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Exclusive: HiLabs inputs $39M for medical data cleanup

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Illustration: Shoshana Gordon/Axios

Health data analysis company HiLabs raised $39 million in Series B funding, CEO Amit Garg tells Axios exclusively.

Why it matters: Rising costs and a glut of mismatched health care data have piqued payer and provider interest in tools offering a chance to boost efficiency and curb spending.

Zoom in: Eight Roads and Denali Growth Partners led the round. F-Prime Capital participated.

What's next: Funds will be directed to hone HiLabs' AI capabilities, including building a generative AI tool to parse value-based care contracts and other legal documents.

  • Garg foresees the company raising a Series C in 2026 and reaching profitability by Q4 of 2025. (The company was profitable in 2021, he says, but not in 2022 or 2023 when it was focused heavily on R&D.)

How it works: The Bethesda, Maryland company sells its AI-powered data analysis tools to health plans, who use it to clean clinical data, boost the accuracy of provider directories, and identify and address medical claim errors.

  • The company also publishes research on its efforts.

What they found: For a 2023 study it funded and published in the Journal of the American Medical Association, HiLabs analyzed health plan provider directories for over 40% of U.S. physicians and found inconsistencies for 81% of doctors across a handful of major insurers.

What they're saying: "All of our products have a common theme, which is finding data errors," says Garg, "and making that clean data accessible to payers and providers in timely manner."

Flashback: Garg started HiLabs in 2014 after meeting cofounder and UCHealth interventional cardiologist Neel Butala at Yale.

  • The founders' initial aim was using data analysis to predict patients at high risk of being readmitted to the hospital, since those patients contribute to higher medical spending.

Yes, but: When the pair realized the quality of the data was an even bigger problem, they pivoted, focusing instead on cleaning the data and getting it to payers and providers faster.

State of play: Medical analytics firms continue to attract the interest of VC and public market investors (see below), but Garg says HiLabs stands out by working with its customers during the implementation process and helping them to customize their tools.

  • Health care analytics company Definitive Healthcare last summer paid $52 million in cash for health insights startup Populi.
  • Clearsense, a health care analytics firm, last January collected $50 million in Series D financing.
  • Veda, a data automation company focused on health plans and care providers, in 2021 raised $45 million in Series B funding.
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