Hgp platform high flyers v4

Healthcare Growth Partners, LLC 2014 All Rights ReservedCONFIDENTIAL
Health IT – “High Flyer” Investment Trends
May 2014

CONFIDENTIAL 2HEALTHCARE GROWTH PARTNERS
Where are we?
HITECH (2011-2017)
(HITECH): Install and
ensure the usage of
electronic medical
records and basic
communications
infrastructure with the
capability of collecting
and aggregating data
across care settings
ACA (2012-2020)
(ACA Implementation):
Lay the foundation for
reform with pilot risk-
based reimbursement
models that are
dependent on
outcomes, quality and
efficiency rather than
the volume of service
Value-Based (2015+)
(ACO/Bundled
Payment): Execute on a
streamlined system of
robust care
coordination and
population health to
maximize quality as
well as efficiency with
the goal of delivering
higher value
Personalized 20??
(Personalized
Medicine): Using big
data, quality reporting,
and genetic analytics,
optimize care and
medicine based on
individualized
characteristics and
genomics

Healthcare Stakeholders React to Cost, Access, and Quality Initiatives
Providers
• Direct Impact
• Risk-based
pilots
• Readmission
penalties
• Fraud scrutiny
• Quality
reporting
• ICD-10 (non-
ACA)
• Indirect
• Resource
constraints
• Consolidation
• Focus on care
continuum
Payers
• Direct Impact
• Public HIX
• Private HIX
• Rate hike caps
• MLR caps
• Medicaid
expansion
• Coverage
requirements
• Indirect
• Expanding
capabilities
Employers
• Direct Impact
• Insurance
requirements
(min
employees/
hours)
• Indirect
• Defined
benefits
• Private HIX
• Wellness
initiatives
Med-Pharm
• Direct Impact
• Higher taxes
• Comparative
effectiveness
• Sunshine Act
• Indirect
• Care
management
• Big data
• Genomics
• Personalized
medicine
Patients
• Direct Impact
• Greater
protections
(pre-existing
conditions,
denials, caps)
• Greater
coverage
• More choice
• Non-
discrimination
• Indirect
• Greater
Responsibility
Information Technology – Quality & Cost (aka, Value)

Volume to Value Driving the Trend
• Payer
• Disease
• Care-setting
• Treatment
• Today, 10% of
Patients

Volume to Value Key Stats
 Shift reflects the introduction of a
series of accountable care pilots
developed by CMS over the last few
years—specifically, the Medicare
Shared Savings Program (MSSP) and
the Bundled Payments for Care
Improvement (BPCI) initiative.
 It’s important to note that the # of
providers does not represent the # of
patients – only a fraction of patients
at the risk-contracted facilities will be
risk-based.
 Around two-thirds of providers report generating more than 80% of their revenue from
standard fee-for-service contracts, and about half are still receiving more than 90% of
payments for patient care from such contracts.
 65% of providers are contracting with commercial payers on new payment models, in
many cases in conjunction with Medicare’s risk-based payment initiatives.
(Source: The Advisory Board Company)

Volume to Value Transition
1. Payers: Orientation toward value (eg, risk) has been core to payers for
years, in the form of utilization management, disease management, and
cost containment.
2. Employers: As the cost burden explodes and with their place secured as a
stakeholder in healthcare, employers are expanding the role in care
management. This trend is coupled with built-in incentives from the ACA.
Further, employers can be more nimble in navigating FDA vs non-FDA
regulated mobile monitoring (eg, games, wellness platforms, etc).
3. Providers: As discussed, value is limited to narrow patient populations
based on payer, disease, and care program. IT and services that
complement value-based reimbursement must be consistent with
incentives.
4. Patients: The out-of-pocket financial burden is expanding (now 25%+ of
provider revenue and share is growing). For now, true patient care
decisions tend to be managed by the stakeholders above.

