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Equity Research Industry Analysis Fall 2013
The Digital Healthcare Roadmap The Four Stages of Healthcare Digitization: The Nexus of Digital Healthcare Technology and Health Information Management
Digital Healthcare Sector Steve Rubis
(202) 778-4780 ● [email protected]
Digital Healthcare 1 Industry Analysis — Fall 2013
Table of Contents
Preface 2 The Four Stages of Healthcare Digitization 3 Unlocking the Value of Data 8 The Demographic Trends Driving Digital Healthcare
and Why Investors Should Pay Attention 14 The Accelerators of Digital Healthcare Innovation 27
Qualcomm Life 28 Rock Health 31 StartUp Health 32 Healthbox 33 Blueprint Health 34
Digital Healthcare Technology Industry Overview 35 Many Exciting Opportunities and Many Ways to Invest 39
Clinical Back-Office and Clinical Front-Office 41 Analytics 46 Health and Wellness/Gamification 48 Medical Devices (Sensors/Monitoring/Imaging) 51 Diagnostics/Genomics/Clinical Trials 53 Provider Information/Insurance/Education 54 Fitness 56 Diabetes 58 Cardiovascular Diagnostics/Sensors 59 Telehealth 60
Conclusion: Who Leverages Digital Healthcare and Investment Potential? 62 Important Disclosures and Certifications 63
Stifel does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
All relevant disclosures and certifications appear on pages 63 and 64 of this report.
Digital Healthcare 2 Industry Analysis — Fall 2013
Preface What is Digital Healthcare? We believe digital healthcare companies are engaged in the pursuit of leveraging technology to transform all aspects of healthcare. Digital healthcare technology companies specifically look to leverage Internet and mobile technology to improve healthcare by providing networks with interoperability and providing mobility to the clinic. At the same time, digital healthcare companies are leveraging these technologies to incentivize consumers to engage and take ownership of their health.
What is Health Information Management? We define health information management as the maintenance of health records by pen and paper or digitally in hospitals, physician offices, health departments, and insurance companies. In our view, electronic medical records (EMRs) and electronic health records (EHRs) are creating the basic digital foundation needed to create a fully integrated digital healthcare eco-system.
What are the Four Stages of Healthcare Digitization? In our view, digital healthcare technology and health information management are converging to create a digitized healthcare system. We believe that convergence will move the focus of healthcare digitization from building a foundation to an integrated eco-system that drives reduced healthcare costs through the value of analytics. In our view, there are four stages of healthcare digitization, which we describe below.
Stage 1 – Digitizing the Clinical Back-Office (enterprise systems solutions). We believe Stage 1 consists of building the basic digital infrastructure for healthcare. We believe the focus of Stage 1 revolves around companies developing technology around EMRs/EHRs, revenue cycle management (RCM), and pharmacy benefit management, essentially digitizing the back-office infrastructure of a doctor‟s office or hospital. Stage 1 solutions are often enterprise-type systems and do not always exhibit robust interoperability between disparate systems.
Stage 2 – Digitizing the Clinical Front-Office and Back-Office (Internet and mobile solutions). We believe Stage 2 consists of developing and implementing digital healthcare technologies that involve the patient (e.g., wireless monitoring, health and wellness tracking, et al.). In our view, the commonality among Stage 2 companies is a focus on leveraging the web, mobile, and the cloud to create interoperable solutions, provide mobility to the clinic, as well as facilitating consumer engagement in healthcare decisions.
Stage 3 – Integration. We believe integration consists of healthcare IT companies and digital healthcare companies uniting through partnerships or acquisitions to create a complete eco-system (closed loop of patient, provider, and healthcare organization/institution). We believe interoperability and mobility will allow healthcare to transform outcomes and cost of care by unlocking the value of data.
Stage 4 – Monetization. We believe monetization consists of unlocking the value of healthcare data via analytics to all participants in the healthcare industry (e.g., healthcare IT companies, digital healthcare companies, managed care organizations, and even pharmaceutical companies).
Where Are We Now in Terms of the Four Stages? We believe the digital transformation of healthcare is currently in Stage 1 and the beginning of Stage 2. Clinician adoption of EMR/EHR technology illustrates that the basic digital foundation is in place. In our view, the development of digital healthcare technologies is driving the next stage of development by striving for interoperability of systems, mobile solutions, and engaging patients in healthcare decisions and processes.
Our Thesis. We believe the digital transformation of healthcare will occur in four stages. In our view, current efforts remain focused on building out the necessary technological infrastructure to drive digitalization. We believe that digital healthcare technology will provide the catalyst for the digitalization of healthcare to move from the foundation stage to the integration stage, which is characterized by interoperability of disparate systems and solutions. Digital healthcare technology is engaging patients with their healthcare, providing the necessary foundation to drive healthcare costs lower in the future. In our opinion, the creation of a fully integrated digital healthcare system will lead to the ability to unlock the value of healthcare data in order to drive down costs of care throughout the system.
Digital Healthcare 3 Industry Analysis — Fall 2013
The Four Stages of Healthcare Digitization We believe the digitization of healthcare represents an important secular investing theme that will play out over the next decade. The promise of healthcare digitization lies in the possibility of driving reduced healthcare costs. We note that McKinsey estimates that digital healthcare technology may drive $300 billion to $450 billion in cost savings annually. In our view, these estimates represent the potential associated with the digitization of healthcare. We believe that the digitization of healthcare remains in the very early stages and the current focus lies in building the digital foundation (digitizing the clinical back-office and clinical front-office). Once all constituents of the healthcare industry (clinicians, hospitals, and patients) are digitized, then new technological solutions leveraging mobile and other new technologies born out of digitization should move healthcare toward the goal of significant cost reductions.
In our view, healthcare digitization will develop through four stages. The focus of Stage 1 is developing a basic digital infrastructure that moves the clinical back-office (medical records, billing, et al.) from pen and paper to digital. Stage 2 will be driven by the development of new digital healthcare technologies that leverage the wireless infrastructure digitizing the clinical front-office (communication with patients, scheduling, monitoring, diagnostics, et al.). The focus of Stage 2 is on developing wireless healthcare solutions leveraging mobile technology (smartphones and tablets) that allow patients and clinicians to better understand healthcare issues. In our view, an important aspect of Stage 2 lies in driving consumer adoption and closing the digital healthcare eco-system. We believe without patient buy-in, the digitization of healthcare will likely begin and end with the clinical back-office.
In Stage 3, companies will begin to integrate developments achieved in Stage 1 and Stage 2; at this point we believe companies will focus on how to close the eco-system in terms of their respective business models. Lastly, in Stage 4, constituents will begin to focus on driving meaningful analysis off of the vast data created by digitized healthcare. We believe Stage 4 represents the greatest opportunity for the digitization of healthcare, but also represents the least defined opportunity, as we remain in the early stages of healthcare digitization. In Exhibit 1, we provide a diagram that explains our framework, “The Four Stages of Healthcare Digitization.”
Exhibit 1: The Four Stages of Healthcare Digitization Explained
Investment Area(s)BeneficiariesTechnological
FocusThe Four Stages of Healthcare Digitization
Stage 1• Digitizing the Clinical Back-Office
Stage 2• Digitizing the Clincial Front-Office
Stage 3• Integration
Stage 4• Monetization
EMRs/EHRsRCMsPBMsCROs
Digital Healthcare
Combines Stage 1 and
Stage 2
Entire Healthcare Supply Chain
CliniciansHospitals
ConsumersClinicians
Closes the Eco-system by
Integrating Stage 1 and Stage 2
Constituents
Focus on Leveraging the Value of
Data
Healthcare IT Companies
Digital Healthcare Companies
In Stage 3, we believe Healthcare IT companies will acquire Digital Healthcare
companies. Additionally, Digital Healthcare companies will become IPO candidates
The Entire Eco-system: Healthcare IT
Digital Healthcare TechnologyManaged Care Organizations (MCO)s
Pharmaceuticals
Source: Stifel
Stage 1 – Digitizing the Clinical Back-Office. Stage 1 of healthcare digitization focuses on building a digital infrastructure that allows clinicians (doctors, nurses, healthcare providers), hospitals, and other healthcare organizations to move operations from pen and paper into the digital era, bringing medical records, billing procedures, pharmacy management, and other relatively basic tasks online. Investment opportunities in Stage 1 are for the most part healthcare IT companies focused on providing EMR/EHR
Digital Healthcare 4 Industry Analysis — Fall 2013
technology to healthcare, but also include companies focused on revenue cycle management, pharmacy benefit management, and even contract research organizations. As clinicians become more comfortable with digitization over time, we believe workflow will become more efficient and clinicians will become more receptive to leveraging more complex digital healthcare solutions. We note that Government stimulus represents a major catalyst driving Stage 1 as the Health Information Technology for Economic and Clinical Health (HITECH), part of the American Recovery and Reinvestment Act (ARRA) of 2009, authorized $22 billion in incentives to drive the modernization of health information technology systems.
Stage 2 – Digitizing the Clinical Front-Office. In Stage 2, the digitization efforts focus not only on the clinical back-office, but also the clinical front-office. We believe Stage 2 digitization is about closing the digital healthcare eco-system through interoperability, mobility, and consumer engagement. The focus of Stage 1 is digitizing basic clinical back-office tasks that will likely result in more efficient clinician workflow. In our view, Stage 1 does not involve using digital technology to transform patient care or provide technological solutions that allow patients an easier time of tracking their own health. Really, the focus of Stage 2 digitization lies in leveraging wireless technology (smartphones and tablets) to develop digital healthcare solutions that allow patients to not only better understand their health, but also allow them to make behavioral adjustments to their health. In our view, this stage represents the beginning steps for healthcare leveraging digital technology to drive reduced healthcare costs. We note that Stage 2 digitization is being driven by multiple catalysts: (1) the Affordable Care Act, which shifts the focus of healthcare decisions to consumers/patients, and (2) the proliferation of wireless technology and high adoption rates among consumers and physicians. The convergence of these two catalysts has led to the development of myriad companies focused on attacking different areas of healthcare through digital technology.
