the patient, what are the things I'm going to be looking for?" says Gundersen.

What we're watching: CardioOne operates similarly to how Redesign portfolio company Valendo Health partners with diabetes clinics, which has us wondering about Valendo's next strategic move.

What they're saying: It's rare for a PE player to invest in such an early-stage company, but Moses says the firm had been considering a cardiology play when he met Gundersen.

  • "We have a conviction that this type of offering is going to be very attractive to the people paying for health care and to cardiologists looking for an alternative" to working in large health systems, says Moses.
  • Moses sees enabling cardiologists' independence as "the bigger driving force in the market."

Between the lines: Windrose and CardioOne maintain they have no plans to acquire practices outright — probably a smart decision for now, considering recent regulatory backlash against PE-led provider acquisitions.

State of play: A growing senior population coupled with a shift in the provision of care to lower-cost settings is fueling demand for remote and home-based heart care businesses and interest among venture capitalists in early-stage companies. For example:

  • Chamber Cardio, a VBC-focused cardiac care technology company, raised an $8 million seed led by General Catalyst this week.
  • Value-based heart care enabler Karoo Health in June raised $3.4 million in seed funding.
  • Virtual cardiology care network Ventricle Health last fall closed an $8 million seed round.
  • HealthSnap, a virtual chronic care platform developer that focuses on cardiology, last summer collected $9 million in Series A funding.
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