Changing Incentives = Changing Business Models
The Spreading Cost Burden
• Risk-based payment
• Readmission programs
• Higher patient pay
• De-centralized care
Phase 1 Technologies Phase 2 Technologies Phase 3 Technologies
The Marketplace Response
• Provider-focused
• EMR/RCM
• HIE
• Establishes the
“infrastructure”
• Data collection and sharing
• Employer Focus
and
• Population Health
• Care Coordination
• Data Analytics
• Risk Stratification
Providers
• Patient/Individual Focus
• Mobile apps
• Tele/Monitoring
• Personalized Medicine
• Predictive Analytics
• Data Optimization
Payers Employers Consumers
• MLR caps
• Premium caps
• HIX = “Consumer”
• Coverage expansion
• Comprise 40%+ of
healthcare spend
• ACA secured their
stakeholder status
• Higher patient pay
(25% is out-of-pocket)
• More (and less) choice
• Patient Engagement

Phase 3 Technologies Developments and Challenges
There have been tailwinds in the emergence of consumer-facing HIT technologies
• Proliferation of mobile technologies driven by advent of smart phones serve as a critical hub,
and accessibility of sensor innovation which provide real-time data insights
• Employers, payers, and even providers are subsidizing the cost of mobile technologies, either
directly (by purchasing on behalf of patients) or indirectly (by monetizing data or through ads)
…However, there remain some obstacles
• Reimbursement for Tele-Health and Remote Monitoring remains vague
• FDA and licensing ambiguity will stall growth and already lagging payer reimbursement trends
• Physicians and other care providers are often resistant to the disruption of remote or tele-
health
• Today, the market is responsive to very target reimbursement programs (eg, Readmission
Reduction Program), but these programs and risk-based payment models are expanding

Keys to Success
Valuation-Centric
1. Cloud technology (multi-tenant that enables scale and analytics)
2. For apps, developing a platform rather than an app
3. Open, accessible APIs
4. Recurring revenue model
Customer-Centric
1. Hard ROI
2. Pricing that aligns with Hard ROI (increase revenue or drive down cost)
3. Policy/Political alignment with Business Model (government, associations,
reimbursement, etc)
4. Non-disruptive or even enabler of clinical/admin/patient workflow

Reasons for Failure
1. Innovating too far ahead of the adoption curve
2. Misalignment with the healthcare incentive model
3. Lack of clinical/workflow understanding
4. Inappropriate revenue model
5. Inefficient distribution model (go-to-market plan)
6. Data/architecture “closed” (note, this used to be a key to success)
7. Ramping up too quickly – going too deep into the red
 Lack of readiness for long sales cycle
8. Losing focus on customer happiness/retention

Trending Investment Verticals
Employer
Health
Benefits
Management
Health
Consumers
Patient
Engagement
Big DataPM & EMR
Remote Care
ACO Tools
ACO-Oriented
RCM
Guiding Theses
• Transparency
• Cost & Quality
• Big data
• Value-based payment
• Patient vs Consumer Engagement
• Informed, connected patient
• Utilization Management
• Real-time CDS
• Care Coordination
• Non-Acute care focus

High Flyer #1: One Medical Group (http://vimeo.com/62750513)
Series E: $20mm (9/11)
Series F: $30mm (3/13)
Growth Fund: $40 mm (4/14)
Business Model:
Membership based ($149/year), high touch, hi
tech physician practice management serving
multiple and an expanding list of US cities.
Macro Thesis:
A significant care experience and quality gap
exists at most physician practices due to the
underutilization of technology. Payers, patients,
and providers all stand to benefit from IT-enabled
care models.
Opportunities:
1. Strong value prop to payers and patients
2. Savvy physicians may prefer hi-tech practice
3. Risk-based models that align with payers and
employers may be viable once the value
proposition is clearly defined
4. Last valuation 8x revenue!
Threats:
1. Continued acquisition of physician practices
by hospitals and health systems: model may
need to find a way to serve health systems
2. Need to navigate any sensitivity with
standard practices of the AMA

High Flyer #2: FlatIron Health
Series A: $8mm (10/12)
Series B: $130mm (5/14)
Business Model:
Consolidate disparate structured and
unstructured clinical data into a central EDW for
purpose of driving best practices, cancer
targeting and planning, and drug/treatment
development and optimization.
Macro Thesis:
A specialized analytics play focused exclusively on
cancer that addresses a high cost, high need
segment of healthcare that should align with
stakeholders across cancer care continuum,
including providers, payers, consumers, drug
development and hardware.
Opportunities:
1. Acquired Altos – a cancer-specific EMR, to
streamline the integration with regards to
the data collection process
Threats:
1. Need to overcome aggregation of data from
disparate data sources (EMR, lab, pathology,
imaging, etc) in order to create a longitudinal
care record
2. Unstructured data requires NLP to make it
actionable
3. Data “rights”
4. Can they be EMR-agnostic with Altos?

