Health Catalyst announced a new round of funding on Tuesday morning that officially put it above $1 billion – and into an elite class of private companies otherwise known as unicorns.
The $100 million Series F round of funding is led by OrbiMed and includes Sequoia Capital, Norwest Venture Partners, Sands Capital Ventures, UPMC Enterprises and Kaiser Permanente Ventures.
I spoke with Health Catalyst CEO Dan Burton ahead of the public announcement about what unicorn status means to the company, what it signifies for the industry and where they plan to invest in technology.
Q: First of all, how will becoming a health IT unicorn change Health Catalyst?
A: In many ways, it is just a next step, a small validation we are headed in a positive direction. One of the ways it feels meaningful is that we have crossed a few size and scale thresholds that help us be a stronger long-term partner and choice to large health systems that make up the majority of our customers base. Our business model runs and accelerates more effectively when our clients succeed.
Q: What are the broader implications of having a new unicorn to the health IT industry?
A: Health Catalyst, at its best, plays a small role in the transformation that is beginning to take more of a hold in healthcare. One area I expect to see growth and momentum in is the harnessing of data, and data being utilized more and more for data-informed improvements across clinical, financial and operational areas. There will be many companies, a growing list of great examples of companies harnessing the value of data and yielding those improvements.
Q: You’ve raised a billion dollars. What’s next on the technology horizon?
A: Two fundamental things we try to bring the data platform we’ve invested very heavily in during the past three years. First is to launch and migrate to our cloud-hosted data platform, with a significant fabric layer, AI, machine learning and natural language processing built in. We want to see that platform utilized in powerful ways. Second is the analytics layer: We’re focusing on and continuing to invest in clinical app suites, like our patient safety suite that launched six months ago, and we have financial and operational suites we are excited to continue investing in those. We’re also working on a tech ecosystem of companies that need data and can utilize our platform. Our clients have always been able to build on top of our platform, and we’re starting to develop that ecosystem of third party innovators. It’s early, but we’re excited.
Q: You have said in the past that Health Catalyst would undertake an initial public offering. Does becoming a unicorn change that? Is it still a potential option?
A: The decision to go public is a board decision and our job as the leadership team is to continue to build a company that can scale and grow. Whether to IPO, that’s really a board decision.
Q: There are those who would argue both ways. Epic CEO Judy Faulkner seems to relish staying private. And when Jonathan Bush was CEO of athenahealth and there was conjecture that Elliott Management might want to take the EHR vendor private, he told me that being public makes tech companies angels of their better nature …
A: Every capital strategy has upsides and downsides and each company’s board has to assess in that particular situation what the optimal capital strategy is. I respect both of those leaders and understand the decisions they made. The board at Health Catalyst goes through a regular strategic dialogue about what’s best for us.
Q: Last question, here. What scares you about becoming a health IT unicorn?
A: It’s a lot to live up to. I feel like at Health Catalyst, we’ve tried to live up to certain operational principles, cultural attributes and values – and anytime some level of notoriety comes to a company, a certain amount of scrutiny comes as well. We are aware that we’re not perfect but we strive to be every day. This notoriety should cause us to lengthen our stride and try harder to live up to our ideals because we will be scrutinized.
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