Health Catalyst has raised USD70 million in a Series E funding round co-led by Norwest Venture Partners, the lead investor in three previous rounds, and UPMC, a healthcare provider and insurer that is also a Health Catalyst customer.
Two additional existing customers of Health Catalyst – MultiCare Health System and OSF Healthcare – also contributed to the funding round, continuing Health Catalyst’s successful model of investment by customers. Other contributors to the round were new investor Leerink Capital and existing investors Sequoia Capital, Sands Capital, Kaiser Permanente Ventures, CHV Capital (an Indiana UniversityHealth Company), Partners HealthCare, EPIC Venture Partners, Leavitt Equity Partners, and Tenaya Capital.
“We are pleased to join Health Catalyst as a customer, an innovation partner, and now as an investor,” says Tal Heppenstall, Executive Vice President and Treasurer of UPMC, and President of UPMC Enterprises, the venture capital and commercialization arm of UPMC. “This investment is a signal of our strong commitment to Health Catalyst, and to our mission of improving healthcare by supporting and developing market-leading companies and innovations.”
Proceeds from the financing will support a significant expansion of Health Catalyst’s outcomes improvement solutions for healthcare organisations.
“Amid a very challenging capital environment, we are honoured to have been oversubscribed for this latest round of financing at an increased valuation relative to our most recent round, continuing a trend that we have been fortunate to experience throughout our history,” says Health Catalyst CEO Dan Burton. “We are grateful that new investors UPMC, MultiCare, OSF and Leerink, as well as our existing investors, have provided us with the opportunity to continue to grow and expand.
“As our customers have come to depend on us for data warehousing and analytics to drive outcomes improvement, they are also asking more of us. This new financing will help us to meet that request by expanding the breadth and depth of the solutions we provide for managing the cost and quality of care across whole populations of patients. We anticipate that this is the company’s last round of capital as a private company as we expect to be cash-flow sustainable by the fourth quarter of 2016.”
The arrival of new value-based reimbursement models is requiring providers to adopt new models of care centring on more proactive management of the highest-risk populations of patients. In response, Health Catalyst is evolving from an offline data aggregator and analysis company to a real-time data production and decision support company, integrating the knowledge derived from its unmatched data content and analytics into the decision workflow of clients and their patients, anywhere and on any device. This year, Health Catalyst expects to release new solutions for activity-based costing, care management, and real-time clinical decision support.
“Our new products, funded by this round, will enable better, faster decisions, from the population level to the individual patient level,” says Burton.
The market’s rising valuation of Health Catalyst as a leader in healthcare outcomes improvement was secured by the company’s stellar performance in 2015. During the year, Health Catalyst experienced significant expansion in the number of patients served by its customers to over 65 million, doubled its bookings backlog, doubled its revenue, nearly doubled its customer footprint and increased the number of team members nationwide from approximately 230 to over 400.
Also in 2015, Health Catalyst grew the number of published outcomes improvement case studies to 61, reflecting the depth of its partnership with customers. In addition, Health Catalyst acquired important intellectual property from customers including Allina Health, Partners HealthCare, and UPMC to help catalyse outcomes improvement for healthcare organisations across the country.