High Flyer #3: Health Catalyst (http://vimeo.com/67330845)
Series A: $Undisclosed (9/11)
Series B: $41mm (1/13)
Series C: $41mm (1/14)
Business Model:
Aggregate structured and unstructured data
from disparate data sources and centralize into a
data warehouse that drives actionable and
predictive analytics. (Mostly) Subscription pricing
mitigates upfront cost.
Macro Thesis:
Develop “content-driven clinical applications”
that enable the management of quality measures
and identification of care gaps with an eye
toward value-based reimbursement and a
sensitivity toward physician engagement.
Opportunities:
1. EHR vendors (Epic) leave significant
functionality gaps
2. Coupling EDW w/ quality improvement
3. Value-based pricing lends to ROI proposition
4. Very low penetration of EDW and large
market opportunity – increasing digital data
enhances value-prop
5. Estimated $100mm+ revenue in NTM
Threats:
1. EHR vendors expand (Epic Cogito)
2. Increasingly structured data decreases value
of data aggregation

High Flyer #4: NantHealth (http://vimeo.com/75977508)
First Round: $25mm (10/12)
Second Round: $100mm (4/14)
Business Model:
Backed by billionaire Patrick Soon-Shiong,
NantHealth aims advance diagnostics to better
identify and target specific disease
characteristics; transform clinical delivery with
clinical data and promoting wellness for a
healthier, happier world by building an
integrated, evidence-based, genomically-
informed, personalized approach to the delivery
of care and the development of next generation
healthcare solutions.
Macro Thesis:
The business model says it all…
Opportunities:
1. Patrick Soon-Shiong has a large brain and
large bank account – having sold two cancer
therapeutic companies (American
Pharmaceutical Partners and Abraxis
BioScience) for an aggregate ~$10B
Threats:
1. Data can only be aggregated and analyzed to
the extent that it can be digitized, and a
finite amount of digital information exists
2. Predicated on the cost curve continuing its
downward trend in sequencing and
personalized medicine

High Flyer #5: Alignment Healthcare
“Seed”: $125mm (4/14)
Business Model:
A de-novo pop health “start up” (similar to
Evolent) that aims to create alignment between
provider and payer organizations to smooth the
transition to value/risk-based payment models.
Macro Thesis:
Provide technology and integrated care
coordination models to improve quality
outcomes, while lowering cost and eliminating
waste in the care system by focusing on the
highest-cost, most complex patient groups in
Medicare Advantage, Medicaid, and commercial
HMO populations.
Opportunities:
1. Value-based care delivery is the future of
health and healthcare
2. Providers have historically not been in the
business of managing risk, thus are in short
of expertise to make this transition
3. Combo of risk-based, project-based and
subscription pricing model may prove
lucrative
Threats:
1. Large MCO’s are increasingly “owning” the
technology offered by Alignment Healthcare
2. Competitors are coming from all directions

High Flyer #6: Omada Health (http://vimeo.com/85544572)
Seed: $0.8mm (12/11)
Series A: $4.7mm (3/13)
Series B: $23mm (4/14)
Business Model:
Based on the landmark NIH-sponsored Diabetes
Prevention Program, Prevent provides digital
tracking tools, personalized coaching, and social
support to inspire and sustain healthy behaviors
for consumers, employers, and payers with a
focus on pre-diabetes and the intent to expand
into other treatment programs.
Macro Thesis:
Links the trend toward consumer engagement,
chronic care prevention in high risk populations,
and alignment of stakeholders who
Opportunities:
1. If high-risk populations can be identified and
enrolled, the value proposition is extremely
high across all stakeholders (except those
who earn profits from diabetics)
2. Focus on behavioral change is notoriously
challenging but, once proven hugely
impactful
3. Expansion into other treatment programs
Threats:
1. Requires earning clinical trust
2. Requires payment incentives to align with
outcomes

