Health Catalyst hauls in $70 million in Series E cash, moves closer to IPO
Health Catalyst has raised $70 million in its fifth round of funding, bringing the total of venture capital it has attracted to $235 million.
Norwest Venture Partners, the lead investor in three previous rounds of funding, and UPMC Enterprises, the commercialization arm of UPMC, co-led the round. UPMC is also a Health Catalyst customer and technology development partner.
Also contributing are Health Catalyst customers MultiCare Health System and OSF Healthcare, new investor Leerink Capital as well as existing investors Sequoia Capital, Sands Capital, Kaiser Permanente Ventures, CHV Capital (an Indiana University Health Company), Partners HealthCare, EPIC Venture Partners, Leavitt Equity Partners and Tenaya Capital.
The company will use the new capital to expand its product line.
“Our new products, funded by this round, will enable better, faster decisions, from the population level to the individual patient level,” Health Catalyst CEO Dan Burton said.
Areas of particular interest, Burton said, are population health management, care management and costing – “precise costing such that you really know what it costs to deliver specific procedures in specific locations.”
There’s no standing still for Health Catalyst, a company inspired by the analytics that were being honed at Intermountain Healthcare back in the day when that kind of analysis was done on spreadsheets.
Today, Health Catalyst is redefining what it means to improve healthcare outcomes and keep the lid on cost. It is also shaking up how a health IT enterprise does business, having persuaded many of its high-profile clients – Allina Health, Partners HealthCare and UPMC, among them – to not only work with the company to develop new products, but also to invest big time.
“Their investment is very, very meaningful to the company, and their involvement fits within the construct that has really served the company well for many years,” Burton said. “We have found that having mix strategic investors along with pure financial investors provides a healthy balance and complementary strengths. It opens the doors for collaboration and co-development that you wouldn’t normally see being pursued between a health system and a vendor.”
Last year Health Catalyst increased the number of patients served by its customers to more 65 million, doubled its bookings backlog, doubled its revenue, nearly doubled its customer footprint and increased the number of employees nationwide from about 230 to more than 400.
Burton has been open about Health Catalyst’s plans to go public – though no formal decision has been made. The board will make that decision, he said, and he is only one member.
“But, I believe that’s the path that we’re on,” he said.
[Like Healthcare IT News on Facebook]
“The decision to go public will not be because we need funding,” he added. “This round of capital is designed to give us the balance-sheet strength to get to the cash flow-sustainable territory on our own. As a cash flow sustainable entity, we will not be required to raise capital through the public markets.”
Judy Hanover, research director for IDC Health Insights' Healthcare Provider IT Strategies practice, told Healthcare IT News, there are many steps in the data warehousing/analytics process that can fail “even if the tools are great, the implementation is stellar, but the folks in the hospitals that make decisions don’t use the information.” But what Health Catalyst seems to do well, she said, “is that last step of turning the results into reasonable and productive and beneficial decision making at the hospital.”