Biofourmis, a virtual care management company that enables hospital-at-home initiatives, has raised $300 million in a Series D funding round. With these funds the company surpassed ‘unicorn status’ and is valued at $1.3 billion.
The round was led by equity firm General Atlantic with participation from CVS Health, SoftBank Vision Fund 2, Openspace Ventures, MassMutual Ventures, Sequoia Capital and EDBI. It’s the company’s first round since August 2020, when it raised $100 million in a Series C round. As part of the announcement, Biofourmis also named former Medtronic CEO, Dr. Omar Ishrak as its board chairman.
Since being founded in 2015, Biofourmis has evolved from originally targeting pharma companies for digital therapeutics to one that uses biomarkers and analytics to monitor patients at home for hospital systems. CEO Kuldeep Singh Rajput spoke with Digital Health Business & Technology about the latest funding round, expanding the company’s reach via potential M&A targets and more. The interview has been edited for length and clarity.
How did this round come together and what are your plans for this new infusion of cash?
Since our last round, a lot has changed with the business. Because of the pandemic, patients started to demand more personalized care in the comfort of their home. We were able to set up a whole new different business vertical where we manage patients across the continuum, everything from acute care, post-acute care and providing patients with long-term chronic care. We started that particular business line in early 2021. Our focus was to go after hospital systems since they were frustrated with all these point-of-care solutions. They were looking for a single, unified care management platform to manage patients across the continuum of care. So that started to propel our growth within the care-at-home space. Within a year, we were working with almost over 20 hospital systems in the U.S.
As we scaled that business, we grew the number of employees in the company. During our Series C, we were close to 150 employees. Now we are at 500 employees headquartered in Boston. For this round, we were looking to bring in investors who really understand the space very well and have portfolio companies that would be synergistic to us. In this regard, General Atlantic was a great partner to lead this round. With this capital, we hope to fund our organic and inorganic growth plan, particularly through strategic partnerships and mergers and acquisitions. We want to accelerate our penetration into the hospital system market and then expand into new business areas. The market is consolidating, and we want to be that consolidator.
What can you tell me about any potential acquisition targets?
We don’t specifically have the targets now, but we know the categories of companies we are going to look at. The first category is companies who have care-at-home technology market share within hospital systems, so we could expand our penetration in that space. The second category is companies who have market share with payers. It’s a massive opportunity. We haven’t tapped into payers yet, but we added a virtual specialty care capability a few months ago onto our platform. Almost 70 percent of medical spend is on specialty care in the U.S. For payers, this is a big opportunity. We’re going to look at companies who can enable us payer penetration, allow us to scale up our specialty care services and eventually it will allow us to get into value-based care. Lastly, we want to expand into new disease areas. We would still retain cardiovascular, pain, oncology and respiratory disease as our four core areas, but we want to expand within those diseases.
How did you get Dr. Ishrak to come on board?
We’re excited to have him on board. He scaled Medtronic by focusing on clinical rigor and regulatory approved products. This mirrors how we think about scaling at Biofourmis. I was connected to him through one of our board members. We started talking and he got excited about Biofourmis. He liked our approach to healthcare, the applicability of the platform for a variety of disease areas and how we personalized care solutions with our technology. He was excited and we decided to eventually bring him on as the chairman. We’re at a point where we’re zeroed in on scale and growth. He is someone who has done this before and knows how to scale companies.
Do you have concerns over regulatory reimbursement uncertainty surrounding hospital-at-home initiatives?
Reimbursement for hospitals was certainly part of the waiver program due to the pandemic. Centers for Medicare & Medicaid Services really wants to look at data to assess whether the program is driving value. I truly believe within the last year, a number of hospital systems have demonstrated that value. So, I don’t foresee [those flexibilities] going away. Hopefully, it will become part of bundled payments. As of now, it is a waiver. When we look at post-acute and long-term care, there are established programs. They have existed 5-6 years. Our mid-term strategy is we want to evolve toward value-based care. We are testing out risk-sharing agreements with some of our partners. Eventually, we want to get paid based on value. That’s where I see this headed.
What comes after Series D, are you looking to go public?
Right now, our focus is to scale through our inorganic growth plan. We will evaluate at the right time what the right strategy is for us and if an IPO makes sense.