Stage 3 – Integration. We believe Stage 3 represents the creation of a fully integrated digital healthcare eco-system, which includes clinicians, hospitals, and patients. In Stage 3, companies will focus on ways to integrate the digitized clinical back-office and the digitized clinical front-office. The goal of integration will be to provide more complex solutions that help lead to reduced healthcare costs throughout the system. We believe the integration of Stage 1 and Stage 2 will provide the necessary technological tools for Accountable Care Organizations (ACOs) and other healthcare organizations to truly better understand their patient populations, leading to improved healthcare outcomes and reduced costs.
Stage 4 – Monetization. We believe Stage 4 represents the Holy Grail of healthcare digitization as it represents monetizing the value of data through reduced healthcare costs. In Stage 4, the integrated digital healthcare tools of Stage 3 allow numerous constituents to analyze large data sets in order to drive better understanding of patients and their health, in turn leading to lower costs. According to a recent McKinsey & Company study, the promise of integrating digital healthcare and analytics may lead to an estimated $300 billion to $450 billion in cost savings for the U.S. healthcare complex.
Where Are We in Terms of the Four Stages? In terms of the Four Stages of Healthcare Digitization, we believe that we are in the early development phase of Stage 1 and Stage 2. In terms of Stage 1 – Digitizing the Clinical Back-Office, we believe that digitization remains low, as according to HIMSS roughly 80% of clinicians are using a component of a basic EMR/EHR, and less than 40% of clinicians are using a more complex integrated EMR/EHR solution. In our view, these statistics suggest that the digitization of the clinical back-office remains a developing theme. At the same time, we believe that innovative digital healthcare technologies are beginning to hit their stride. Technology companies are conducting clinical trials testing wireless devices (e.g., Qualcomm Life testing devices from Asthmapolis and Zephyr) in order to understand the possible impacts digital healthcare technology may have on care outcomes. We believe that wearable computing, especially devices focused on tracking health data, seem to be one of the more well developed areas of digital healthcare. Also, we believe there are companies already working to monetize healthcare data, most notably managed care organizations (MCOs) with a health data analytics function.
Digital Healthcare 5 Industry Analysis — Fall 2013
We believe numerous companies are participating in the continued digitization of healthcare. In our view, some participants are focused on a single stage of digitization. Companies participating in healthcare digitization range from healthcare IT companies to digital healthcare companies, to technology companies and managed care organizations, as well as pharmaceutical companies. At the same time, some companies are starting to extend their focus to other stages (e.g., EMR/EHR companies integrating digital healthcare technologies into their platforms (Athenahealth‟s acquisition of Epocrates or Aetna‟s acquisition and integration of iTriage)). We believe that companies focused on creating integrated solutions across all stages of digitization are best positioned to capitalize on the ongoing digitization of healthcare. Below we provide a breakdown of companies participating and companies that are possible beneficiaries of digitization by stage and focus.
The first stage of healthcare digitization, in our view, focuses on digitizing the clinical back-office. We define the clinical back-office as tasks associated with health information management (e.g., medical records, billing, revenue cycle management, or essential tasks not associated with direct influence of care outcomes). The solutions and technologies that are digitizing the clinical back-office are aimed at generating a more efficient infrastructure. Companies participating in Stage 1 likely fall into one of four categories: EMR/EHR providers, revenue cycle management providers, pharmacy benefit managers, logistics, or contract research organizations. We provide a list of prominent public and private companies that we believe are participants in Stage 1 digitization in Exhibit 2.
Exhibit 2: Key Companies Participating in the First Stage of Healthcare Digitization ($ in millions)
EMRs / EHRs Ticker
Market
Cap
Revenue Cycle
Management (RCM) Ticker
Market
Cap
Pharmacy Benefit
Managers (PBM) Ticker
Market
Cap Logistics / Misc. Ticker
Market
Cap
Athenahealth ATHN $3,956.1 MedAssets MDAS $1,422.1 BioScrip BIOS $779.5 Owens & Minor OMI $2,153.2
Cerner CERN $16,023.2 HMS Holdings HMSY $2,103.9 ExpressScripts ESRX $53,346.3 Omnicell OMCL $807.6
Allscripts MDRX $2,565.9 Accretive Health AH $904.6 Walgreens WAG $46,739.9 Merge Healthcare MRGE $250.1
Greenway Medical GWAY $474.5 Quality Systems QSII $1,264.5 CVS/Caremark CVS $72,019.3
Computer Programs and Systems CPSI $638.2 Premier, Inc. Private Catamaran Corp CTRX $11,471.6
Epic Private
eClinicalWorks Private
M*Modal Private
MEDITECH Private
Stage 1: Digitizing the Clinical Back-Office: EMRs / EHRs / RCMs / PBMs / Logistics / Misc.
Source: Company documents, FactSet, and Stifel
The second stage of healthcare digitization, in our view, focuses on digitizing the clinical front-office. We define the clinical front-office as essential tasks in a clinician‟s workflow aimed at driving a healthcare outcome (e.g., monitoring, tracking information, et al.). We believe an essential component of digitizing the clinical front-office consists of bringing patients into the fold. In our view, innovative companies focused on developing digital healthcare technologies seek to solve a healthcare issue through wireless/mobile technology, but also recognize that patient participation is vital to reducing costs. Both public and private companies are participating in Stage 2 with public company participants being Internet healthcare focused companies, large technology companies, and even diagnostic companies. Innovative private digital healthcare companies are focused on a myriad of topics: medical records, analytics, diagnostics, wearable computing, health and wellness, et al. We provide a list of prominent public and private companies we believe are participants in Stage 2 digitization in Exhibit 3.
Digital Healthcare 6 Industry Analysis — Fall 2013
Exhibit 3: Key Companies Participating in the Second Stage of Healthcare Digitization ($ in millions)
Company Ticker
Market
Cap Company Ticker
Market
Cap Company Ticker Company Ticker
WebMD WBMD $1,667.0 Vocera VCRA $450.9 Jawbone Private Sotera Wireless Private
eHealthinsurance EHTH $513.8 Streamline Health STRM $92.1 Castlight Health Private Prodea Systems Private
Google GOOG $292,918.6 iRobot IRBT $966.3 PracticeFusion Private RedBrick Health Private
Apple AAPL $452,631.4 Nuance NUAN $6,101.1 AirStrip Technologies Private Healthline Networks Private
Samsung 005930.KS $163,245.0 Model N MODN $337.9 23andMe Private CareCloud Private
Medidata Solutions MDSO $2,434.8 Illumina ILMN $9,902.1 MedSynergies Private Glumetrics Private
Healthstream HSTM $933.6 Orasure OSUR $287.4 ZocDoc Private Kareo Private
c8Medisensors Private Audax Health Private
FitBit Private Oscar Private
Blue Health Intelligence Private Kinnser Software Private
Withings PrivateHumedica (Owned by UnitedHealth)
Stage 2: Digitizing the Clinical Front-Office and Clinical Back-Office (Interoperability/Mobile/Consumers)
Source: Company documents, FactSet, Rock Health, StartUp Health, and Stifel
The third stage of healthcare digitization, in our view, focuses on integrating the technological advances in digitizing the clinical back-office and clinical front-office. Participants in this stage seek to build platforms that provide innovative solutions aimed at changing clinical outcomes, but also providing the essential digital backbone needed to do so. We believe that large technology companies, diagnostic companies, and even managed care organizations are early participants in this stage of digitalization. We provide a list of select prominent public companies we believe are participants in Stage 3 digitization in Exhibit 4. First, we list Qualcomm (QCOM: $68.02, not covered) because of its significant efforts to build a digital healthcare eco-system through its Qualcomm Life subsidiary. Alere (ALR: $31.98, not covered) represents a medical diagnostics company working to integrate diagnostics, health monitoring, and information technology solutions in one eco-system. Dexcom (DXCM: $26.67, not covered) represents a medical device company focused on developing glucose monitors integrated with a software platform that facilitates data communication between patients and doctors. In terms of healthcare IT companies, we list Athenahealth (ATHN: $107.36, not covered) because of its acquisition of Epocrates, Cerner (CERN: $46.70, not covered) as it begins to focus on leveraging the value of data, and Allscripts (MDRX: $14.41, not covered) because of its focus on population health management, and acquisitions of digital healthcare companies dbMotion and Jardogs. We include United Health (UNH: $74.06, Buy, covered by our colleague Tom Carroll), Aetna (AET: $65.11, Buy, covered by Tom Carroll), and WellPoint (WLP: $87.29, Buy, covered by Tom Carroll), as each of these managed care organizations operates an analytics organization, and these organizations have started to collaborate with other healthcare constituents to leverage the value of data.
Exhibit 4: Key Companies Participating in the Third Stage of Healthcare Digitization ($ in millions)
Company Ticker Market Cap Company Ticker Market Cap Company Ticker Market Cap
Qualcomm QCOM $116,683.3 Athenahealth ATHN $3,956.1 United Health UNH $75,296.8
Alere ALR $2,614.5 Cerner CERN $16,023.2 Aetna AET $24,227.4
Dexcom DXCM $1,903.6 Allscripts MDRX $2,565.9 WellPoint WLP $26,096.3
Stage 3: Integration: Technology Integrators and Analytics
Source: Company Documents, FactSet, and Stifel
Digital Healthcare 7 Industry Analysis — Fall 2013
The fourth stage of healthcare digitization, in our view, focuses on unlocking the untapped value of healthcare data through monetization. We believe the participants and beneficiaries of Stage 4 encompass a wide range of industries and constituents ranging from healthcare IT companies to technology companies to pharmaceutical companies. Any company extracting value from healthcare data or providing services to reduce healthcare costs through better outcomes or more targeted advertising, et al., is a participant in this stage.
