KKR captures its piece of the healthcare IT market via Clarify Health, more to follow

  • KKR Healthcare Strategic Growth Fund collected $1.45 bln in November ’17
  • San Francisco startup founded in 2015
  • Clarify represents seventh investment out of HCSG

KKR has struck its first healthcare IT investment through its strategic growth fund, and one executive of the firm is hinting more such deals are poised to follow.

The firm announced Monday that it had led a $57 million Series B funding round in Clarify Health Solutions, the startup that uses predictive analytics to help doctors guide patients to better treatment options.

The investment is being made through KKR Healthcare Strategic Growth Fund, which collected $1.45 billion in November.

While Clarify is KKR’s seventh investment out of the healthcare growth fund and the 13th done through its strategic growth strategy, the deal marks the sponsor’s first true healthcare IT investment through those efforts.

To that extent, Clarify underscores KKR’s “recognition that we think there are interesting investments to be had” in the technology-enabled end of the healthcare market, said KKR Member Ali Satvat, who leads HCSG’s efforts.

While KKR through its growth strategy has explored a number opportunities in healthcare IT, the firm until now hasn’t found one that fit the bill, Satvat said.

“It’s been somewhat barbelled,” Satvat said.

Broadly speaking, the growth fund was launched to invest up to $100 million in healthcare companies that fit within the gap of early-stage assets that are often venture-backed, and large mature companies that fit the bill for typical PE buyouts.

Healthcare IT largely is composed of mature companies that are attractive to big strategic players, and on the other end, many nascent ones that haven’t achieved proof of concept, where Satvat said, “we couldn’t nod and say ‘this thing works.’”

Finding an investment in the segment is further challenging given the competitive nature of healthcare IT, which unlike the average biopharmaceutical company also draws interest from tech-oriented investors, Satvat said.

On the early-stage end of what is an increasingly crowded healthcare IT market, distinguishing quality assets with understandable business models and traction also took time, Satvat said.

Clarify, only about three years old, stood out because the company doesn’t simply provide information to health systems, but what Satvat called “actionable” or “usable” input.

The company uses predictive analytics on a dataset involving 100 million-plus patient lives. The data can be used to address the inconsistency of processes and patient outcomes during medical care. Doctors can use that insight to guide patients through the best care options at the lowest cost.

Clarify says it has achieved more than $1 billion in improvements with more than 125 health systems, payers and pharmaceutical companies.

The company was founded in 2015 by Co-Founder and CEO Jean Drouin, alongside CTO and CFO Todd Gottula.

Action Item: Learn more about KKR’s efforts in autism-treatment here: https://pehub.com/buyouts/healthcare-investors-flocking-opportunities-autism/