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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

As at-home testing gains traction, Nathalya Mamane of RT MicroDx wants to produce PCR-quality at-home kits for strep throat.

Why it matters: RT MicroDx is fundraising to help meet the company’s product development deadline at the end of the year and hopes to start clinical trials as early as next year, writes Steph Solis of Axios Boston.

How it works: As designed, the test would deliver accurate results in minutes.

Although the strep test would resemble a rapid COVID-19 test, it's designed to examine DNA to detect the infection, similar to a PCR test.

Currently, children at a doctor’s office can get a strep test result in minutes, but negative results must be confirmed through a throat culture, which typically takes 48 hours or more to get results.

Of note: RT MicroDx won the 2022 Babson Entrepreneurial Thought & Action Challenge, securing $28,000 in funding, and was a finalist at MassChallenge’s Resolve 2023 awards.

What’s next: If clinical trials of the test are successful, RT MicroDx wants to develop a similar one to detect mono or other illnesses.

By the numbers: The U.S. records 14,000 to 25,000 cases of invasive strep a year, with 1,500 to 2,300 cases resulting in death.

State of play: As health care continues to centralize the consumer experience, a lot of money is being invested in home care, which includes at-home testing and diagnostics.

Teal Health raised $8.8 million in seed funding from Emerson Collective, Serena Ventures, Metrodora Ventures and Felicis Ventures for its at-home cervical cancer screening.

Everly Health is gearing up to partner with a leading home cancer testing company to offer its early-detection home cancer test to members of employer health plans.

Turtle Health in December raised $5.4 million in seed capital for its endeavor to replicate a full-scale fertility evaluation in the home.

The FDA recently authorized the first over-the-counter at-home test that can detect both the flu and COVID-19 — though its manufacturer, Lucira, just declared bankruptcy.

1 big thing: Pioneering an at-home strep test 

Illustration of a shadow cast over a home with a red cross for a door

AI-powered revenue cycle service provider CodaMetrix collected $55 million in Series A funds, CEO Hamid Tabatabaie tells Erin exclusively.

Why it's the BFD: With health worker deficits hitting hospital billing and revenue cycle departments particularly hard, CodaMetrix's tools offer potential to boost efficiency without filling vacant or additional roles.

Deal details: SignalFire led the round and was joined by Frist Cressey Ventures, Martin Ventures, Yale Medicine, University of Colorado Healthcare Innovation Fund, and Mass General Brigham physician organizations.

CodaMetrix will use the capital to build out "as many specialty areas with as high quality in as short a time as possible — in that order," Tabatabaie says.

The company doesn't plan to raise a Series B "unless we grow faster or want to get into areas that require M&A," Tabatabaie adds, predicting the company will get to break-even by the end of 2024.

Alongside the fresh capital, SignalFire partner Chris Scoggins joins CodaMetrix's board of directors.

How it works: Operating as a software-as-a-service business, CodaMetrix contracts with health systems for given specialties and charges various rates depending on the amount of automation it can provide.

The company combines machine learning, deep learning and natural language processing to turn clinical notes into billing and diagnostic codes across radiology, pathology, surgery, gastroenterology and inpatient specialties.

To track outcomes, CodaMetrix assesses how fast submitted claims are processed, the number of coders assigned to areas other than what they're automating, and the number of coders made redundant by its technology.

What he's saying: "Our providers represent great data to train models with," Tabatabaie says.

In addition, Tabatabaie says CodaMetrix uses pattern recognition rather than natural language processing as its technology backbone, so its tools can improve more quickly.

The backstory: Tabatabaie created four health tech IT companies before leading CodaMetrix, which started when some leaders at Massachusetts General Brigham invited him to look at a tool they'd been developing internally.

"This was my first entry into revenue cycle," says Tabatabaie, whose previous startups had all focused on clinical software. "They proved to me that codes are becoming so detailed they can represent virtually the entire patient history."

By the numbers: CodaMetrix is partnered with 10 health systems, including Mass General Brigham, University of Colorado Medicine, Yale Medicine and Henry Ford Health Systems.

Those systems represent 111 hospitals and over 120 million outpatient visits a year.

2. The BFD: CodaMetrix gets $55M Series A 

Illustration of a heart with a barcode sticker on it.

Hospitals have a plethora of venture-backed and legacy options when it comes to revenue cycle automation tools, but Tabatabaie stresses that CodaMetrix's strength comes from its origin inside a major health system.

Automated medical coding company Fathom last fall filed a $46 million Series B round.

Nym Health, another medical coding automation startup, in 2021 raised $25 million.

With a market cap of $455 billion, UnitedHealth Group also offers Optum's suite medical coding software.

3M, with a market cap of $59 billion, also sells its own medical coding tools.

State of play: Revenue cycle automation

3. State of play: Revenue cycle automation 

Illustration of a person retrieving a newspaper titled "State of Play" from a mailbox.

Olympus Corp. (Tokyo: 7733) agreed to acquire Taewoong Medical, a South Korean maker of endoscopic devices for gastrointestinal procedures, for up to $370m in cash (including $256m upfront). https://axios.link/3m7tTSS

Spex Capital, a British health-tech VC firm led by Claudio D’Angelo, says it’s targeting €100m for its debut fund. www.spexcapital.com

3. Deals o' the day

Palm Medical Centers, a portfolio company of MBF Healthcare Partners II, hired Brandon Zeman as its corporate business development officer. https://www.palmmedicalcenters.com/

H.I.G. Capital added Colin Hannaway as a managing director in the firm’s capital formation group. https://higcapital.com/

Ellodi Pharmaceuticals, backed by TPG, announced that Debra Silberg joined the company’s board and will also serve as a scientific advisor. https://ellodipharma.com/

4. It's Personnel

Can A.I. Treat Mental Illness? — The New Yorker

FDA Authorizes First Covid-19 and Flu Test, But its Maker Files for Bankruptcy — MedCity News

Beauty subscription Birchbox 'no longer fulfilling orders' due to 'unprecedented' setbacks — Liverpool Echo (recall the business is a subsidiary of troubled FemTec Health).

State of play: At-home testing and diagnostics

5. Your daily dose

Happy Monday, Health Tech readers. Welcome to another week. 

☀️ Aaron is cleaning and decorating the patio for a wonderful WFH outside office.

👏🏻 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Brad Bonhall. Please ask your friends, family and colleagues to sign up.

February 27, 2023

1 big thing: Pioneering an at-home strep test