Venture capital-backed Datavant is combining with clinical data network Ciox Health in a deal valued at $7 billion.
The combined company, to be named Datavant, will be the nation's largest health data ecosystem, enabling patients, providers, payers, health data analytics companies, patient-facing applications, government agencies and life science companies to securely exchange patient-level data, according to the companies.
San-Francisco headquartered Datavant is a unit of Roivant Sciences, which was created to provide data sharing services in the healthcare industry.
Datavant, which is expected to generate $700 million in revenue, will offer the ability to access, exchange and connect data among the thousands of organizations in its ecosystem for use cases ranging from better clinical care and value-based payments to health analytics and medical research, the companies said.
The deal is expected to close in the third quarter of 2021. Sixth Street is leading a structured investment in the combined company alongside Goldman Sachs Asset Management’s West Street Strategic Solutions fund.
The companies said the $7 billion deal is supported by its group of investors led by investment firm New Mountain Capital, Roivant Sciences, Labcorp and Cigna Ventures.
Datavant's tokenization technology connects data sets of de-identified patient data for medical research. Ciox Health, which transfers more than 50 million patient records each year, has built an extensive clinical data network of more than 17,000 hospitals and clinics, and the deal with Datavant will accelerate the company's capabilities to enable real-world data.
Datavant will now provide data services to more than 2,000 U.S. hospitals, 15,000 clinics, 120 health plans and 100 health data analytics companies as well as more than 75 state, local and federal government agencies and a number of life sciences companies.
The deal with Datavant will help drive Ciox Health's growth as the combined company tackles the challenge of health data fragmentation, Pete McCabe, CEO of Ciox Health, who will lead the new company, told Fierce Healthcare.
"The opportunity to power everyday health decisions with data can be the biggest advancement in healthcare in the last 30 years," he said, noting that patients have many dozens of interactions with the healthcare system over the course of their lives and that information is retained in siloed databases across disparate institutions.
New Mountain Capital-backed Ciox Health was created by the 2015 merger of HealthPort, IOD Inc., Care Communications Inc. and ECS. The company provides a neutral network that does not sell health data, McCabe said.
For the thousands of hospitals and clinics the companies work with, the combination of Datavant and Ciox Health will enable providers to connect patient medical records with other data sources to improve patient outcomes, advance the development of new drugs and treatments and contribute to population health studies, McCabe said.
There is a massive opportunity for Ciox Health to leverage its relationships with healthcare providers to tap into unstructured health data, such as clinical notes.
"Liberating that data gets to the core of what the Ciox Health team does and then overlaying that with Datavant technology is a huge advancement across the health data ecosystem," McCabe said.
As an example, in the early days of the COVID-19 pandemic, there were no ICD-9/10 codes to flag a patient's loss of smell or taste, a common symptom of the virus. That information can be a treasure trove for medical researchers, and tapping into clinical notes will help advance data-driven research.
Combining the capabilities of Datavant and Ciox Health benefits payers as well, he said. "To advance value-based care models, health plans need access to data. Everybody has a piece of that data and there are huge holes, this combination enables us to close those gaps."
The combined Ciox Health and Datavant platform will represent a "powerful force in enabling connectivity of critical clinical data across the healthcare ecosystem,” said Jo Natauri, managing director and global head of private healthcare investing for Goldman Sachs Asset Management, in a statement.
There have been several major deals in the healthcare and life sciences spaces focusing on advancing real-world data and clinical research. Health IT giant Cerner acquired the health division of Kantar Group for $375 million to advance clinical research development. Cerner is setting its sights on building a $1 billion data business for the healthcare and life sciences industries based on the acquisition.
EHR competitor Allscripts also has put significant investment in its Veradigm business, which is the largest linked EHR claims patient database available for research sourced from and directly connected to clinical platforms.
Deutsche Bank, Goldman Sachs and Triple Tree served as the financial advisers to New Mountain and Ciox. Ropes & Gray LLP served as legal adviser to New Mountain and Ciox; Goodwin Procter LLP served as legal adviser to Datavant. Sidley Austin LLP served as legal adviser to Sixth Street and Goldman Sachs.