While we believe there are many participants and possible beneficiaries of healthcare digitization, we believe there are companies at risk of disintermediation. First, we believe the greatest risk is posed to companies focused on solutions that target either just the clinical back-office or just the clinical front-office. Companies that do not extend their focus to understanding the possible opportunities associated with integrating current technologies with new digital healthcare innovations will likely be (1) acquired, (2) disintermediated, or (3) become irrelevant.
Additionally, we believe the wearable computing space, specifically those companies focused on tracking health data, e.g. FitBit, Jawbone, Withings, et al., may disintermediate global-branded consumer weight-loss services companies. Wearable computing companies are combining social networking with wearable computing to allow consumers to more easily track their fitness, health, and even weight, as well as allowing consumers to compete against one another. Lastly, these companies are analyzing consumer data inputs in order to provide feedback on how to make the healthiest choices in real-time.
Now we attempt to better understand the potential value of healthcare data and the potential cost savings that healthcare data may provide in the next section of this report, Unlocking the Value of Data.
Digital Healthcare 8 Industry Analysis — Fall 2013
Unlocking the Value of Data The ultimate potential for digitizing healthcare lies in the ability to drive reduced costs. The U.S. Government has committed significant stimulus dollars via HITECH/ARRA to be used for updating healthcare information technology infrastructure. We believe these efforts are building the foundation for the further digitization of healthcare. Additionally, the Affordable Care Act (ACA) is shifting the focus of healthcare decisions to the consumer, which is serving as a catalyst to drive the development of digital healthcare technology solutions focused on the clinical front office. What remains untapped is the potential value locked in the massive data sets generated throughout the healthcare supply chain. In our view, the “Holy Grail” of healthcare digitization lies in reducing healthcare costs through data and analytics.
We believe several government initiatives are helping drive the digitization of healthcare, including the HITECH Act, the Health Data Initiative (HDI), and the Affordable Care Act. In our view, the goals of these programs align well with our Four Stages of Healthcare Digitization framework. Through the HITECH Act, the government funding has created an impetus for healthcare professionals to adopt electronic medical record technologies, in turn creating a foundation for further digitization. Through the Health Data Initiative and Affordable Care Act, the government is providing the impetus for the healthcare industry to create a foundation for digitized data and analytics, which we believe represents a significant catalyst for the continued development of digital healthcare technologies.
In Exhibit 5, we provide a summary of these key government programs, as well as their key provisions and potential outcomes. First the HITECH act provides $22 billion worth of incentives for providers to adopt and utilize electronic health technology and records. The Health Data Initiative, launched in 2010, and now known as the Health Data Consortium, represents a public-private partnership made up of 17 organizations. The Health Data Initiative aims to help Americans understand health and healthcare performance in their communities, and ultimately facilitate improvement. Lastly, the Affordable Care Act focuses on bringing affordable care to consumers and brings roughly 30 million new patients under coverage. We believe the Affordable Care Act makes numerous provisions that will help further development of a digitized data and analytics eco-system for healthcare.
Exhibit 5: Summary of Key Government Programs Driving Healthcare Digitization
• Enables new payment models
• Provides new ways for patients and providers to engage
• Reduces medical errors
• Increases use of latest research and evidence
• Patients can compare provider value
• Providers can better evaluate appropriate use of drugs and
treatments
• Manufacturers can optimize R&D
• Insurers can design more engaging programs
• Organizations can distill quality information and create
products to inform consumers
• Enables coverage for about 30 million more patients• Providers focus on outcomes, perform newer unneeded
activities
• Reduces reimbursement for readmissions • Providers increase productivity
• Eliminates reimbursement for hospital-acquired infections • Demand for hospitals declines
• Supports patient-centered medical homes • Patients become sensitive to value
• Creates Accountable Care Organizations (ACOs)
• Moves toward paying for full episodes of care rather than fee
for service
HITECH Act:
Health Data
Initiative:
Affordable Care
Act:
• Provides incentives for use of electronic health technology and
records
• Releases government health data into the public sector
Initiative Provisions Potential Outcomes
Source: Castlight Health, HITECH Act (www.healthit.gov), Health Data Initiative (www.hhs.gov), and the Affordable Care Act (www.hhs.gov)
In our view, the HDI initiative and the ACA provide a major catalyst for moving towards a fully integrated digital healthcare eco-system. The HDI initiative “liberates” health data allowing innovators and developers across the country to tap into data sets from CMS, CDC, FDA, and NIH, in order to drive
Digital Healthcare 9 Industry Analysis — Fall 2013
innovation. Information provided by HDI includes clinical care provider quality information, nationwide health service provider directories, databases of the latest medical and scientific knowledge, consumer product data, community health performance information, government spending data, et al. A major focus for HDI has been on making existing data machine-readable, downloadable, and application programming interface accessible, while protecting privacy. Furthermore, HDI sponsors innovation using its library of data sets through numerous events as well as its annual Health Data Initiative Forum (Health Datapalooza).
We note that the ACA also makes several provisions for a digitized data and analytics eco-system for the improvement of healthcare. While the ACA focuses on expanding the insured population by more than 30 million, the ACA also makes numerous provisions focused on building an integrated digitized data and analytics eco-system. Several sections of the ACA represent provisions for the development of data and analytics applications for healthcare; we highlight a few of the provisions below:
Section 3013 – Quality Measure Development. This section sets the standards for measuring performance and improvement of population health or of health plans, providers of services, and other clinicians in the delivery of health services.
Section 3022 – Medicare Shared Savings Program. This section outlines the establishment of Accountable Care Organizations (ACOs).
Section 4302 – Understanding Health Disparities. Data Collection and Analysis. The section calls for healthcare programs to enhance their data collection and data reporting in order to reduce disparities.
Section 6301 – Patient-Centered Outcomes Research. This section sets guidelines for comparative clinical effectiveness research and establishes a Patient Center Outcomes Research Institute (PCORI).
Section 10305 – Data Collection; Public Reporting. This section calls for a strategic framework for public performance reporting.
Section 10332 – Availability of Medicare Data for Performance Measurement. This section calls for the creation of qualified entities; establishes qualifications for using Medicare claims data for analysis.
A major provision of the ACA revolves around the development of Accountable Care Organizations. The Centers for Medicare and Medicaid defines ACOs as: groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients. These organizations exist to drive lower healthcare costs, improve the quality of outcomes, and improve the care experience. ACOs achieve these goals through payment models that reward quality care coordination and quality outcomes. We believe a key component of ACO success will be the use of data and analytics.
In January 2013, McKinsey published a study entitled “The „big data‟ revolution in healthcare: Accelerating value and innovation,” which analyzed the possible impact of data analysis on the healthcare industry. The report estimates that unlocking the value of data in healthcare might lead to between $300 billion and $450 billion in savings compared to the $2.6 trillion baseline U.S. healthcare costs as of 2010.
In Exhibit 6, we illustrate the estimated savings scenarios based on five focus areas: health tracking, coordinated care, best provider, accountable care, and digital healthcare. Health tracking, which consists of patients taking control of their health through tracking and behavioral change, is estimated to drive between $70 billion and $100 billion in savings. The coordinated care category, which represents a fully integrated digital healthcare organization, is estimated to drive between $90 billion and $110 billion in savings. The best provider category, which focuses on ensuring patients always see the highest quality provider and provider of best fit, is estimated to drive between $50 billion and $70 billion in savings. The accountable care category, which consists of tying provider reimbursement to performance, is estimated to drive savings between $50 billion and $100 billion. Lastly, the digital healthcare category, which consists of leveraging new technologies to improve healthcare, is estimated to drive between $40 billion and $70 billion in cost savings.
Digital Healthcare 10 Industry Analysis — Fall 2013
Exhibit 6: The Potential of Unlocking the Value of Healthcare Data
$70
$90
$50 $50
$40
$-
$20
$40
$60
$80
$100
$120
Health Tracking
Coordinated Care
Best Provider Accountable Care
Digital Healthcare
Esti
mate
d S
avin
gs ($b
illio
ns)
Estimated Cost Savings: Low Estimate
$100
$110
$70
$100
$70
$-
$20
$40
$60
$80
$100
$120
Health Tracking
Coordinated Care
Best Provider Accountable Care
Digital Healthcare
Esti
mate
d S
avin
gs ($b
illio
ns)
Estimated Cost Savings: High Estimate
Total Estimated Costs Savings (Low Estimate) = $300 Billion
Total Estimated Costs Savings (High Estimate) = $450 Billion
Source: American Diabetes Association, American Hospital Association, HealthPartners Research Foundation, McKinsey Global Institute, National Bureau of Economic Research, U.S. Census Bureau
While we believe that the potential of unlocking healthcare data remains untapped, we do believe there are examples of companies that are working on unlocking the value of data. We provide a few examples of these companies below.
At the most basic level, we believe companies such as WebMD (WBMD, $33.09, Buy) and competitors are analyzing vast consumer data sets to drive more efficient healthcare advertising. These companies have been able to develop robust mobile app eco-systems, creating a stickier user experience across their platforms. A consumer using mobile apps makes the platform a daily or weekly destination in order to track health data, whereas before a consumer might visit once every few months. The stickier user experience has led to the development of vast consumer data sets regarding demographics and other health-related information. The data can then be analyzed in order to drive better ad targeting, as well as more efficient marketing ROI. We believe the use of general healthcare-like data to drive more efficient advertising represents an early step toward unlocking the value of healthcare data.
We note that wearable computing technology companies are focused on driving consumer health engagement, but also utilizing data to provide health behavior advice. Companies such as Fitbit, Jawbone, and Withings are developing a suite of smart-devices that allow consumers to better track their health and fitness. Providing consumers the ability to track their health information creates large data sets and allows these companies to leverage analytics to provide feedback to consumers. Each of these company‟s device suites not only collects a consumer‟s health information, but also uses that information to provide feedback, allowing the consumer to make optimal health choices.
