Red Hots, Get Your Red Hots

With the World Series upon us, I find myself lured to the TV to watch baseball, a rare occurrence during the regular season. Notably absent from the experience of taking in a game on the flat screen, however,  is the clarion cry of “red hots, get your red hots”, and the associated culinary experience that makes an outing at the ball park about much more than baseball ; a hot dog at a professional baseball game, however rare the experience, never tasted so good.

Not so rare, however, is the menu of “red hot” investments being served up lately in the major leagues of venture investing. Last quarter witnessed $760 million of venture capital investments in the U.S. healthcare IT sector reflecting a voracious appetite for exposure to businesses that address such needs as clinical integration and interoperability, predictive analytics, mobile health, care coordination and remote monitoring; to name just a few:

  •  North Bridge Growth Equity Acquires Majority Stake in Ingenious Med: Ingenious Med is a provider of a patient encounter platform that automates physician and care team workflows at the point of care, unifying communication, coding, revenue, and business and clinical intelligence into a single, integrated solution accessible through mobile devices or the Web.
  • CareSync Raises $4.3M in Series A Financing: CareSync is a provider of patient-centered care coordination software that collects the user’s medical records from all the providers to build a comprehensive “Health Timeline”, allowing the user, their families and their care teams to share valuable health information and facilitate continuity
  • Viewics Secures $8M in Funding: Viewics is a healthcare analytics and data platform company whose suite of analytics solutions integrates data from different silos within a healthcare organization.
  • RightCare Secures $4M in Additional Capital: RightCare offers a software platform that assesses risk and needs for all patients at admission, recommends the right level of post-acute care and refers and transitions critical information to the selected post-acute care.
  • Lumiata Raises Additional $6M in Series A Funding: Lumiata is a provider of predictive analytics that increases the ability of health insurers and risk-bearing organizations to understand the level of clinical, operational and financial risk associated with a patient, through the lens of medical science.
  • Sandlot Solutions Raises $23.3M in Funding: Sandlot Solutions is interoperability, big data analytics and population health management platform provider that provides tools and technology that enable healthcare organizations to improve the quality of care, understand and manage risk, reduce costs, and transition to new business models.
  • AirStrip Raises $25M in Strategic Funding Round: AirStrip is a provider of mobile healthcare applications, including a complete vendor- and data source-agnostic enterprise-wide clinical mobility solution, which enables clinicians to improve the health of individuals and populations.
  • Acupera Raises Additional $4M in Series A Funding Round: Acupera is a provider of population health and workflow technology for health systems designed to integrate seamlessly within existing workflows, effectively mining existing electronic medical records to elevate the most important data relevant to improving overall population health management.

The pre-money valuations being garnered by emerging healthcare IT companies, undoubtedly, are as striking to professional investors as the cost of a red hot to the average consumer at the World Series.    Experienced healthcare IT investors may regard some of these recent investments as symptomatic of an “eyes are bigger than stomach” syndrome.   To prevent future investor indigestion, emerging healthcare IT companies would be well-advised to add the following accoutrements to their menus:

  •  Capability to integrate with electronic medical records
  • SaaS delivery methodology
  • Customer contracts that deliver strong base of recurring revenue
  • Solution roadmaps that allow for future up-sell opportunities
  • Scalable cost structure that will generate attractive EBITDA margins

The foregoing ingredients, like ketchup and mustard, will help ensure that investors “relish” (sorry, I couldn’t resist) their red hot investments well beyond the 7 inning stretch.