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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Curewell Capital, launched by Pritzker Private Capital’s former health care team, is acquiring a majority stake in the Alliance for Multispecialty Research (AMR), the parties tell Sarah exclusively. 

Zoom in: Curewell is partnering with the clinical research site company's management team, led by founder and CEO Bill Smith, while appointing former LabCorp CEO Dave King, a Curewell operating partner, as AMR chairman. 

The parties declined to comment on terms of the transaction, but sources tell Sarah the deal commanded a valuation in the low $300 million range, equating to around a 12x to 13.5x normalized EBITDA multiple. 

The investment is the first for Curewell, launched by Michael Dal Bello and Ceron Rhee, who recently transitioned into adviser roles at PPC. Curewell, a growth-oriented health care-focused firm, has not yet raised a fund.

AMR started as a co-op for shared practices for clinical research centers in 1994. In 2017, 16 of its member research sites joined forces to create what is now AMR. 

Fairmount Capital advised AMR on the transaction.

Be smart: Contract research organizations (CROs) have professionalized and scaled over the last several years, calling for the clinical research sites they partner with to do the same. 

CROs gain efficiencies and cost-savings by working with high-performing clinical site organizations, and scale lends to additional benefits, Smith tells Sarah. 

Scale brings a larger database of eligible patients for studies (which means that you have to recruit fewer participants), expansion of therapeutic expertise, integrated relationships with CROs, as well as greater access to patients when trials require a specific geographic concentration, King elaborates. 

“To me, we’re on the verge of an explosion of innovation in pharma services, and as we go up that arc of more products, more R&D dollars, more mRNA therapies, we have to recruit more patients [for clinical studies],” King says. 

Yes, and: The pandemic environment has underscored the role of clinical site organizations. 

"With COVID, trying to manage these large collections of sites, people recognize that it’s so much more efficient to go to those with scale," one source told Sarah previously.

What’s next: With the backdrop of a robust R&D pipeline, Curewell's backing will “allow us to partner with a lot of sites that we would have not have otherwise considered," Smith says. 

Curewell's capital injection will turbocharge AMR's organic growth and acquisition playbook to meet increasing demand.  

Studies that were delayed in 2020 and 2021 are now starting to be initiated, Smith adds.  

AMR has completed 7,800-plus trials with over 160,000 study participants and has been growing at a 30%-plus clip annually.

State of play: Private equity firms are driving consolidation at site management organizations for clinical research, many of which didn't exist five years ago. 

PE-based clinical research site companies include GHO Capital's Velocity Clinical Research, Linden Capital Partners’ Evolution Research Group, KKR's Headlands Research and Webster Equity Partners' CenExel.  

GHO bought Velocity last year in a deal valued at around $500 million, while Webster subsequently explored a sale of CenExel, Sarah wrote.

What we're watching: Will more CROs (like PPD and Icon) start buying site companies as they scale, or will they question if they can remain independent? If so, might we see larger clinical site groups start to pick up some CRO skills like biostatistics and protocol design? 

1 big thing: Curewell's big debut

Illustration of gloved hand holding a Petri dish with an exclamation point

An SEC filing reviewed by Erin reminded us that the strategy behind Cleerly, a New York-based digital health company, speaks to where disease management is heading.

Why it's the BFD: Digital health for disease management — which began with a focus on metabolic conditions — is beginning to take off in other areas, particularly heart disease, digital health observers tell Erin.

For example, Saratoga, Calif.-based Story Health, a virtual care startup focused on heart conditions, launched last month with $22.6 million in Series A funding led by Northpond Ventures and B Capital Group.

Health systems are increasingly contracting with startups to help patients manage chronic conditions both inside and outside of the hospital and to track their disease's progression over time.

For now, most companies are focused on one particular disease area or condition, but in the future, experts expect to see consolidation that allows for disease management across multiple conditions.

Yes, but: Cleerly's core offering is essentially a software overlay that adds AI to coronary CT scans, as opposed to a full-stack digital health care platform, outside experts tell Erin, and its leadership includes just one cardiologist.

Context: Founded in 2017, Cleerly launched publicly last June with $43 million in Series B funding led by Vensana Capital with participation from LRVHealth, New Leaf Venture Partners, DigiTx Partners, the American College of Cardiology, Cigna Ventures and existing investors.

Those funds brought the company's total funding to $54 million.

The company says it is built on research performed at the Dalio Institute for Cardiovascular Imaging at the New York-Presbyterian Hospital and Weill Cornell Medicine that includes clinical trials performed on more than 50,000 patients.

“The filing [is] tied to the completion of our previously announced Series B raise last summer," a company spokesperson tells Erin.

How it works: Cleerly has built a digital care pathway that uses imaging and a set of algorithms in an effort to stop heart attacks and track disease over time.

Its imaging uses a coronary computed tomography angiogram, or advanced X-ray, to assess the health of the coronary arteries based on images of the heart and its blood vessels.

Cleerly's platform also includes clinician- and patient-facing tools designed to track improvements or declines in patients' heart health. 

What's next: Virtual disease management is clearly attracting increased attention from investors, but precisely what those digital tools will look like in the future remains unclear.

2. The BFD: The future of disease management

Illustration of a one-hundred-dollar bill with a portrait of a heart.

Doctolib, a French admin SaaS for doctors and medical workers, raised €500m in equity and debt funding at a €5.8b valuation. Eurazeo led, and was joined by Bpifrance and General Atlantic. https://www.doctolib.fr/

Vira Health, the U.K. maker of menopause app Stella, raised $12m to support its expansion into the U.S. Octopus Ventures and US VC Optum Ventures led the funding. https://www.vira.health/

OpenLoop, a multispecialty telehealth company, raised $8m in Series A funding led by SpringTide Ventures. ManchesterStory joined the round, along with existing investors including Next Level Ventures, Panoramic Ventures, ISA Ventures, and some strategic health care syndicates. https://openloophealth.com/

Legion Health, makers of a mental health marketplace designed to help digital health companies hire mental health professionals on a freelance and hourly basis, raised $2m in seed funding from Y Combinator, UpHonest Capital and Soma Capital and individual investors including Modern Health co-founder Erica Johnson, SVB Leerink CEO Jeffrey Leerink, Definitive Healthcare president Robert Musslewhite and PatientPing founder Jay Desai. https://legion.health

IVC Partners acquired Urgent Care Group, merging it with Total Access Urgent Care to create a combined urgent care network that spans more than 50 clinics in four states. https://www.totalaccessurgentcare.com/

Quadrant Private Equity is seeking to sell Australian in-home care provider Enrich Living Services for up to A$400m, per The Australian. www.myhomecare.com.au

Lyniate, a health care data interoperability company, agreed to merge with NextGate, a pioneer in health care identity resolution and Enterprise Master Person Index. https://nextgate.com/

3. Deals o' the day

Amazon named Aaron Martin VP of health from Providence health system, where he was chief digital officer and head of the health system’s venture capital arm.

Thirty Madison added Andy Weissman, managing partner at Union Square Ventures, and Regina Benjamin, the 18th U.S. Surgeon General, to its board of directors.

4. It's Personnel

🐊☀️ As promised, Sarah made time for a swamp walk in St. Pete before heading back to New York, spotting a hefty 2-foot-long armadillo and some baby crocodiles laying in the sun. 

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March 15, 2022

1 big thing: Curewell's big debut