Additionally, there are several companies in the managed care space working to better monetize and understand healthcare data. We note that managed care providers United Health, Aetna, and WellPoint each operate their own analytics division. United Health‟s OptumInsight provides technology, consulting, and analytics solutions to different stakeholders throughout the healthcare system. Aetna‟s ActiveHealth provides population health management solutions in order to help manage healthcare costs. We note that ActiveHealth‟s MyActiveHealth personal health record is integrated with its consumer-facing mobile app iTriage. Lastly, WellPoint‟s Healthcore provides clinical outcome research services to health plans, pharmaceutical companies, and government agencies. We believe each of these entities shows that significant value lies in analyzing and understanding vast healthcare data sets to drive reduced healthcare costs.
Digital Healthcare 11 Industry Analysis — Fall 2013
Exhibit 7: Real Life Examples of Leveraging Healthcare Data
Pharma and Payors
Employers and
EmployeesTracking Employees Health and Wellness Drive Benefit Costs Lower
Blue Cross Blue Shield of
California
Nant Health
AstraZeneca
Well Point's HealthCore
CVS/Caremark
Use HealthCore and AstraZeneca Clinical
Trial Data to more efficiently allocate
R&D spending
WebMD
Conducting studies to determine the most effective and
economical treatments for chronic illnesses and other
common diseases
Constituents Partners What Are They Working On Goal
Payors and Providers
Developing an integrated technology system allowing
doctors, hospitals, and health-plans to deliver more
coordinated and personalized evidence-based care.
Performance Improvement
Source: McKinsey & Company, and Stifel
In Exhibit 8, we provide a diagram of who we believe are the key constituents of digital healthcare. In our view, constituents include consumers, digital health technology providers, healthcare IT companies, managed care organizations, and biopharmaceutical companies. The commonality among these constituents is that each entity has the opportunity to extract value from innovation in digital healthcare technology. Consumers are able to better track their daily activities, allowing consumers to more easily adopt healthy habits and healthy lifestyles. Digital healthcare technology companies are able to provide innovative mobile apps and devices that foster healthier lifestyles and life choices for consumers. The opportunity for healthcare IT companies lies in integration of these innovative technologies. We believe that integrating these consumer-focused technologies allows healthcare IT companies to go beyond digitizing the undigitized medical records by providing a more efficient, convenient, and interactive healthcare experience for consumers and physicians. We believe the integration of consumer-focused digital healthcare technology will also unlock value to managed care organizations and biopharmaceutical companies. First, MCOs will be able to utilize the vast amounts of consumer- and physician-generated data to better understand their patient populations, which should help drive costs down. Lastly, biopharmaceutical companies will be equipped to better target possible consumers of drugs, leading to greater marketing efficiency and likely better patient outcomes.
Exhibit 8: Key Constituents of Healthcare Data
Physicians Technology Companies Healthcare IT companies
Healthcare Professionals Digital Healthcare Companies Managed Care Organizations
Patients Pharmaceutical Companies
Constituents of the Digital Healthcare Ecosystem
Source: Stifel
Digital Healthcare 12 Industry Analysis — Fall 2013
We provide a diagram of what we believe to be a representation of the digital health eco-system in Exhibit 9. The eco-system consists of the key constituents we identified in Exhibit 8, but also includes technology companies and digital healthcare companies. In our diagram, Qualcomm Life‟s 2Net Hub represents the center of the eco-system. The hub allows several digital technology companies to leverage 3G technology, providing mobile solutions to physicians and patients. Entities like WebMD are working with technology providers such as Qualcomm Life and other digital technology providers to aggregate data across several different devices to help patients better understand their health. We believe this portion of the network offers significant promise to healthcare IT companies, MCOs, and even biopharmaceutical companies. In our view, leveraging consumer-facing digital healthcare technologies shifts electronic health records from a nice technological advancement to an essential innovation that truly drives value through the healthcare chain through cost reductions. We believe this extends even further to MCOs and ACOs, as these entities should be able to better analyze and understand health risks with those patients they cover.
Exhibit 9: The Digital Healthcare Eco-System
Source: Company documents, and Stifel
We believe the crux of digital healthcare lies in the continued development and leverage of mobile technologies. In our view, the ways in which WebMD and other online health information companies use mobile in their business models can be applied to the digital healthcare industry. Both WebMD and other online health information companies operate consumer- and physician-facing portals for health information that combine both the PC-based Internet and mobile devices to deliver information. We believe the development of an integrated multi-screen PC/mobile app eco-system represents an essential component of success for online health information companies.
Digital Healthcare 13 Industry Analysis — Fall 2013
In Exhibit 10, we provide a diagram of what we call the Mobile Virtuous Circle, which describes the value and how WebMD and other online health information companies leverage mobile eco-systems. These companies have developed their own eco-system of mobile apps and data trackers that allow consumers to further customize how they interact with their own health. The apps these companies have built allow for customization and allow consumers to track some form of health data. In turn, the ability to track health data makes the app “sticky”, driving increased and more frequent consumer engagement. At the same time, user engagement and data input creates a large database of information, which can then be analyzed and monetized. Given these companies are predominantly advertising driven, the data analysis can be used to prove out ROI metrics to biopharmaceutical advertisers and consumer products companies. We believe the mobile Virtuous Circle extends to all digital healthcare companies as they seek to monetize data and reduce costs.
Exhibit 10: The Mobile Virtuous Circle
Consumers Use Eco-System to
Track Health Data
Mobile Eco-System
Becomes Destination
Large Data Set
Develops
Company Drives
Value Via Data
Analysis
Mobile App Eco-System
Created
Source: Stifel
The promise of digitized healthcare lies in analyzing data in order to drive cost of care reductions. We believe that as healthcare professionals and hospitals continue to build out a digital foundation, new, more complex digital healthcare technology solutions will emerge. In our view, healthcare IT companies, managed care organizations, and even pharmaceutical companies will utilize these technologies to analyze data in order to extract value throughout the healthcare industry. Next, we review the technological and demographic trends driving the shift toward digital healthcare technologies.
Digital Healthcare 14 Industry Analysis — Fall 2013
The Demographic Trends Driving Digital Healthcare and Why Investors Should Pay Attention
We believe the adoption of digital healthcare among clinicians and consumers remains in the early stages. The ubiquity of Internet access and usage among Americans and increasing proliferation of mobile devices (smartphones and tablets) has created an environment rife for adoption of digital healthcare. Clinicians exhibit a high rate of adoption of mobile technology, which we believe is significantly higher than mainstream America. Despite high adoption rates, we believe that the utility of digital health technology among clinicians remains untapped, as utilized technologies are for the most part focused on performing the simplest of tasks (drug information and medical research).
At the same time, we believe consumer adoption of digital healthcare remains nascent, but we believe consumers/patients exhibit a strong appetite for digital solutions to their healthcare problems. Consumers/patients seem to be digitally engaged across all age groups, as well as gender. Currently, consumers/patients exhibit an appetite for digital health information via the online channel. While consumer/patient adoption of mHealth remains relatively low, we believe that adoption trends will improve as more meaningful solutions for healthcare problems are introduced, and note that demographic trends (high adoption among Millennials and Generation X‟ers) further support improving adoption trends.
The ubiquity of Internet access and mobile connectivity continues to grow in the United States and globally. We estimate Internet penetration in the United States to be roughly 87% as of 2012 (Exhibit 11). Additionally, estimates from Nielsen Online and The Pew Internet & American Life Project suggest that smartphone penetration and tablet penetration are roughly 56% and 34% in the United States as of 1H13, respectively. In our view, these trends are providing the foundation for the development of digital healthcare technologies, and have set a foundation for widespread adoption of digital healthcare solutions. We believe digital healthcare remains in the early innings of development and adoption, as we believe adoption trends will continue to grow, and digital healthcare solutions are in the early stages of development with the expectations that a plethora of new solutions and business models will be introduced over time.
Exhibit 11: Internet Usage Has Become Ubiquitous in the U.S.
2007 2008 2009 2010 2011 2012
301.2 304.1 306.8 309.4 311.6 313.85
212.1 220.1 227.7 239.9 245.2 273.8
70% 72% 74% 78% 79% 87%
U.S. Population
U.S. Internet Users
% Penetration
60%
65%
70%
75%
80%
85%
90%
95%
100%
0.0
50.0
100.0
150.0
200.0
250.0
300.0
2007 2008 2009 2010 2011 2012
U.S
. In
tern
et U
ser P
en
etr
ati
on
U.S
. In
tern
et U
sers
(m
illio
ns)
U.S. Internet Users and Penetration 2007 to 2012
U.S. Internet Users % Penetration
Source: Internet World Stats, ITU, Nielsen Online, and U.S. Census Bureau
Digital Healthcare 15 Industry Analysis — Fall 2013
While Internet usage has become ubiquitous as 87% of Americans now have access to the Internet, we believe that smartphone and tablet usage will continue to increase over the next several years. In Exhibit 12, we illustrate mobile computing device penetration for the 2009 to 1H13 period. Between early 2009 and early 2013, we estimate that smartphone penetration in the United States has nearly tripled, no doubt driven by the innovative iPhone and Android devices. Additionally, we note that tablet penetration among Americans has increased more than 10 times between 1H10 and 1H13. Current estimates from Nielsen Online and the Pew Internet & American Life Project suggest that smartphone and tablet penetration among Americans stands at an estimated 56% and 34%, respectively. Over time, we believe that these devices will prove to be invaluable to changing healthcare in the United States and abroad.
Exhibit 12: Mobile Device Adoption Continues to Ramp in the U.S.
