Header graphic for print

The Healthcare Investor

Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Healthcare & Life Sciences Private Equity Deal Tracker: Invitae Secures $120 Million in Financing

Posted in Healthcare Services Investing

Invitae Corp. has announced it has raised $120 million in series F financing.

Invitae, based in San Francisco, is a genetic information company specializing in genetic diagnostics for hereditary disorders.

New investors participating in the round included The Broe Group, Decheng Capital, Deerfield Management, OrbiMed, Perceptive Advisors, Rock Springs Capital and Wellington Management Company. Existing investors participating in the financing included Casdin Capital, Genesys Capital, Genomic Health, Randy Scott, Redmile Group and Thomas McNerney & Partners.

Invitae indicated that it planned to use proceeds from the financing round to accelerate the build out of its infrastructure for its genetic information business and expand its global presence.

Healthcare & Life Sciences Private Equity Deal Tracker: Cardiac Dimensions Expands Financing Round to $28.5 Million

Posted in Healthcare Services Investing

Cardiac Dimensions has announced it has expanded its previously announced financing round to $28.5 million with the addition of $8.5 million.

Cardiac Dimensions, based in Kirkland, Wash., develops interventional tools for the treatment of heart failure and the related condition of mitral valve regurgitation.

For the round, Michigan-based VC firm Arboretum Ventures joined investors from Australia, the United States and Canada that includes M.H. Carnegie & Co. and Lumira Capital.

Cardiac Dimensions indicated the funding will used to support the completion of the company’s REDUCE FMR clinical trial, a blinded, randomized clinical trial in the field of functional mitral regurgitation. as well as accelerating and expanding the company’s commercial expansion plans.

Investors Should be Aware of ASC Operator Meridian’s Recent Settlement

Posted in Healthcare Services Investing

Meridian Surgical Partners, a national operator of outpatient ambulatory surgery centers, announced on September 10 that it had settled a qui tam lawsuit brought by a former employee at one of its centers located in Florida. The case is especially relevant to anyone in the ASC industry as it touched on several issues faced by most joint ventured ASCs, including the sale of shares to physicians and redemptions of physicians. Among other claims, a key allegation in the case was that Meridian had sold shares to physicians at below fair market value in order to induce referrals from such physicians.

While denying any liability, Meridian agreed to pay the U.S. government $3.8 million plus $1.8 million in attorneys fees, a small fraction of the $100 million originally demanded by the plaintiff, Thomas Reed Simmons.

In a qui tam lawsuit (commonly referred to as a whistleblower suit) a plaintiff brings an action alleging misuse of government funds, in this case Medicare funds. The U.S. Department of Justice then reviews the merits of the allegations and decides whether to join the lawsuit. If the government declines to join the suit, as it did in the Meridian case, the plaintiff can still proceed. If there is a settlement, the proceeds are awarded to the government and the plaintiff then receives a percentage of those proceeds.

Healthcare & Life Sciences Private Equity Deal Roundup: Jiff, iHealth, CVRx and Zyga Technology Secure Financing

Posted in Healthcare Services Investing

Over the past week, Jiff, iHealth Lab, CVRx and Zyga Technology have all separately announced completion of financing rounds.

Jiff, a Palo Alto, Calif.-based digital health technology company, announced an $18 million series B round led by Venrock, which was joined by Aberdare Ventures and Aeris Capital. Jiff indicated it would use the funds to expand its sales and marketing team, grow its network of sales and distribution partners, and build out its network of digital health partners.

iHealth Lab, a Mountain View, Calif.-based designer of mobile personal healthcare products, announced it had secured $25 million in capital from Xiaomi Ventures. This is iHealth’s first institutional round of funding. iHealth indicated the funding would go toward expanding its global reach, accelerating growth and innovation, and investing in additional sales and marketing resources.

CVRx, a developer of an implantable system designed to treat hypertension and heart failure headquartered in Minneapolis, announced it had secured a $15 million growth capital debt facility from Silicon Valley Bank. CVRx indicated the funding would go toward marketing development and clinical activities.

Zyga Technology, a developer of minimally invasive solutions for the spine based in Minnetonka, Minn., announced (pdf) it had completed a $10 million round of financing. The company indicated it intended to use the proceeds to fund the expansion of its U.S. sales and marketing organization as well as support clinical studies. The financing is a combination of $8 million in debt and with $2 million in equity. Silicon Valley Bank was the sole debt provider while the equity financing comes from all existing major investors.

Tech Investors Eye Healthcare Data Firms

Posted in Healthcare Services Investing

Technology investors, including VC firms and portfolio managers of large mutual funds, are increasingly targeting healthcare data firms as new sources for investments. A recent Reuters report highlights this trend with interesting detail.

Investors are finding firms that gather and analyze healthcare data appealing because of the growth of electronic records and consumer use of health tracking technology. In addition, investing in these companies would seem to present less of a risk than investing in biotech firms whose profitability hinders on the successful development of just a single or few drugs.

