Digital primary care startup K Health raised $50 million in an equity funding round to build out its AI-powered medical services and fuel its growth, the company announced Monday.
The equity found, which the company said was oversubscribed, was led by Marcelo Claure’s Claure Group and was backed by Pablo Legorreta, founder and CEO of Royalty Pharma. Existing investors Mangrove Capital Partners, Valor Equity Partners and Atreides Management LP also participated.
K Health, which launched in 2016 and rolled out into the U.S. market in 2018, has raised $380 million to date, according to Ran Shaul, K Health co-founder and chief product officer.
The transaction values the startup at about $900 million, Bloomberg reported.
K Health plans to use the funding to continue to improve the company's AI, including how generative AI is applied to personalizing primary care, and to fuel its growth across the country through more health system partnerships.
The company developed a chat function that uses artificial intelligence to suggest potential diagnoses for consumers who enter symptoms and also takes into account the user's medical history, age and gender. Its platform sifts through the data of millions of patients and suggests a medical condition and will connect patients with a doctor or nurse, if needed.
K Health connects patients with primary care, including chronic condition management and preventive care, as well as urgent care and mental health services for anxiety and depression. And, K Health offers a medical weight management service.
The company also built out an AI "copilot" that interacts with patients, collects information, integrates with electronic medical records and assembles insights to improve doctors' clinical decision-making.
The company, named one of Fierce Healthcare's Fierce 15 of 2023, is focused on building out hospital and health system partnerships.
The company partnered with Cedars-Sinai in California to develop an app, Cedars-Sinai Connect, to make virtual care providers available around the clock for urgent issues and same-day appointments for primary care. The goal is to reduce wait times for patients and open up access to care. Through the app, patients can be connected, via chat, with a health-system-credentialed doctor or nurse. The app also is linked to the system’s electronic medical record system. Doctors also can make referrals within the brick-and-mortar Cedars-Sinai network for any needed specialty care.
Through the partnership with K Health and the use of the Cedars-Sinai Connect app, the health system has increased primary care capacity by 15%, according to Shaul.
Three years ago, K Health inked a collaboration with Mayo Clinic through the Mayo Clinic Platform, the hospital's digital health and artificial intelligence project. The two organizations said they would focus on developing clinical decision support tools for Mayo Clinic patients and doctors and virtual care models to help patients receive autonomous care.
The company says it works with multiple health systems and thousands of doctors to improve the speed, efficiency and access to high-quality medical care.
"We've seen significant growth in that business," Shaul said. "It's actually provided a very significant growth engine to our company."
K Health operates in 48 states and, along with its health system collaborations, it also partners with UnitedHealthcare and Elevance Health, formerly known as Anthem. The company also provides a direct-to-consumer service.
The company's platform works with about 2,000 patients a day, Shaul said.
Ten million people have interacted with K Health’s AI, and 3.1 million patients have completed a chat with a doctor or nurse visit via K Health, CEO and co-founder Allon Bloch told Forbes a year ago.
K Health is not yet profitable, but "will be there soon," Shaul said. The company's use of AI benefits its business model and it enables it to provide high-quality primary care in a more cost effective way compared to brick-and-mortar businesses, he noted.
An initial public offering could be in the company's future, but Shaul said there is no definitive timeline to go public.
K Health wanted to work with investment firms like Claure Group because they are "strategic, long-term" investors with deep pockets, Shaul said. "We are thinking about big picture," he said. "
As virtual care continue to evolve in a post-COVID market, K Health aims to reinvent primary care by providing patients remote access to healthcare services through their smartphones. The company also has invested in AI and generative AI to help doctors make personalized diagnoses and treatment plans.
"What we have done in the last 18 months at K health is we have done two very important proof points. One, we managed to build longitudinal continuity of care through a 24/7 clinic. You are seeing the same provider again and again on a virtual platform that is connected with your healthcare system. So, building that longitudinal care remotely, I think we are the first company to have done that," Shaul said in an interview with Fierce Healthcare.
"To do that in a scalable way, we have matured our AI to be a copilot to our physicians that provide them basically superpowers. It's like having a resident preparing everything to be ready for their evaluation, so the physician can stay more focused on the patient and they can do better quality care," he said.
AI has been "disappointing" in healthcare so far, Shaul contends.
"It hasn't changed the delivery of care. In most people's lives, it hasn't changed anything, yet. Some in radiology, yes," he said. "In healthcare, we're still see people the same way we did 70 years ago. We walk into a doctor and have no clue what we're about to do and we get two to three minutes of clinical time with a physician."
He added, "This is why we believe we're on to something. This is a large scale problem. There are 1 billion visits annually in the U.S. for primary care. Imagine if we can impact that and we can enable people to get high-quality care more efficiently so we can see more people and we can get better care."
K Health has been developing AI technology for over six years, amassing billions of patient data points from real-world health cases, according to the company.
The company built its AI models based on data sets from Israeli health insurance company Maccabi. Through a licensing agreement, Maccabi provided anonymized health data of 2.1 million people over 20 years, including 400 million medical charts, 2 million hospitalizations, 500 million prescriptions and more than a billion lab results, Forbes reported a year ago.
K Health also licensed another large anonymized data set from the Mayo Clinic that included anonymized medical charts from 5.3 million patients,1.2 million lab tests and partial data tied to another 4.7 million patients.
Shaul is bullish on K Health's potential to help open up access to primary care on a large scale.
K Health's growth comes as other big players in the market are pulling back on their investments in primary care. Walmart announced two months ago it was shuttering its 51 health centers along with its virtual care services (its telehealth business was just acquired by Fabric), while retail pharmacy operator Walgreens is closing 160 VillageMD primary care clinics and plans to cut its stake in the company. CVS also made a hefty investment in primary care with its Oak Street Health acquisition and there are reports it is seeking a private equity partner to fund growth.
Retail health clinics "have not fulfilled their promise," Shaul said. "To do primary care, you need high-quality care and you need people to manage it continuously and the unit economic is just not there."
K Health's AI-powered medical services becomes an extension of brick-and-mortar primary care, he noted. "It scales very nicely because of the AI and the ability to do 24/7 services."