Devices 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13
Smartphone Penetration 16% 19% 21% 26% 35% 45% 46% 47% 56%
Tablet Penetration 0% 0% 3% 5% 8% 10% 18% 25% 34%
0%
10%
20%
30%
40%
50%
60%
1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13
User P
en
etr
ati
on
(%
)
U.S. Mobile Computing Device Penetration 1H09 to 1H13
Smartphone Penetration Tablet Penetration
Source: Nielsen Online, and Pew Internet & American Life Project
We believe clinician adoption of digital technologies (smartphones and tablets) will play an important role in the digitization of healthcare. If mobile technologies are prevalent among mainstream Americans, then clinicians and physicians represent power users of mobile technologies. Mobile technology adoption among physicians appears to be significantly higher than for mainstream America. According to Manhattan Research‟s “Taking the Pulse 2012” survey, smartphone and tablet adoption among physicians stood at 85% and 62%, respectively, as of 1Q12 (Exhibit 13). A more recent survey from Epocrates suggests that adoption rates may be higher and the survey estimates that smartphone and tablet adoption among physicians will be 94% and 85%, respectively, by 2014 (Exhibit 14).
In Exhibit 13, we provide an illustration of physician adoption of mobile technology (smartphones and tablets) for the 2001 to 2012 period. Physician adoption of smartphones more than doubled between 2001 and 2012, whereas physician adoption of tablets has doubled in roughly a year. Based on Manhattan Research‟s “Taking the Pulse U.S. 2012” survey of 3,015 practicing physicians across the U.S., roughly 85% of physicians utilize a smartphone and 62% utilize tablets. We expect adoption to increase further over the coming years as new technologies are tested and proven in terms of monitoring chronic diseases, diagnostics, health and wellness, and data analytics. In our view, as new digital healthcare solutions are validated, mobile devices will become an essential part of a physician‟s daily workflow.
Digital Healthcare 16 Industry Analysis — Fall 2013
Exhibit 13: Historical Adoption Trend for Physicians and Mobile
2001 2004 2007 2009 2010 2011 2012
30% 40% 50% 64% 72% 81% 85%
35% 62%
Mobile Device
Smartphone
Tablet
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2001 2004 2007 2009 2010 2011 2012
User P
en
etr
ati
on
(%
)
Physician Adoption of Mobile Technology 2001 - 2012
Smartphone Tablet
Source: Manhattan Research, “Taking the Pulse U.S. 2012”, 1Q12
According to Epocrates “2013 Mobile Trends Report: Maximizing Multi-Screen Engagement Among Clinicians”, adoption of mobile technologies among clinicians will increase significantly in 2014. The survey queried 1,063 healthcare professionals regarding their usage of mobile devices and likelihood of mobile device usage over the next 12 months, illustrated in Exhibit 14. The survey illustrates the already high digital engagement among clinicians, as the overwhelming majority of respondents are multi-screen users (PC, smartphone, and tablet). According to the survey, roughly 82% of respondents will be multi-screen users by 2014.
Exhibit 14: Clinician Adoption of Mobile Devices Continues to Increase
99%
78%
34%28%
100%
86%
53%47%
100%94%
85% 82%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Computer Smartphone Tablet Digital HCP
Mo
bile P
en
etr
ati
on
(%
)
Clinicians' Adoption Of Mobile
2012 2013 2014E
Source: Epocrates 2013 Mobile Trends Report: Maximizing Multi-Screen Engagement Among Clinicians
Digital Healthcare 17 Industry Analysis — Fall 2013
Additionally, the increasing appetite for multi-screen solutions among clinicians is not limited to a few indications, but rather extends across many healthcare professional focus areas, including clinicians focused on chronic health, general practitioners, nurse practioners, as well as physician assistants. In Exhibit 15, we provide an illustration of current adoption rates and expected future adoption rates for several types of clinicians. We think as doctors become more connected across mobile devices, they will begin to accept new digital healthcare technologies. In turn, we believe this will lead to increased consumer usage of digital healthcare technologies and applications. Physician comfort should lead to broad acceptance of mobile solutions, which should help further increase consumer adoption of more advanced digital healthcare solutions.
Exhibit 15: Clinician Mobile Adoption Extends Across Several Categories
59%54%
48%44%
40%
30%
84%88% 85%
77% 77% 76%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Oncology Cardiology Primary Care Psychiatry Nurse Practitioner
Physician Assistant
Mo
bile P
en
etr
ati
on
(%
)
Mobile Adoption By Clinician Focus
2013 2014E
Source: Epocrates 2013 Mobile Trends Report: Maximizing Multi-Screen Engagement Among Clinicians
Not only are clinicians adopting mobile technology more so than mainstream society, but also clinicians are utilizing mobile technologies in their daily workflow as well. In Exhibit 16, we provide an illustration of physician usage of smartphones and tablets in their daily workflow based on the “Wolters Kluwer Health 2013 Physician Outlook Survey” conducted in April 2013, which queried 300 physicians. The survey found that eight of 10 physicians are using smartphones and six of 10 physicians are using tablets. According to the survey, smartphone and tablet usage seems to make up about 25% or less of a physician‟s workday.
In our view, these estimates seem low, and likely do not reflect physician usage of these tools outside of work hours. We note that the “Epocrates 2013 Mobile Trends Report: Maximizing Multi-Screen Engagement Among Clinicians” found that smartphone usage can account for upwards of 40% of a typical clinician‟s time at work. Additionally, the report found that nurse practitioners and physician assistants were the predominant users of mobile devices during the workday. Additionally, the study found that clinicians‟ usage of mobile devices dominated the hours of 5 P.M. to 5 A.M., suggesting that mobile devices currently do more to extend the clinician workday.
Digital Healthcare 18 Industry Analysis — Fall 2013
Exhibit 16: Physicians’ Usage of Mobile During the Workday
51-75% of day8%
76-100% of day11%
26-50% of day14%
No usage21%
1-25% of day46%
Smartphone Usage (iPhone, Android, et al.)
51-75% of day4%
76-100% of day7%
26-50% of day13%
1-25% of day37%
No usage39%
Tablets (iPad, Kindle Fire, et al.)
Source: Wolters Kluwer Health 2013 Physician Outlook Survey, April 2013
We note that physicians are using mobile in a variety of ways to aid their daily workflow. In Exhibit 17, we illustrate how physicians are using mobile devices based on the “Wolters Kluwer Physician Survey.” According to the survey, physicians typically use mobile devices for looking up drug information, medical research, and evidence-based clinical reference tools at the point of care. Other workflow uses for mobile seem to be dictated by form factor, as more physicians use tablets to access medical records/data (think large screen size), or more physicians communicate with patients via smartphone than tablet. In our view, the survey really only provides details on some of the most basic usage of mobile in a physician ‟s daily workflow. We believe the promise of mobile for physicians lies beyond the uses reflected in Exhibit 17. We note that entities such as Qualcomm Life are actively partnering with hospitals to test mobile medical devices and applications that go beyond basic physician uses of mobile. In our view, the physician use of mobile reflected in Exhibit 17 illustrates how clinician adoption of digital healthcare technologies remains in the very early stages.
Exhibit 17: What Physicians Are Using Mobile Devices for in Their Workflow
13%
24%
43%
17%
50%
63%
20%
55%
9%12%
17%
33%
42% 43% 44%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Other Reimbursement / Billing
Medical Records / Data
Communication w/ Patients
Evidence-Based Clinical Reference
Tools at Point of Care
Medical Research Communication w/ HCPs
Drug Information
Resp
on
den
ts (%
)
Mobile Device Uses
Tablets Smartphone
Source: Wolters Kluwer Health 2013 Physician Outlook Survey, April 2013
Digital Healthcare 19 Industry Analysis — Fall 2013
In Exhibit 18, we go one step further and analyze how clinicians use mobile applications in their daily workflow based on the “2
nd Annual HIMSS Mobile Technology Survey”, which queried 180 healthcare
professionals. We find it striking that the majority of mobile application usage remains focused on the most basic healthcare functions: viewing patient information and viewing non-protected health information (non-PHI). We note that between 45% and 55% of respondents are using mobile apps for moderately complex functions such as clinical notifications, tracking work lists, education/training, and collecting patient data at the bedside. Less than 40% of respondents are using mobile apps for complicated healthcare functions such as patient data analysis and monitoring patient data from medical devices, and less than 25% of clinicians are referring patients to mobile apps. In our view, the potential of digital healthcare remains untapped, as clinicians continue to underutilize mobile apps for the most part. We expect that clinicians will begin to use mobile apps for more complex healthcare functions over the next few years, and that clinicians referring patients to mobile apps will increase significantly as well.
Exhibit 18: How Clinicians Are Using Mobile Applications in Their Daily Workflow
23.9%
26.7%
34.4%
34.4%
37.8%
37.8%
38.3%
45.0%
45.0%
46.1%
51.7%
64.4%
65.0%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
Refer Patients to the Use of Apps for Health-Related Items
Capture Visual Representation of Patient Data
Monitor Data from Medical Devices
Secure Communication Regarding Patients
Analysis of Patient Data
E-prescribing
Use Bar Code Reader on Mobile Device
Collect Data at the Bed Side
Use for Educational / Training
Tracking Work Lists
Clinical Notifications
Look Up Non PHI Health Information
View Patient Information
Clinicians' Use of Mobile Apps in Workflow
Source: 2nd Annual HIMSS Mobile Technology Survey, sponsored by Qualcomm Life
In our view, the adoption of electronic medical records and electronic health records represents the foundation of developing a digitized healthcare system. At the most basic level, the adoption and implementation of EMRs and EHRs provide clinicians a basic familiarity with digitized healthcare that will help clinicians accept technological advances in the healthcare space. In Exhibit 19, we provide an illustration of EMR/EHR system adoption among office-based physicians in the United States according to the Healthcare Information and Management Systems Society (HIMSS). Based on the survey, an estimated 72% of office-based physicians were using some form of EMR or EHR. Additionally, the survey estimated that roughly 40% of office-based physicians were using a basic EHR system (patient history and demographics, patient problem lists, physician clinical notes, comprehensive list of patients‟ medications and allergies, computerized orders for prescriptions, and ability to view laboratory and imaging results electronically). While the significant acceptance of some form of EMR/EHR suggests mainstream adoption of digital healthcare, the much lower 40% penetration of basic EMR/EHR systems suggests there is room to improve. We believe that as office-based physicians increase their adoption of basic EMR/EHR systems, clinicians‟ comfort with developing digital healthcare technologies will increase.
