When it comes to data, perhaps no sector has as much of it and in as many distinct silos as the healthcare industry.
Hundreds of millions of patient records reside within various electronic health records (EHRs) maintained by vendors like Epic, Cerner and Athena. Insurance companies hold extensive data sets on coverage, reimbursement rates, and patient demographics. Pharmacies and laboratories contribute further data points on medication usage and diagnostic results.
Over the last decade or so, multiple companies have tried to unify all that patient data across health systems and care settings, but according to various investors, over the last few years, San Francisco-based Innovaccer has emerged as a leading player in this space.
Innovaccer currently counts six of the U.S.’s top ten healthcare systems as customers and is making strides in selling its platform to insurers, pharmaceuticals, and government organizations.
The company already provides a suite of applications for value-based care, population health management, and customer relationship management (CRM), all built upon its cloud-based infrastructure.
And now, Innovaccer plans to introduce multiple AI co-pilots and agents, including an AI medical scribe, a tool that simplifies prior authorizations, and another to help with denied claims.
To support its grand ambition of becoming what Innovaccer co-founder and CEO Abhinav Shashank calls “a one-stop shop for healthcare AI solutions,” the company has raised a $275 million Series F from investors including B Capital Group, Banner Health, Danaher Ventures, Generation IM, Kaiser Permanente, and M12.
This round has both primary and secondary components: approximately 35% of the funds are allocated to provide some liquidity for the company’s seed and Series A investors, according to Shashank. Despite this secondary component, this is still enough capital to fuel Innovaccer’s next phase of growth.
While the company declined to disclose its latest valuation, a source familiar with the deal said that the post-money valuation of the primary funding is approximately $3.45 billion. That’s a slight uptick from the $3.2 billion valuation Innovaccer earned when it raised its previous round of $150 million in late 2021, when pandemic tailwinds were still favorable. The secondary transaction likely valued the company at a significant discount to the primary, but that valuation couldn’t be learned.
The fundraise confirms TechCrunch’s report from last May about Innovaccer being in talks to raise $250 million with Kaiser Permanente as a lead investor.
Healthcare’s data fabric
Innovaccer was founded in 2014 with the aim of unifying data for all types of enterprises. However, after three years, the company decided to start focusing exclusively on healthcare.
“Healthcare lived in a pre-Internet era. There was no connected fabric of information that existed,” Shashank told TechCrunch.
So Innovaccer set out to build data infrastructure by connecting its platform to every major EHR system. The company spent about two years and more than $100 million building that connectivity, Shashank said.
That effort seems to have paid off. Innovaccer’s revenue has increased by 50% every year for the past five years, and the company is on track to hit $250 million in annual recurring revenue (ARR) this year.
Shashank said that while Innovaccer has its sights on an IPO, the company won’t seriously consider that route until it is generating $400 million to $500 million in ARR.
The company is now squarely focused on creating a platform for AI applications on top of its infrastructure layer. Shashank hopes that instead of buying AI tools from many different companies, customers will choose Innovaccer for all their AI needs.
This vision has resonated with investors. Rashmi Gopinath, who first invested in Innovaccer when she was a managing director at M12 and is now a co-founder and manager partner at BAM Corner Point (also an investor), praised the company for being proactive at integrating AI solutions.
“I think the rapid advancements that we’re seeing in generative AI is going to be a huge tailwind and momentum driver for the company,” she said.
Innovaccer plans to develop some AI solutions in-house while partnering with or acquiring other promising AI products.
Shashank said that if the company executes its vision well, Innovaccer will have an opportunity to become the biggest healthcare business within five years. “Fingers crossed,” he added.