Other Start-up Videos
1. Healthcare Blue Book: http://youtu.be/IWjanH2ifyg
2. Glooko: http://vimeo.com/53724549
3. Fitmob: http://vimeo.com/89156907
4. MyHealthTeams: https://www.youtube.com/watch?v=Xh1wFwf8PwA
5. Jawbone: https://vimeo.com/53768086
6. MindBody https://vimeo.com/30442715
7. MD Revolution: https://www.youtube.com/watch?v=srzArQD2SX8
8. Peloton: https://vimeo.com/84235357
9. Better: https://www.youtube.com/watch?v=OBSfE28g3EY
10. MD Live: https://www.youtube.com/watch?v=-CoZAIwikh4

11. TigerText: https://vimeo.com/90250710
12. Voalte: https://vimeo.com/31567227
13. Specialists on Call: https://www.youtube.com/watch?v=plN2OWmXsrg
14. Tyto Care: https://www.youtube.com/watch?v=0UB51753X8k
15. Reflexion Health: https://www.youtube.com/watch?v=mv3emE8gkOQ
16. Liaison: https://www.youtube.com/watch?v=Av1v6HXSk34
17. InfoBionic: http://infobionic.com/mome-system
18. Wellcentive: https://vimeo.com/42380446
19. Doximity: https://www.youtube.com/watch?v=Nb3FKtaLpBc
20. PlanSource: https://vimeo.com/86025810

21. Zenefits: https://www.youtube.com/watch?v=4cIR86F_210
22. bswift: https://vimeo.com/77795920
23. hCentive:
https://www.youtube.com/watch?v=TdWjbP5s66s&list=UUFmjDGgFRvq-
aqYkn3YjN1g

Other High Flyers – Consumer Deals
Quality and
Pricing
$7.0mm
The Martin Cos
Operates a Website
that provides users
with the knowledge
and tools they need to
shop for and receive a
fair price for their
healthcare products
and services.
Monitoring
$7.0mm
Samsung Venture
Investment
Corporation and
The Social+Capital
Partnership
Offers blood glucose
monitoring meters .
Fitness
$9.8mm
Mayfield Fund,
Silicon Valley Bank
Owns and operates an
online community for
fitness enthusiasts.
Social
$3.4mm
Adams Street
Partners, 500
Startups,
HealthTech
Capital, Sand Hill
Angels, The
Westly Group
Creators of social
networks specifically
for people with
chronic health
conditions.
Fitness
$250.0mm
Rizvi Traverse
Management
Develops noise
eliminating Bluetooth
headsets and
accessories. App
$2.3mm
Cowboy Ventures;
FLOODGATE;
Google Ventures;
Greylock Partners
A mobile app for
dieting and health.

Other High Flyers – Consumer Deals
App
$7.0mm
Individual
Investors
Offers RevUp, a
subscription-based
online health
monitoring platform
for population health
management.
Fitness
$50.0mm
Bessemer Venture
Partners,
Institutional
Venture Partners,
Catalyst Investors,
Montreux Equity
Partners and W
Capital Partners
Serves fitness, yoga,
Pilates, salons, spas,
and martial arts
businesses, a software
company, provides
business management
software for personal
service businesses in
the health, wellness,
and beauty industries.
Adherence
$1.5mm
Jonathan Bush,
Tim Draper,
Sabaratnam
Arulkumaran,
Russ Nash, Carl
Byers, James
Nahirny
Owns and operates an
online community for
fitness enthusiasts.
Fitness
$10.5mm
Tiger Global
Management
Provides at-home
fitness solution for live
and on-demand
indoor cycling classes.
App
$5.0mm
Mayo Clinic, The
Social+Capital
Partnership
A personalized health
assistant app.