Digital Healthcare 20 Industry Analysis — Fall 2013
Exhibit 19: Clinician Adoption of EMR and EHR Technology
18.2% 17.3% 17.3%20.8%
23.9%29.2%
34.8%42.0%
48.3%51.0%
57.0%
71.8%
10.5% 11.8%16.9%
21.8%27.9%
33.9%39.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012E
EM
R/E
HR
Ph
ysic
ian
Pen
etr
ati
on
(%
)
Office-Based Physicians with EMR/EHR Systems
Any EMR/EHR Basic System
Source: CDC/NCHS, National Ambulatory Medical Care Survey, 2001 - 2012
In Exhibit 20, we analyze EMR/EHR adoption trends by looking at the HIMSS Analytics Electronic Medical Record Adoption Model (EMRAM). The data in Exhibit 20 looks at EMR/EHR adoption rates across healthcare organizations according to the eight stages of adoption according to HIMSS Analytics. According to HIMSS Analytics, the EMRAM represents an eight-step process that allows a healthcare organization to track their level of EMR adoption compared to other healthcare organizations. Adoption stages range from Stage 0, where EMR integration remains nearly non-existent, to Stage 7, where the entire healthcare organization has integrated EMR technology. Additionally, ambulatory-focused healthcare organizations can track their progress using the Ambulatory Electronic Medical Record Adoption Model (A-EMRAM).
We believe the data provided in Exhibit 20 further illustrates how the digitization of clinicians and healthcare organizations remains focused on the digitization of the most basic core functions. We believe the digital healthcare companies focused on EMRs/EHRs, health and wellness, diagnostics, analytics, sensors, and telehealth will ultimately drive EMRAM adoption higher. Introducing new, innovative, and meaningful digital healthcare solutions should provide an impetus for further digitization.
Exhibit 20: HIMSS Analytics EMRAM Adoption Trends
2%
10%
19%15%
35%
9%
4%7%
1% 1%5%
1%
10%
27%
5%
50%
0%
10%
20%
30%
40%
50%
60%
Stage 7 Stage 6 Stage 5 Stage 4 Stage 3 Stage 2 Stage 1 Stage 0
EM
R A
do
pti
on
Based
on
HIM
SS
A
naly
tics D
ata
base (%
)
EMR Adoption Model (EMRAM) Trends 2Q13
EMRAM A-EMRAM
Source: HIMSS EMR Adoption Model (EMRAM)
Digital Healthcare 21 Industry Analysis — Fall 2013
We believe consumer adoption of digital healthcare technology represents an important and necessary step toward the digitization of healthcare. As we note in our framework, Four Stages of Healthcare Digitization, the ultimate goal of healthcare digitization is to drive the cost of care lower. Fundamentally, we believe that the only way to truly reduce healthcare costs is to include consumers/patients, as they ultimately have the final say in whether or not they choose to live a healthy lifestyle or not. Given the importance of the consumer/patient population, we believe it is worthwhile to review how these constituents are using digital healthcare currently.
In our view, consumer/patient adoption of digital healthcare remains in the early stages of development. Nevertheless, we believe that consumers exhibit a strong appetite for digital healthcare solutions. In our view, consumer/patient usage of digital healthcare, much like clinicians, remains focused on the simplest solutions and significant opportunity exists to further develop digital healthcare capabilities. Lastly, we believe that investors should think not “if”, but “when” in terms of consumer adoption of digital healthcare.
We believe that current trends suggest that as consumers/patients exhibit a strong appetite for digital healthcare solutions, adoption trends should improve over time as digital healthcare solutions move beyond weight-related and information-focused apps to more complex solutions. Additionally, we believe that consumer/patient adoption trends benefit from demographics, as both Millennials and Generation X‟ers exhibit a high proclivity for technology, which should in turn translate into interest in meaningful and useful digital healthcare apps.
In Exhibit 21, we provide a breakdown of online health-related search trends for American adults based on a survey from the Pew Internet & American Life Project. According to the survey, roughly 72% of respondents stated they had performed an online health-related search query in the last 12 months, whereas in 2010, roughly 66% of respondents had never done an online health-related search query. Additionally, most American adults searching for health-related information online are focused on a specific disease or medical problem, or a certain treatment or procedure. We believe American adults‟ online health-related search activity illustrates a strong appetite to engage with better understanding their healthcare, as well as engaging new digital healthcare technology solutions. We believe that as digital healthcare technologies begin to tackle more complex issues, more adults will be engaged digitally with their healthcare.
Exhibit 21: American Adults Go Digital in Order to Understand Their Health
11%
12%
14%
15%
16%
16%
19%
20%
25%
27%
43%
55%
72%
0% 20% 40% 60% 80%
Reduce Healthcare Costs
Pregnancy
Caring for an Aging Relative / Friend
Test Results
Drug Safety / Recalls
Advertised Drug
Food Safety / Recalls
Other Health Issues
Health Insurance, including Medicare and Medicaid
Weight Loss / Control
Certain Medical Treatment / Procedure
Specific Disease or Medical Problem
At Least One of the Topics Below
Online Health Search Trends
Source: Pew Internet & American Life Project, “Health Online 2013,” January 15, 2013
Digital Healthcare 22 Industry Analysis — Fall 2013
We believe that the digitization of healthcare benefits from demographics, specifically the high proclivity for technology among younger generations, which should help drive consumer adoption of digital healthcare technology over time. In Exhibit 22, we provide a look at online health-related search queries of American adults by age group. Overall, online health-related search queries skew toward younger generations as expected, but we note that all age groups exhibit a high proclivity for online health-related searches. Specifically, more than 70% of respondents aged 18 to 64 performed an online health-related search query in the last 12 months and more than 50% of respondents over the age of 65 had performed an online health-related search query as well. More importantly, when looking at online health-related search queries regarding specific diseases, medical problems, medical treatments, or procedures, engagement among older populations increases significantly. Based on the Pew survey, more than 39% of respondents aged 18 to 64 performed an online health-related search query regarding a specific disease or medical problem, and of those 65 and older 36% of respondents had performed a similar search query. We believe these results illustrate the basic fact that consumers/patients turn to digital channels to better understand their health, as well as to find healthcare solutions.
Exhibit 22: Profile of Online Health-Related Search Queries by Age Group
0% 20% 40% 60% 80%
Other Health Issues
Reduce Healthcare Costs
Pregnancy
Caring for an Aging Relative / Friend
Test Results
Advertised Drug
Drug Safety / Recalls
Food Safety / Recalls
Health Insurance, including Medicare and Medicaid
Weight Loss / Control
Certain Medical Treatment / Procedure
Specific Disease or Medical Problem
At Least One of the Above Topics
Online Health Searches By Age
65+ 50-64 30-49 18-29
Source: Pew Internet & American Life Project, “Health Online 2013,” January 15, 2013
In Exhibit 23, we look at the demographics of online health-related search queries among American adults by gender. According to the Pew survey, online health-related search queries are well utilized by both men and women, as 72% of all respondents reported conducting an online health-related search query in the last 12 months. The results also found a striking difference between male and female usage, as 65% of males had performed an online health-related search query, but 79% of females had performed similar queries. As one drills down into specific topics, the results suggest that women are more engaged with their health through digital channels. We believe the high usage rates among both men and women further suggest our belief that consumers/patients remain interested in increasing their usage of digital healthcare technology.
Digital Healthcare 23 Industry Analysis — Fall 2013
Exhibit 23: Profile of Online Health-Related Search Queries by Gender
0% 20% 40% 60% 80% 100%
Other Health Issues
Reduce Healthcare Costs
Pregnancy
Caring for an Aging Relative / Friend
Test Results
Advertised Drug
Drug Safety / Recalls
Food Safety / Recalls
Health Insurance, including Medicare and Medicaid
Weight Loss / Control
Certain Medical Treatment / Procedure
Specific Disease or Medical Problem
At Least One of the Above Topics
Online Health Searches By Gender
Women Men
Source: Pew Internet & American Life Project, “Health Online 2013,” January 15, 2013
According to a Brookings Institute study from May 2012, roughly 75 million individuals (roughly 30% of the U.S. population) had used mobile phones for health information and apps in 2012. Despite seemingly strong adoption, a recent study from Ruder Finn suggests that American adoption of mHealth apps remains nascent. According to Ruder Finn‟s “mHealth Report,” only 16% of all respondents accessed mHealth apps regularly (at least once a week), which is about one-fourth the amount of respondents accessing social media and games via mobile regularly (Exhibit 24). The Ruder Finn survey also found several reasons as to why consumers do not use mHealth apps: 27% reported no need, 26% preferred to talk to a clinician in person, 11% expressed privacy concerns, 9% said mHealth apps were not useful, and 7% were unaware of mHealth apps (Exhibit 24). We believe consumers‟ lack of mHealth app usage will dissipate over time as clinicians become more digital and new innovative mHealth apps are introduced.
Exhibit 24: Mobile App Consumption Among American Adults
0% 10% 20% 30% 40% 50% 60% 70% 80%
Do Not Use
Other
Health/Healthy Living
Hobbies
Travel
Sports
Shopping
News
Games
Social Media
Consumer Mobile App Usage
Tablet Smartphone All
Source: Ruder Finn, “mHealth Report,” March 2013
Digital Healthcare 24 Industry Analysis — Fall 2013
Despite the fact that mHealth app usage seems low, consumers/patients seem to exhibit a high degree of interest in using mHealth apps. According to the Ruder Finn survey, more than 50% of respondents ages 18 to 44 were highly likely to adopt mHealth technology (Exhibit 25). Additionally, those with chronic health conditions and families seem to have a higher interest in adoption of mHealth solutions. We believe the survey findings illustrate that adoption is not a question of “if”, but “when” consumer/patient adoption of mHealth will go mainstream. As new digital healthcare solutions are tested, proven, and introduced to society, we believe that consumers will likely embrace digital healthcare solutions that can solve complex healthcare needs, especially if these solutions can be integrated to make daily life easier.
