September 01, 2022
It's Thursday! And September is here.
Programming note: Starting tomorrow, each Friday's newsletter will be a digest of the week's top news, providing easy access to all the scoops, deals and analyses we've covered since Monday in one spot.
1 big thing: 98point6 to bring virtual care to health systems
98point6, a text-based virtual care startup, raised an additional $20 million-plus from insiders L Catterton and Activant Capital.
Why it matters: The investment will enable Seattle's 98point6 to bring — through technology licensing agreements — its virtual care platform to health care systems and their emergency departments, whose models are ripe for innovation.
- "Health systems have a new series of competitive entrants in PE-backed urgent care providers popping up," 98point6 president Jay Burrell tells Sarah. "Using our platform, they have a new patient engagement model."
What they're saying: The model is a win-win. In out-licensing its technology, 98point6 gains a higher margin stream of business, Burrell says.
- "As we focus on a path to [sustainable] profitability, this is a big step in us achieving that."
Details: 98point6's debut licensing agreement is with MultiCare Health System, which will utilize its technology through its urgent care division Indigo Health.
- MultiCare, with 11 hospitals, is the largest health system in Washington state, while Indigo encompasses 35 ambulatory care clinics. This year, it added primary care services.
- 98point6 is in talks with another half-dozen regional health systems, and it aims to have licensing agreements with a portfolio of organizations by year's end, Burrell says.
- As needed, 98point6 can also leverage its own clinician network to provide assistance to health systems.
How it works: Offered via a smartphone app, 98point6's core business is text-based primary care that includes on-demand consultation, diagnosis and treatment.
- Its customer base includes several hundred self-insured employers that access 98point6 on a subscription basis.
- Users access the app at a low cost or at no cost per visit.
- Photo, audio and video capabilities are available as necessary, and virtual physicians can also make referrals to in-person care.
- The startup expanded beyond primary care and into behavioral health last year.
What's next: Burrell says the startup is starting to think about entry points to chronic care and at-risk health care models.
By the numbers: The investment brings 98point6's total funding to date to $267 million, almost two years after it raked in $118 million in Series E funds.
- The October 2020 funding was led by L Catterton (via its growth fund) and Activant, joined by Goldman Sachs Merchant Banking Division, Optus Capital Partners, MUUS Asset Management, Westway Capital, Summer VC, ACE & Company and Cole Rotman.
Catch up quick: 98point6 laid off 10% of its workforce in July, per Geekwire, with the cuts including the creative team and many members of the marketing team.
- Burrell calls the layoffs "very painful" but says, amid a shift to focusing on profitability, 98point6 remains in growth mode by continuing to hire on the technology side and building out its clinical staff.
- Co-founder and CEO Robbie Cape abruptly left 98point6 in September 2021, following which chairman Jeff Greenstein stepped into the role, Geekwire reported.