Other High Flyers – Provider Deals
Risk
Undisclosed
Health Enterprise
Partners, Heritage
Group
Operates a care
management
company that focuses
on the needs of
patients with chronic
and complex medical
conditions.
Analytics geared
toward value
$41.0mm
CHV Capital,
Kaiser
Permanente
Ventures, Norwest
Venture Partners,
Partners
Innovation Fund,
Sequoia Capital,
Sorenson Capital
Provider of healthcare
data warehousing and
clinical process
analytics.
Outcomes
Undisclosed
Sterling Partners
Outsourced healthcare
outcomes-data
provider focused
exclusively on serving
the quality
departments of acute
care hospitals.
Telehealth
$23.6mm
Heritage Group,
Kayne Anderson
Capital Advisors,
Sentara
Healthcare, Sutter
Health
Corporation
A network of Board
certified physicians
and licensed
therapists, provides
online and on-demand
healthcare delivery
services and software
that benefit patients,
hospitals, employers,
payers, physician
practice groups, and
care organizations.

Referral
management
$21.0mm
Easton Capital
Investment Group,
New Leaf Venture
Partners, New
Science Ventures,
OrbiMed Advisors,
Reed Elsevier
Ventures, Shasta
Ventures, TELUS
Ventures
Providing secure
mobile messaging
services for healthcare
companies. Telehealth
$32.0mm
Warburg Pincus
Provides specialist
neurologists’ access to
urban, suburban, and
critical access
hospitals through a
consolidated
infrastructure of
people and
videoconferencing
technology.
Referral
management
$35.9mm
Bedford Funding
Offers point-of-care
communications
solutions, including an
iPhone solution for
caregivers that
connects with the
EMR.
Decision support
$12.8mm
Grayhawk Capital,
Kansas Bioscience
Authority
Focuses on translating
the advances in
clinical research into
decision-support
products and services
for physicians and
their patients,
healthcare
organizations, and
other medical
software developers.

Telehealth
$4.0mm
LionBird
(Ventures),
OrbiMed Advisors
Develops a handheld
device to perform self-
examinations for
remote diagnosis. Adherence
$7.5mm
The West Health
Investment Fund
Offers a rehab
measurement tool to
track patient
adherence for the
prescribed rehab plan.
Analytics geared
toward value
$15.0mm
Accenture (NYSE:
ACN)
Provider of cloud-
based integration and
data management
services and solutions
with funding to
significantly
accelerate its growth
in the life sciences,
healthcare and health
information exchange
(HIE) markets.
Telehealth
$17.0mm
Beta Fund,
Broadview
Ventures,
Launchpad
Venture Group,
Mass Medical
Angels, Safeguard
Scientifics Inc.
(NYSE:SFE)
A cloud-based SaaS
service and wireless
remote patient
monitoring platform.
Decision support
$5.5mm
Draper Triangle,
Hopen Life Science
Ventures, TriStar
Technology
Ventures
Provides automated
workflow, real-time
decision support, and
behavior change
software solutions
that consumers and
businesses use to
change outcomes and
lives.
Chronic
management
$23.0mm
Andreessen
Horowitz, Kaiser
Permanente
Venturesm, The
Vertical Group,
U.S. Venture
Partners
Provides group-based
programs for chronic
disease prevention.

Population
health
$22.5mm
Great Point
Partners
Offers healthcare
solutions, including
clinical and medical
cost management,
practice and office
management, risk and
financial
management, and
population health
management
solutions
Engagement
$28.7mm
Bpifrance
Financement, Cap
Décisif
Management SAS,
CM-CIC Capital
Innovation,
Innovation Capital
SAS, QUALCOMM
Ventures, Societe
Hospitaliere
D'assurances
Mutuelles,
Vesalius Biocapital
Partners
Voluntis SA provides
software and services
to enable health care
organizations build
and manage patient
relationship
management
programs
Population health
$12.0mm
Harbert Venture
Partners, Noro-
Moseley Partners,
Summit Partners
Provides preventive
care, chronic disease
management, and
health information
exchange systems
IT-enabled care
$40.0mm
Benchmark
Capital; Oak
Investment
Partners; Maverick
Capital, DAG
Ventures, Google
Ventures, Redmile
Group
Operator of primary-
care physician offices
that allow patients to
book same-day visits
online
Provides technology
enabled physician
practices