According to a report from digital health seed funding firm Rock Health, VC funding for healthcare technology firms was at $2.3 billion as of June 2014, which already exceeded the 2013 total.

Almost 50% of this funding comes from six categories: payer administration ($211 million), digital medical devices ($206 million), analytics and big data ($196 million), healthcare consumer engagement ($193 million), population health management ($162 million) and personalized medicine ($150 million).

Reuters, citing Rock Health information, reports that VC firms investing in healthcare technology companies this year include Andreessen Horowitz, Qualcomm Ventures and Google Ventures, while Intel, General Electric and Medtronic have acquired digital health companies.

Several large technology funds are committing a larger percentage of their portfolio to health companies. Reuters reports that the Hennessy Technology fund devotes a quarter of its portfolio to health technology companies, while the Waddell and Reed Science and Technology A Fund and the Ivy Science and Technology fund each now have about 14 percent of their portfolios in healthcare funds.

This trend is yet another example of investors finding new ways to invest in the thriving healthcare industry, even for those investors wary of taking reimbursement risk traditional provider-side investments who still wish to dip their toes into the broader industry.

Investors: Note Health Expenditure Projections for 2013-2023

Posted in Healthcare Services Investing

On September 3, 2014, the CMS Office of the Actuary published a report in Health Affairs spelling out its projections for health care expenditure growth over the next ten years. The authors of the report expect health spending growth to remain slow at 3.6% in 2013, which is the fifth year in a row of spending growth under 4%. The report blames the slow growth on a  lukewarm economic recovery, government sequestration and increases in private health insurance cost-sharing requirements.

For 2014, the growth in health spending is expected to be 5.6% since 9 million Americans will obtain insurance coverage under the Affordable Care Act (“ACA”) through Medicaid expansions or the health insurance exchanges. Parallel to the increased coverage will be a reduction of out-of-pocket spending by 0.2%. Additionally, annual growth of 6% is expected for 2015 through 2023 due to further implementation of the ACA’s coverage expansion, healthier economic growth and an aging baby-boomer population. While this growth rate is larger than recent years, it is still slower than the growth averaged over the past two decades. However, since health spending is projected to grow 1.1% faster than the average economic growth until 2023, health care’s share of the nation’s gross domestic product may increase up to 19.3% in 2023 from 17.2% in 2012.


Laboratories Compensating Physicians for Ordering Tests Under Investigation

Posted in Healthcare Services Investing

Health Diagnostic Laboratory in Virginia and several other labs are under investigation by the Office of Inspector General and Justice Department into the practice of compensating physicians for ordering their tests, according to a Wall Street Journal report.

HDL halted the payments following an HHS Special Fraud Alert (pdf) issued in June that notes the OIG has identified specific trends involving transfers of value from laboratories to physicians the OIG believes presents a “substantial risk of fraud and abuse under the anti-kickback statute.”

We’ve discussed regulatory issues with investing in clinical laboratories in the past and will likely cover this piece more fully in a future blog post and Law360 column.

Bullish Behavioral Health Market Drives Investment

Posted in Healthcare Services Investing

Below is a link to view the latest entry from the monthly Law360 that we publish relating to healthcare private equity investments.

We’ve listened closely to the recent Cain Brothers’ House Calls on behavioral health and, like many professionals in this market, we believe these factors and others will continue to drive investment. As a result, we remain bullish on this sector of health care. Moreover, there are additional factors that contribute to a strong market and private equity investors are well situated to take advantage of the opportunity.

View the column “Bullish Behavioral Health Market Drives Investment” (pdf).

Healthcare & Life Sciences Private Equity Deal Tracker: AirStrip Secures $25 Million in Financing

Posted in Healthcare Services Investing

AirStrip has announced (pdf) it has raised $25 million in a strategic funding round.

AirStrip, headquartered in San Antonio, Texas, is the developer of the AirStrip ONE enterprise-wide clinical mobility solution.

The funding round was led by the Gary and Mary West Health Investment Fund, Sequoia Capital and Wellcome Trust. New investors included the Gary and Mary West Health Investment Fund, Dignity Health, St. Joseph Health and Leerink Partners.

AirStrip indicated the funding will go toward supporting the growth of AirStrip ONE, expansion into the home health space, internationalization efforts and integration with analytics engines.

Healthcare & Life Sciences Private Equity Deal Tracker: Healthsense Secures $10 Million in Financing

Posted in Healthcare Services Investing

Healthsense has announced it raised $10 million in financing.

Healthsense, headquartered in Mendota Heights, Minn., is a provider of technology-enabled care solutions for the senior care continuum, including remote monitoring, emergency response and wellness management solutions.

The financing round was led by Mansa Capital. Previous investors Merck Global Health Innovation Fund and Radius Ventures also participated in the round.

Healthsense indicated the new capital will support the company’s expansion into managed care and other healthcare sectors.