14 Internet Healthcare Companies Poised for IPO in 2015 File Prospectuses

In 2014, investors poured substantial capital into the internet healthcare sector, with notable examples including Flatiron Health, Nanthealth, Proteus Digital Health, Guahao.com, DXY, and Chunyu Yisheng. As venture capital investment grew, it brought forth challenges related to suitable initial public offerings (IPOs) and capital exit strategies. Of the approximately $20 billion in mergers and acquisitions activity in 2014, $10 billion in capital was generated through IPOs. A renowned U.S. internet healthcare incubatorRock Health's 2014 Internet Healthcare Investment ReportIt also took stock of internet healthcare companies that might go public in 2015, none of which were Chinese firms. VCBeat conducted a further analysis of these 14 potential IPO candidates in 2015, comparing their prior financing rounds, core business areas, and years of operation. (For internet healthcare companies that had their IPOs in the U.S. during 2013–2014, please see here）

From the list, we see that Practice Fusion has undergone the most funding rounds and attracted the largest number of investors, having completed 12 rounds and secured backing from 31 venture capital firms, including institutional investors, individual investors, and strategic investors, for a total financing amount of $123.5 million. If Rock Health’s predictions come true, seven venture capital firms—SV Angel, Felicis Ventures, Morgenthaler Ventures, Founders Fund, Kleiner Perkins Caufield & Byers, Google Ventures, and Morgenthaler Ventures—will reap substantial returns. Among them, Kleiner Perkins Caufield & Byers invested in four companies, SV Angel in three, and the others in two each.

In terms of publicly disclosed financing amounts, Nanthealth ranks highest. Despite being founded only eight years ago, its total funding has reached $525 million. This is primarily due to a $135 million private equity investment secured in May 2014 and a $320 million Series B round raised in October of the same year, which propelled it to the top spot. On the surface, other companies appear to have raised smaller amounts, but whether they are simply playing hide-and-seek with their financial data remains to be seen; we shall wait for their IPOs.

In terms of founding dates, most of these companies are relatively early-stage, with operational histories exceeding seven years, except for Flatiron Health, Doximity, and Evolent Health. These three operate in the niche sectors of physician communities, data analytics, and healthcare software services, respectively. Moreover, other companies that have expanded into these three fields also have relatively short operational histories. Can it be inferred that greater market demand in these sectors has accelerated their growth? In contrast to the online consultation sector, which is also highly favored in China, the overseas companies potentially going public have significantly longer operational histories than their Chinese counterparts. Although Chinese online consultation startups are very active, their level of maturity falls far short of that of these overseas firms.

In terms of niche segments, there are potential IPO candidates across various fields. However, online consultation and data analytics stand out with three companies each. Notably, two companies are focused on optimizing health insurance plans and enhancing price transparency, a sector that appears to remain largely untapped in China.

Below, we take a closer look at the growth profiles of internet healthcare companies that were potential IPO candidates in 2015.

1、Fitbit
Founders: Eric Friedman, James Park
Year Established: 2007
A company that manufactures a variety of electronic fitness trackers and health devices. Its hardware product line includes multiple wristbands and clip-on activity trackers, such as the Fitbit One, Fitbit Zip, Fitbit Flex, and Fitbit Force, as well as the Aria connected smart scale. The company also provides mobile applications and an online dashboard. By partnering with third-party app developers, it enables users to track steps, body weight, food intake, and other exercise metrics through these software platforms. In October 2014, Fitbit expanded its product lineup by launching the more feature-rich Charge and Charge HR fitness bands (the latter equipped with heart rate monitoring), as well as the Fitbit Surge, its first smartwatch featuring built-in GPS and heart rate sensors, designed to compete directly with the Apple Watch. This move allowed Fitbit to transcend its earlier limitation of relying solely on step-based activity tracking.

In terms of business footprint, the company has been actively expanding, successively entering Europe, the Middle East, Africa, and the Asia-Pacific region. It has also vigorously developed domestic sales in the United States, increasing the number of exclusive stores to over 15,000, while partnering with corporate wellness programs to drive growth.

In early March 2015, the video-based personal training fitness app FitStar was acquired. The main competitors currently identified include Stayhealthy, Switch2Health, and Jawbone.

