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BFD Expert Voices - Health Tech Deals

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Komodo Health, the health care map maker last valued at $3.3 billion, has hired Goldman Sachs and SVB Securities for an upcoming initial public offering, sources tell Sarah. 

Why it matters: Komodo is arguably the most anticipated health tech IPO of 2022, and could be one of the first big names to pull the trigger and potentially help to reopen the IPO markets this summer.

The San Francisco-based startup is expected to file confidentially for an IPO over the next couple of months and aims to go public around June or July, sources say, noting market conditions will dictate final timing.

Many companies are rethinking their plans as public equities continue to sag.

The focus of many dual-track processes has flipped to sales while leaving the IPO on the table. 

2022 has produced just 16 IPOs so far this year (well off the pace from 102 IPOs in last year's Q1), according to Renaissance Capital, and only 23 SPAC business combinations have been announced so far, for the record.

By the numbers: Komodo has SaaS-like margins and is growing top line at a rate of 50%-plus. 

Current ARR sits around $150 million but Komodo has not yet reached profitability.

Komodo last year clinched $220 million in a Series E funding round that pushed its valuation to $3.3 billion. Tiger Global Management and Casdin Capital led the round, joined by existing investors ICONIQ Growth, Andreessen Horowitz and SVB Capital. 

What they’re saying: Komodo co-founders Web Sun and Arif Nathoo told Fierce Healthcare in late January that they were ultimately looking to take the company public. 

Nathoo hinted then that “over the course of this year, you'll expect to see us take steps to get closer to the public markets.”  

Komodo and Goldman Sachs declined to comment, while an SVB spokesperson didn’t immediately return a request for comment. 

How it works: Komodo applies artificial intelligence and data science to create a “health care map,” tracking patient journeys to develop a robust record of more than 325-plus de-identified, real-world patient insights.

These clinical insights are predominantly used today by pharma companies for multiple use cases, but Komodo sees opportunity in increasingly working with providers and payors. 

For instance, data insights can be used to predict barriers to study success, understand clinician influence, or make accurate projections of adherence. 

Komodo also lets users build custom data on top of its customized datasets and integrate with other third-party datasets. 

Yes, but: There are other players on folks' IPO radars that could look to make a big splash this year should the equity markets stabilize.

On the digital health front, there’s Included Health (formerly Grand Rounds Health and Doctor on Demand), which Insider wrote in December had engaged banks for an upcoming IPO.

Elsewhere, Bloomberg wrote in November that Tempus Labs, a data-driven precision medicine business, was considering an IPO as soon as the first half of 2022.

The bottom line: Although the IPO markets remain cold and chilly, when Komodo does ultimately come out it will likely emerge as one of the market's only hyper-growth, high-margin pharma data and analytics plays. And that, industry sources say, investors should like.

1 big thing: Komodo preps IPO 

Illustration of heart monitor charting health care costs

Specialty pharmacy startup House Rx raised $25 million in Series A funding led by Bessemer Venture Partners, company co-founders Ogi Kavazovic and Tesh Khullar tell Erin exclusively. 

Why it's the BFD: Specialty medications present a special hassle since insurers dispense the majority of such drugs, often on a delayed basis and without coordination with providers.

These drugs are often expensive and include medications for different types of cancers and other severe conditions.

Insurers and pharmacy benefits managers (PBMs) are mandating that providers complete detailed prior authorizations, a lengthy and mostly manual process.

In surveys, some oncologists have suggested those delays may be tied to poorer health outcomes.

How it works: House Rx partners with specialty clinics to get patients care and medications from the same place. 

The company either trains clinics' existing staff to use its tools and software or places pharmacists or pharmacy technicians inside the clinic to collaborate with doctors on patient care.

"We were afraid we might be starting a turf war, but it turns out the doctors and the pharmacists love it," says Kavazovic, House Rx's CEO. "It's a complementary skillset."

House Rx also assigns a remote pharmacist to the clinic to verify that prescriptions are written and sent out appropriately.

Currently focused on Medicare Advantage patients, the company charges a per provider/per month service fee.

Yes but: The company faces fierce competition from controlling incumbent PBMs for whom specialty drugs tend to be highly profitable.

"There is a ton of opportunity here, but it is very challenging for specialty pharmacies to get penetration into these broader PBM networks," says Antonio Ciaccia, a pharmacy sector analyst and the CEO of research firm 46brooklyn.

Khullar, House Rx's president, hopes that as more and more startups begin to challenge those dominant PBMs, House Rx will have more leverage — especially if it can show better patient outcomes.

Details: First Round Capital, Character.vc and 1984.vc joined Bessemer in House Rx's raise, which brings its total financing to $30 million.

What they're saying: Kavazovic, Khullar and industry observers view House Rx's biggest potential advantage as helping to streamline and improve patient care.

"That’s the dream, honestly — getting physicians and pharmacists and nurses working together," says Ciaccia. "When you’re talking about patients with complex diseases on specialty medications, collaboration is essential to make sure they're calibrated on the right treatment path."

2. The BFD: Specialty pharmacy startup nets $25M

Illustration of money pouring into a prescription bottle.  

Virtus Health (ASX: VRT), an Australian fertility services provider, accepted a sweetened A$705m takeover offer from CapVest Partners. http://axios.link/TXFS

Audax Private Equity agreed to sell Lifemark Health Group, Canadian a provider of rehabilitation services, to Shoppers Drug Mart, a subsidiary of Loblaw Companies Ltd (TSX: L). The deal's price tag is C$845m, or ~$663m. https://www.lifemark.ca/

Clarify Health, a cloud analytics and value-based payments company, acquired Embedded Healthcare, a behavior change platform. Clarify's investors include Insight Partners, Spark Capital Concord Health Partners, HWVP, KKR Rivas Capital and Sigmas Group. https://www.embeddedhealthcare.com/

3. Deals o' the day

GTCR announced several leadership appointments, including naming  Sean Cunningham and Ben Daverman co-heads of GTCR's healthcare group.

Calibrate named Edward Cudahy CTO from Bread, where he held the same role.

Nomi Health named Tessa Curry senior content manager from SMS-Magic, where she held the same position.

Sibly named Gary Kurtzman to its board. He also sits on the boards of digital health companies including Prognos, NuvoAir and MoxeHealth.

4. It's Personnel

✈️  Erin is running around in Orlando all week at HIMSS, while Sarah finally treks back to Brooklyn this evening after a few weeks of travel.  

🐊 Sarah "recovered" from Miami's ViVE and HPE in St. Pete all weekend with an old J-school friend, and is planning on a quick "swamp walk" before flying home tonight. 

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March 14, 2022

1 big thing: Komodo preps IPO