Population
health
$125.0mm
General Atlantic
Provides healthcare
services which include
offering care
coordination solution
for population health
management.
Data driven
clinical support &
drug optimization
$100.0mm
Kuwait
Investment
Authority
Provides fiber-optic,
cloud-based data
infrastructure to
deliver multimedia
healthcare
information to mobile
devices.
Referral
management
$54.0mm
Draper Fisher
Jurvetson,
Emergence Capital
Partners,
InterWest
Partners, Morgan
Stanley
Investment
Management,
Morgenthaler, T.
Rowe Price
(NasdaqGS:TROW)
Operates a physician
network platform that
links medical
professionals over the
mobile and Web.

Other High Flyers – Employer Deals
$12.0mm
Lemhi Ventures,
Timucan Asset
Management
Helps employees
discover and review
benefit options with
ease, as well as offer
tools to help make
complex benefit
concepts and
terminology simple.
$17.1mm
Andreessen
Horowitz,
Maverick Capital,
Ltd., Venrock
Provides payroll and
benefits management,
human resource, and
insurance brokerage
services.
Benefits and HIX
$51.0mm
Great Hill Partners
Offers software and
services that
streamline benefits,
HR, and payroll
administration for
employers, brokers,
and public and private
exchanges.

Other High Flyers – Life Sciences Deals
Big data
$15.0mm
JAFCO Ventures,
Kleiner Perkins
Caufield & Byers
Develops cloud based
ingestion platform for
drug developers and
researchers. Big data
$4.0mm
Khosla Ventures
Provider of predictive
analytics for medical
science and patient
data.

Other High Flyers – Payer Deals
Payer Analytics
$15.0mm
Undisclosed
Provides business
process optimization
and intelligence
management
technology solutions
for health insurers’,
commercial,
Medicare, and
Medicaid lines of
business.
Chronic care
management
$40.0mm
Warburg Pincus
Provider of face-to-
face solutions for frail,
special needs and
complex populations,
offering short-term
and long-term care
management and
assessment services
designed to improve
quality outcomes,
optimize revenue, and
lower costs.
Benefits Mgmt
Undisclosed
General Atlantic
Provides evidence-
based healthcare
management
programs. HIX
$35.0mm
Undisclosed
Offers solutions that
enable consumers and
businesses to connect,
communicate, and
engage with health
plans for acquiring
health insurance.
HIX
$10.5mm
Aberdare
Ventures,
FirstMark Capital
An online health
insurance
marketplace.

Technology-Enabled Healthcare Delivery – Who to watch?
Humedica (2013), Connextions
(2011), Ventures Group
Coventry (2012), Healthagen
(2011), Prodigy (2011),
Medicity (2010)
Linkwell (2013), Amerigroup
(2012), SoloHealth (2012),
Bloom (2011), CareMore
(2011), HealthyCare Solutions
Certify Data (2012), Anvita
(2011), Concentra (2010)
PureWellness (2013), Clairvia
(2011), Resource Systems
(2011), IMC Health (2009)
Medical Referral (2013),
360Fresh (2012), Pivot Health &
Cielo Med (2011), Southwind
(2010), Crimson (2008)
Array (2013), $11mm Carnegie
Mellon Partnership, $100mm
Medical Mall
Data warehouse initiative,
UPMC Health Plan
CardioCom (2013)
Health Catalyst, Telcare,
AssureRx, Airstrip
Navihealth, Hello Health,
Patientco, change:healthcare,
Essence Group, Bloom Health,
Phreesia
Quantros, Navihealth, Vivify,
GetWellNetwork, BodyMedia,
Phreesia
Aviacode, Vivify, Awarepoint,
Shareable Ink
Transparent Insurance ($40mm
investment in July ‘13)
35mm member “transparent”
PBM
Competitive Dynamics
Oscar Health

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