Exhibit 25: American Adults Show High Interest in mHealth Solutions
42%
59%
42%
53%
31%
31%
40%
54%
52%
65%
0% 10% 20% 30% 40% 50% 60% 70%
No Children
Has Children
No Chronic Condition
Has a Chronic Condition
65+
55 to 64
45 to 54
35 to 44
25 to 34
18 to 24
Likelihood of mHealth Adoption
Source: Ruder Finn, “mHealth Report,” March 2013
In Exhibit 26, we illustrate consumer mHealth app usage trends according to the Ruder Finn “mHealth Report.” According to the survey, more than 40% of respondents are using mHealth apps for what we believe represents basic functionality (e.g., health and wellness, fitness, weight-loss, and general health information). We believe the list of functions the survey queried for further illustrates the opportunity for new and innovative uses in the future. We believe that the significant adoption of mHealth for the most basic health and wellness functions highlights the potential of digital healthcare adoption for more complex healthcare issues. In our view, consumers/patients will adopt strong digital healthcare technologies that allow better management of their healthcare.
Exhibit 26: The Potential of mHealth Apps Remains Significant
1%
4%
7%
9%
9%
10%
13%
23%
41%
46%
48%
48%
49%
0% 20% 40% 60%
Smoking Cessation
Other Health Info
Private Medical Provider
Medication Reminder
Health Education (Children)
Sleep Aid / Monitor
Advice on Long-term Medical Conditions
Apps to Acces Magazines, et al.
General Health Info
Nutrition
Fitness / Training
Calorie Counter
Healthy Eating
Consumer mHealth App Usage
Source: Ruder Finn, “mHealth Report,” March 2013
Digital Healthcare 25 Industry Analysis — Fall 2013
In Exhibit 27, we illustrate areas where consumers believe health apps can be introduced to improve patient care. We note that less than 50% of respondents had an opinion that health apps can improve patient care. Consumer/patient responses identified access to test results, monitoring, and patient health records as the greatest areas for mHealth apps to improve patient care. Again, we believe that survey results show that consumers remain focused on digitization of basic opportunities.
Exhibit 27: Areas Health Apps Can Improve Patient Care
11%
13%
18%
21%
24%
26%
30%
33%
42%
0% 10% 20% 30% 40% 50%
Lifestyle / Healthy Living Advice Sent to Patients
Apps Will Not Improve Care
Virtual Consultations for Remote Patients
Text Message Updates from GP's and Surgeons
Mobile Devices to Record Data
Real-Time in-Home Monitoring Data
Patient Health Records
Monitoring Devices That Send Alerts
Access to Test Results
Health Apps for Improving Patient Care
Source: Ruder Finn, “mHealth Report,” March 2013
We note that both clinicians and consumers/patients are utilizing mobile apps to better understand health issues. In Exhibit 28, we provide an illustration of consumer health app growth between February 2010 and April 2012. According to mobi health news, there were 13,607 consumer health apps available for Apple‟s iPhone as of April 2012. Additionally, Exhibit 28 provides a breakout of these 13,607 consumer health apps available for Apple‟s iPhone by category as of April 2012.
Exhibit 28: The Proliferation of Consumer Health Apps
118
226
271
336
493
665
694
739
962
1,111
1,415
1,915
2,207
2,455
0 500 1,000 1,500 2,000 2,500 3,000
PHR
Medication …
Smoking Cessation
Emergency
Sleep
Calculator
Chronic Conditions
Mental Health
Women's Health
Strength Training
Stress & Relaxation
Diet
Cardio
Other
Consumer Health Apps by Category: April 2012
2,993
5,081
8,924
13,607
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Feb 2010
Aug 2010
Jul 2011
Apr 2012
Consumer Health Apps Growth: February 2010 to April 2012
Source: mobi health news, “An Analysis of Consumer Health Apps for Apple’s iPhone 2012,” July 2012
Digital Healthcare 26 Industry Analysis — Fall 2013
In Exhibit 29, we provide a list of major fitness apps and their reported number of downloads as of August 2013. According to mobi health news, MyFitnessPal exhibited the greatest amount of downloads at 40.0 million, and Endomondo exhibited the least amount of downloads at 16.0 million. The list compiled by mobi health news reflects those app developers that report downloads and user metrics regularly. We note the list omits both Fitbit and Jawbone, as these companies do not regularly update their user metrics.
Exhibit 29: Fitness Apps Show Strong Consumer Traction
16.0
18.0
18.0
18.0
20.0
22.5
40.0
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0
Endomondo
Runtastic
MapMyFitness
Nike+
Azumio
RunKeeper
MyFitnessPal
Major Fitness Apps > 16 Million Downloads
Source: Company documents and mobi health news, August 2013
We believe that Stage 1 and Stage 2 of healthcare digitization are occurring concurrently, and remain in the very early stages of development. The high levels of adoption associated with the Internet, smartphones, and tablets has set a solid foundation for the digitization of healthcare to move forward. Clinicians exhibit significantly higher mobile adoption rates than consumers/patients, but clinician digitization remains focused on basic functions. While consumer/patient adoption of the Internet for understanding health issues remains high, consumer/patient adoption of mobile for understanding health remains relatively low. We believe that digital healthcare innovation in areas such as analytics, diagnostics, health and wellness, medical records, sensors, and telehealth will help drive increased adoption among clinicians and consumers/patients. In our view, digital healthcare innovation will continue to provide new and compelling solutions to complex healthcare problems, which should help clinicians and patients better manage health outcomes. Over time, we expect that digital healthcare technology innovation will drive the integration of the digital clinician and digital patient over the next few years. Next, we explore the important entities responsible for driving digital healthcare innovation forward.
Digital Healthcare 27 Industry Analysis — Fall 2013
The Accelerators of Digital Healthcare Innovation
We believe several digital healthcare accelerators and technology companies are driving the development of Stage 2 (digital healthcare adoption and development) and subsequent shift into Stage 3 (integration). Since 2011, several digital healthcare-focused accelerators have emerged to help digital healthcare focused startups get up and running. We note that these accelerators typically provide startups with seed capital typically around $20,000, significant back-office resources, mentoring, and advice from extensive expert networks. In return, startups provide the accelerator with an equity stake typically between 2% and 10%. In this section, we provide a summary description of these accelerators, as well as one hybrid called Qualcomm Life.
In Exhibit 30, we provide a timeline illustrating the development of digital health accelerators between 2005 and 2011, which comes from the California HealthCare Foundation. The timeline highlights the convergence of three major trends, which have led to the successful emergence of health accelerators. Since 2006, the U.S. Government has placed significant emphasis on facilitating the digitization of healthcare. Second, venture capital models have evolved from simply providing capital in exchange for equity to providing startups a wider suite of mentoring and business development solutions to go along with modest capital investment. Lastly, the proliferation of digital and mobile devices has been exponential since the introduction of innovative devices, e.g., iPhone and iPad. The convergence of these three trends has led to a proliferation of entrepreneurs focused on solving healthcare problems by developing digital solutions.
Exhibit 30: The Development of Health Accelerators: 2005 to 2011
Health Care
Accelerators
Digital / Mobile
ONC Established 1st Health 2.0
ConferenceARRA
ACA
Health Accelerators
Emerge
Facebook at 1 million users
iPhone Launched
App Store Introduced
iPad Launched
Y Combinator Founded
TechStars, Seedcamp
Excelerate Labs, 500 Startups, TechStars Boston
2005 2007 2009 2011
Source: California HealthCare Foundation, “Greenhouse Effect: How Accelerators Are Seeding Digital Health Innovation,” February 2013
ARRA stands for American Recovery and Reinvestment Act
ACA stands for Affordable Care Act
Below we provide summaries regarding Qualcomm Life and important digital healthcare accelerators including Rock Health, StartUp Health, Healthbox, and Blueprint Health. Other healthcare technology-focused accelerators include NY Digital Health Accelerator, StartX Med, and TigerLabs Health. We note that several technology companies working on digital healthcare solutions include Apple (AAPL, $498.22, Buy, covered by Aaron Rakers), Intel Ventures (INTC, $22.67, Buy, covered by Kevin Cassidy), Nuance (NUAN, $19.66, Hold, covered by Tom Roderick), IBM (IBM, $183.03, Buy,
Digital Healthcare 28 Industry Analysis — Fall 2013
covered by David Grossman), et al. We realize that our list may omit some entities and fully expect this list of entities to grow significantly over time.
Who Is Qualcomm Life?
Qualcomm Life is a subsidiary of Qualcomm focused on helping healthcare companies solve their wireless medical device connectivity issues. The primary focus of Qualcomm Life is to develop a wireless health eco-system based on the Qualcomm Life 2net Hub device. Rick Valencia serves as Vice President and General Manager of Qualcomm Life. Don Jones serves as Vice President, Global Strategy and Market Development for Qualcomm Life. James Mault serves as Vice President and Chief Medical Officer for Qualcomm Life. Qualcomm Life is a subsidiary of Qualcomm and is based in San Diego, California. More information can be obtained at the company‟s website www.qualcommlife.com.
What is the Qualcomm Life 2net Platform? The eco-system consists of wireless medical device solutions integrated on Qualcomm Life‟s 2net Platform, analytics for aggregating medical device data, and facilitates interoperability between different devices. The Qualcomm Life 2net Hub sits at the nexus of the eco-system and facilitates 3G and 2G connectivity with wireless medical devices, and is an FDA Class I medical device. Entities focused on healthcare services or disease management can leverage the platform to treat a patient remotely via various medical devices from eco-system partners.
The 2net Platform business model consists of facilitating wireless healthcare solutions via its managed network of digital healthcare technology services. Secondly, the 2net Platform is working to develop solutions for biometric data aggregation and further data analysis. Lastly, the company provides application support to its eco-system partners.