2、ZocDoc
Founders: Nick Ganju, Oliver Kharraz, Cyrus Massoumi
Established: 2007
An online doctor appointment platform. Patients can schedule doctor services through the website, operating on a model similar to booking reservations via OpenTable. Patients incur no fees for using the online service, while doctors pay an annual fee of $3,000 to be included in the ZocDoc database. In mid-2014, ZocDoc launched a corporate employee health services channel in addition to its offerings for the general public. To date, it has expanded to over 2,000 cities across the United States, with more than 5 million users accessing its services each month. Key competitors include DocMeIn, Attencia & Penina Mezei, iMediaSante, Skeduler, Zesty, Doctoralia, WhatClinic.com, DocASAP, and HealthLeap.

3、Practice Fusion
Founders: Matthew Douglass, Ryan Howard
Year Founded: 2005
A U.S.-based electronic health record (EHR) service provider. It is dedicated to serving healthcare professionals by offering free online EHR systems and managing patient appointment workflows. Two years later, it launched its first eponymous product for physicians, Practice Fusion. By April 2013, Practice Fusion extended its services to patients for the first time with the launch of Patient Fusion, a website specifically designed for scheduling doctor appointments. Unlike ZocDoc, which charges physicians a monthly fee, Patient Fusion was free to use, marking the beginning of intense competition for market share. To alleviate profit pressure primarily reliant on advertising revenue, the company introduced Practice Fusion Insight in June of the same year—a paid subscription-based data analytics service. This product mainly targeted pharmaceutical companies, industry analysts, and financial analysts, providing them with access to Practice Fusion’s medical database. During its growth phase, the company acquired 100Plus, a personal health prediction firm, and Ringadoc, a two-way teleconsultation platform. Its main competitors currently include Attencia & Penina Mezei, GE Centricity, Greenway Health, NextGen Healthcare Information Systems, eClinicalWorks, athenahealth, and Allscripts.

4、Proteus Digital Health
Founders: Timothy Shey, Patrick McQuown, Mark Zdeblick, Ph.D., George Savage, M.D., Andrew Thompson
Established in: 2001
A digital healthcare services company that integrates its latest pharmaceutical developments with mobile, wearable, and cloud computing technologies to enable both physicians and family members to participate in patient health management. Its ingestible drug sensor, approved by the FDA in 2012, is a microchip embedded within medication. Once ingested, it generates power through a chemical reaction with gastric fluids, monitoring drug absorption and efficacy, thereby allowing physicians and family members to track medication adherence. Its primary competitor is m-Qube.

5、23andMe
Founders: Anne Wojcicki, Linda Avey
Established: 2006
A company providing personal genomics services. In 2007, it launched a DNA saliva testing kit priced at $999. Later, to align with market trends and reposition its product as a more accessible mass-market consumer good, the company reduced the price to $99 in 2012, thereby attracting a large user base. However, in November 2013, 23andMe faced regulatory action from the U.S. Food and Drug Administration (FDA), which ordered the company to withdraw its saliva-based health risk testing service. (The service was subsequently launched in the UK in late 2014.) The company was permitted to continue offering ancestry analysis based on its DNA database and to aggregate and sell consumer genetic data to pharmaceutical or biotechnology firms, which use this information to guide drug development. In early 2015, 23andMe announced two partnership deals with pharmaceutical companies and collaborations with twelve other institutions. To date, it has accumulated 800,000 DNA samples. Recently, the company also announced plans to develop its own drugs. In July 2012, it acquired the patient community CureTogether. Its main competitors include ScientificMatch, GenePartner, AIBioTech, and Navigenics.

6、Teladoc
CEO：Jason Gorevic
Established: 2002
It aims to provide patients with online medical consultation services, including via telephone and video. However, on the Teladoc platform, users cannot freely choose their physicians; instead, Teladoc assigns doctors to users. In September 2013, it acquired the telehealth service provider Consult A Doctor to help expand its services in niche markets. Known competitors include Doctor on Demand, First Stop Health, LLC, and MDLIVE.

7、Doximity
Co-Founders: Nate Gross, Jeff Tangney
Founded in: March 2011
A social networking platform that aggregates high-quality physicians and integrates resources to facilitate the sharing of patient medical data among doctors. Doximity not only provides physicians with a professional network and personal profile pages, but also enables patients to find relevant specialists on the platform. In addition, it offers CME tools, a news website, email, SMS services, and virtual lounges. Doximity operates on a freemium model, with its current revenue primarily derived from two sources: fees for sending patient profiles beyond a certain limit, and consultation fees. According to its official website, the platform currently covers 50% of physicians in the United States and has established partnerships with more than 200 hospitals and healthcare organizations.

