Advocate Aurora, Novant Health, Stanford Health Care back Xealth's $24M round to expand digital health services

Startup Xealth banked $24 million in fresh funding led by Advocate Aurora Enterprises to help health systems scale up their digital health strategies.

With this latest round of financing, Xealth has raised $52.6 million.

“It’s a stepping stone toward building a better product vision,” Mike McSherry, CEO and co-founder of Xealth told Fierce Healthcare.

The funds will be used to expand Xealth’s operations, including adding staff and new customers, roughly doubling its size. Xealth has 60 employees now.

The fresh capital also will support product innovation, including enhancing the company's intelligence engine to help health systems determine which tools work best with which patients.

“Several of these new system investors are brand new customers so we need to hire staff to do account management, project management, but more aspirationally, I want to be the digital default platform for the provider industry in the U.S. I want to be the software component that prescribes and then subsequently monitors all digital health activity,” McSherry said.

RELATED: Cerner, LRV Health invest $6M in digital prescribing platform Xealth

Xealth, a startup spun out of Providence St. Joseph Health in 2017, enables doctors to prescribe patients apps, connected medical devices and other digital tools directly from electronic health record (EHR) systems.

The company’s platform is designed to help clinicians easily integrate, prescribe and monitor digital health tools for patients from one location in the EHR. Doctors can order solutions directly from the EHR to manage conditions including chronic diseases, behavioral health, maternity care and surgery preparation.

Advocate Aurora Enterprises, a subsidiary of Advocate Aurora Health, was joined by seven additional health systems—Banner Health, ChristianaCare, Cone Health, Memorial Hermann, Nebraska Medicine, Novant Health and Stanford Health Care—and existing health system investors Atrium Health, Cleveland Clinic, Froedtert & MCW Health Network, MemorialCare Innovation Fund, Providence and UPMC.

Xealth has backing from 14 health systems and full integrations with the largest electronic health record (EHR) vendors. Additional investors include Cerner, LRV Health, Threshold Ventures, McKesson Ventures, Novartis, Philips and ResMed.

The use of digital therapeutics and remote patient monitoring is booming as these technologies show they can help extend care options for patients. A Juniper Research study predicts that the number of people using digital therapeutics and wellness apps will grow from 627 million in 2020 to more than 1.4 billion in 2025, according to Xealth’s press release.

Available to more than 100,000 physicians, Xealth’s digital health platform serves a key role in bringing digital health into clinicians’ workflow, company executives said.

“The future of health care is using innovative technology to help people take control of their health beyond traditional care settings,” said Advocate Aurora Enterprises President Scott Powder in the statement. “That’s why we invested in Xealth. The company’s focus on connecting a broad array of health solutions to the consumer aligns with ours, as we seek to invest in industry pioneers who are helping people live well at all stages of life.”

RELATED: Atrium Health, Cleveland Clinic join latest funding round for startup Xealth

McSherry said the company’s long-term outlook includes expanding outside the United States.

 “Ultimately, we’d like to scale to be international,” he said. “We need to tackle the U.S. healthcare market first and then see how we can expand internationally. I think this is a big step toward validation toward what we are building.”

Xealth is a growing player in the "digital supply chain" that makes it possible for healthcare providers to prescribe and monitor digital therapies. 

Pharmacy benefit managers (PBMs) also are moving into this space. Two years ago, Express Scripts launched a digital formulary, since rebranded the Evernorth Digital Health Formulary that includes solutions targeting women's health needs, tobacco cessation, muscle and joint pain, caregiver care and COVID-19 workplace support.

CVS Caremark, CVS Health's PBM, also unveiled a platform to help its payer clients manage digital health and wellness tools. CVS now has 10 solutions on that platform, including Sleepio, Hello Heart, Hinge Health, Torchlight and Whil.