8、Evolent Health
Founders: UPMC Health Plan, The Advisory Board Company
Established: 2011
A healthcare systems services company that provides software and consulting solutions to hospitals and other healthcare institutions to reduce their operational costs.

9、Nanthealth
Founder: Patrick Soon-Shiong
Established: 2007
An e-health technology service provider, its product portfolio includes medical device connectivity, electronic health data sharing, and healthcare software. NantHealth has enjoyed remarkable success. In April 2014, it partnered with BlackBerry to provide more secure information services to major healthcare providers. In August of the same year, it acquired the world’s most powerful DNA sequencer and donated it to 34 Providence healthcare facilities across the United States, thereby gaining ownership of cancer services and bioinformatics within that healthcare system. In December, NantHealth and BlackBerry launched a genomics viewing app, enabling physicians to access cancer patients’ genomic information on BlackBerry smartphones. This March, NantHealth collaborated with electronic medical record (EMR) provider Allscripts to develop a comprehensive, evidence-based, personalized medicine solution platform, aiming to drive innovative transformation in cancer care coordination and management. Over the past few years, NantHealth has also undertaken multiple acquisitions, including medication adherence service provider Vitality GlowCaps and home healthcare technology developer Boston Life Labs. Additionally, in November 2013, it invested $8 million in Fluential, a startup then operating in stealth mode. Patrick Soon-Shiong himself once revealed plans for an initial public offering (IPO) in 2015; however, facing fraud allegations in early 2015, it is impossible that these did not impact the company’s listing prospects.

10、Flatiron Health
Founders: Nat Turner, Zach Weinberg
Established in: 2012
A service provider offering big data solutions for oncology research and clinical practice. Its developed OncologyCloud™ platform primarily aggregates cancer patient data from multiple sources, enabling healthcare professionals and researchers to conveniently access in-depth, actionable insights on cancer data. Since its inception, Flatiron Health has continuously integrated resources by acquiring Altos Solutions, an oncology electronic health record (EHR) service provider, to ensure professional and standardized collection of oncology data. In December 2014, it partnered with Foundation Medicine to jointly develop a cloud-based information data platform aimed at advancing targeted therapies for cancer patients. That same month, it collaborated with Vector Oncology to facilitate easier data collection and retrieval for oncology practitioners. Subsequently, it partnered with the National Comprehensive Cancer Network (NCCN) to launch a new database of oncology medical achievements. Currently, Flatiron Health’s OncologyCloud™ serves nearly 2,000 clinician clients across more than 200 oncology treatment centers.

11、Health Catalyst
Founders: Thomas Burton, Steven Barlow
Established in: 2008
A U.S.-based company specializing in healthcare data management and analytics. Health Catalyst’s systems enable hospitals of all sizes to manage and analyze complex clinical, financial, and operational data, thereby improving efficiency, eliminating waste, and enhancing the standardization of healthcare processes. For instance, it can automatically generate various internal and external reports and charts, including statistics for different departments and patient categories. Its product line has now been integrated into a comprehensive platform comprising more than 50 software applications.

12、RedBrick Health
Founders: Kyle Rolfing, Kurt Cegielski
Established: 2006
A healthcare services company dedicated to helping employers address rising health insurance costs. It currently offers two lines of business: market solutions and product solutions. Market solutions comprise two categories: employee benefits and health plans. The product solutions portfolio includes 12 offerings, such as health assessments, biometric screenings, and telephonic coaching.

13、Lumeris
CEO: W. Michael Long
Established: 2001
A health management service provider. Lumeris’s technologies and services are designed to ease the transition from a treatment- or fee-for-service-based healthcare system to a distributed responsibility model in which patients bear a greater share of healthcare costs. Currently, Lumeris serves 20 markets. The company claims that by the end of 2015, it will expand into an additional 12 markets, partnering with organizations responsible for the healthcare of more than 50 million people. Lumeris is currently a subsidiary of Essence Group. Although there is no separate financing information available for Lumeris, Essence Group raised $71 million in May 2014, stating that the funds would be used to expand the operations of its Lumeris subsidiary.

14、Specialists On Call（SOC）
CEO：Joe Peterson
Established: 2004
SOC primarily provides remote physician consultation services to urban, suburban, and rural hospitals. In addition to helping hospitals improve patient care quality, SOC’s services also strengthen the financial capabilities of community hospitals. The company’s unique clinical service model is expected to further expand the market size for remote consultations and address the traditional shortage of specialist physicians available for patient care in hospitals.