We note that the Platform‟s partner eco-system consists of three types of companies: (1) wireless medical device companies, (2) healthcare services companies, and (3) healthcare payers. According to Qualcomm Life, these companies can then connect with the platform through four gateways: (1) a standalone FDA-listed external device (2net Hub), (2) medical devices with an embedded cellular component, (3) medical data sent from mobile phones, and (4) service platform integration between the medical grade 2net Platform to an eco-system partner via application programming interfaces (APIs).
Exhibit 31: Qualcomm Life Key Developments
February 2012
November 2012 Launces 2net Hub in Europe with Telbios and Cystelcom as its first customers
Announces additional partnership and expands 2net Hub to Canada
Announces WebMD partnership
Acquires HealthCircles and expands 2net Hub to Scandanavia with Infogosoft, e-
mergency, and Viewcare A/S as its first customers
August 2013 Announces investment in Fitbit
March 2013
May 2013
July 2013 Announces first wireless health care customer in France: MEDECIN DIRECT
Date Event
Announces investment in AirStrip Technologies and additional partnerships
December 2012
Qualcomm forms the Qualcomm Life subsidiary and launches $100 million venture fundDecember 2011
Qualcomm Life Development Timeline
Source: Company documents
Digital Healthcare 29 Industry Analysis — Fall 2013
Qualcomm Life Announces Partnership with WebMD. In March 2013, Qualcomm Life and WebMD announced a partnership focused on enabling consumers to access and manage wireless health data across an array of fitness, wellness, and medical devices. The goal of the partnership is to make biometric data available, actionable, and relevant to consumers in order to help consumers better manage their health and fitness. Furthermore, the partnership allows for integration of the Qualcomm Life 2net Hub with various WebMD offerings, ultimately providing consumers and physicians a connected healthcare experience. Most importantly, the partnership establishes an open eco-system of digital health apps and third-party devices across various disease categories and lifestyle interests. We believe this represents an integral partnership for the future success of both Qualcomm Life and WebMD. In our view, the open app eco-system allows WebMD to better personalize health offerings, possibly extend its mobile advertising reach to additional devices, and provides Qualcomm Life with a meaningful aggregation platform for consumers to track their health data flowing through the 2net Hub eco-system.
Qualcomm Life Acquires HealthyCircles. In May 2013, Qualcomm Life announced the acquisition of HealthyCircles, which marked a shift for Qualcomm Life into front-end software. We believe the acquisition provides important new capabilities for Qualcomm Life‟s 2net eco-system that further entrenches Qualcomm Life at the forefront of developing digital healthcare technologies. HealthyCircles is a care coordination management platform providing enterprise clients with private-label branded web, mobile, and multi-lingual solutions and services. The company was founded in order to address the shifting reimbursement landscape under the Affordable Care Act (ACA). HealthyCircles provides services addressing hospital readmission reduction, care transitions, home health monitoring and management, Accountable Care Organizations, and Patient-Centered Medical Homes (PCMH). The acquisition allowed Qualcomm Life to combine its 2net Hub and HealthyCircles to capture new data sets focused on medication history, lab data, care teams, and self-assessment data.
Qualcomm Life Launches Clinical Trial in San Diego to Test Digital Healthcare Technology for Treatment of Children’s Asthma. Recently, Qualcomm Life and partner Rady Children‟s Hospital-San Diego announced the launch of a digital healthcare technology clinical trial focusing on children with asthma. The clinical trial will test digital healthcare technology from Asthmapolis and Zephyr, as well as the Qualcomm Life 2net Hub. Fifty participants between the ages of seven and 17 will be selected, as the project seeks to understand the correlation between time and location, as well as patient health indicators (heart rate, respiratory rate, and activity) in order to better individualize asthma treatment. Each participant will receive a 3G-enabled testing kit consisting of two Asthmapolis sensors used to track inhaler usage, a Zephyr BioPatch used to track heart rate, respiratory rate, and activity, as well as a Qualcomm Life 2net Hub. Additionally, parents and patients can track health information via Asthmapolis‟ mobile apps and patient dashboard. Physicians can access patient data via the ZephyrLIFE Home portal to view wireless contextualized vital sign data.
Scripps Wired for Health Trial Tests Digital Healthcare Technology, Including the Qualcomm Life 2net Hub. In July, the Scripps Translational Science Institute (STSI) launched its Scripps Wired for Health Trial. STSI will select trial participants from its employee population with a focus on employees and family members that have generated high healthcare costs during the 2012 plan year. The clinical trial will test digital healthcare technology from several companies; some devices include Sanofi’s IBG Blood Glucose Meter, Withings Blood Pressure Monitor, and the AliveCor Heart Monitor with each device being linked via Qualcomm Life’s 2net Hub. Participants in the wireless device group will also test Qualcomm Life‟s HealthyCircles Care Orchestration Engine, an enterprise platform designed for care coordination and management.
Qualcomm Life and Palomar Health launch Google Glass Incubator. Qualcomm Life and Palomar Health launched an incubator, based in San Diego, California, to evaluate the application of wearable computing in medicine. The incubator will focus on assessing the medical benefits of Google Glass in both consumer and clinical applications with a focus on improving biometric data and wireless health management. Research and development efforts will focus on (1) augmented reality guided clinical applications, (2) user experience paradigms for clinical navigation of complex data, (3) physiological monitoring, (4) genomic information mapping, and (5) consumer-oriented health and wellness applications. Additionally, the incubator will leverage Qualcomm Life‟s HealthyCircles orchestration engine, which facilitates communication between doctors, EHRs, and biometric medical devices.
Digital Healthcare 30 Industry Analysis — Fall 2013
Qualcomm Life Invests in Fitbit. In August 2013, Qualcomm Life announced an investment in Fitbit through its Qualcomm Life venture fund. The Fitbit investment marks the ninth such digital healthcare investment made by the Qualcomm Life Fund in 1.5 years.
Strategic Partners. We believe Qualcomm Life is at the forefront of developing a highly functional wireless network for digital healthcare companies. The Qualcomm Life wireless eco-system consists of more than 100 companies and ranges from universities to startups to publicly traded healthcare technology companies such as Greenway Medical (GWAY, $15.95, not covered) and WebMD. We provide a summary of Qualcomm Life‟s eco-system partners in Exhibit 32.
Exhibit 32: Qualcomm Life’s Eco-system Partners
Ximed
Zeo, Inc.
Zephyr
Viewcare A/S
VRI
WebMD
Wireless-Life Sciences Alliance
Withings
Worrell Inc.
Telcare
Telsano
Trapollo
Tri-City Medical
U.S. Preventive Medicine, Inc.
Venture Manufacturing
Santech Health
Scripps Health
Sensei
Sotera Wireless, Inc.
Sweetwater Health
Telbios SpA
Predictably Well
Preventice
Radish Systems
Rady's Children's Hospital and Health Care
Rock Health
S3 Group
Omron Healthcare, Inc.
Open mHealth
Orange Business Services
Perminova
PMD Exports, Inc.
Polymap Wireless
MD Revolution
Messe Dusseldorf GmbH
mHealthAlert
Microsoft HealthVault
MIR - Medical International Research
Monitored Therapeutics
myHealthAccount
Nonin Medical, Inc.
Noom, Inc.
NurseBuddy
Infogosoft
Ingram Micro
Integron
Ion IT Group
Jointly
Lifetime Health Diary
HealthyCircles
Heart To Heart Network
HelloHealth
HMM Group
IDG
Independa, Inc.
Greenway Medical Technologies
Happtique
Health Companion, Inc.
Health Founders
Health Numeric
HealthSaaS, Inc.
FitLinxx
ForaCare, Inc.
Geneva Healthcare
Get Real Health
GlobalLogic
goBalto, Inc.
Diversinet Corp
e-mergency
Elbry's
Entra Health Systems
ERT
FatSecret
CellTrust
Ceretec, Inc.
ChoiceMMed
Citrusbyte
CleverCap
Connected Care Solutions
Continua Health Alliance
ConversePoint
Dexcom, Inc.
Digifit, Inc.
AT&T Mobility
Aventyn, Inc.
BodyMedia, Inc.
Cambridge Temperature Concepts
Care Technology Systems
Case Western Reserve University
American Heart Association
American Stroke Association
American Telemedicine Association
ANT+
Apsora
Asthmapolis
Qualcomm Life Eco-system Partner Companies
A&D Medical
ActiveCare
Advanced Warning Systems, Inc.
Agile Edge Technologies, Inc.
AirStrip
AliveCor, Inc.
Source: Company documents, Qualcomm Life
In Exhibit 33, we provide a summary of Qualcomm Life‟s investments that comprise the Qualcomm Life Fund. We note that the Qualcomm Life Fund portfolio consists of nine interesting digital technology startup companies.
Exhibit 33: Qualcomm Life Portfolio Company Summary
Source: Company documents, Qualcomm Life
Digital Healthcare 31 Industry Analysis — Fall 2013
Rock Health
Rock Health is a non-profit seed accelerator for digital health startups. The accelerator boasts a strong network of startup executives, industry executives, and venture capital investors. Halle Tecco serves as the Chief Executive Officer and was a co-founder of Rock Health. Sarah Pollet is the Chief Operating Officer, and oversees the daily business operations of Rock Health. Nate Gross serves as Medical Director and was a co-founder of Rock Health. Rock Health is headquartered in San Francisco; additional information can be found at the accelerator‟s website www.rockhealth.com.
Structure and Focus. The accelerator is exclusively focused on digital healthcare startups in the concept stage or early stages of development (pre-VC). Typical startups selected for the accelerator are developing software or hardware products for consumers and/or enterprise customers. Residencies last four months and include a demo day with roughly 15 startups per class. Startups can elect to receive funding in the form of a $100,000 convertible note. Terms of the note vary by the startup‟s maturity, and startups can still participate in the accelerator without accepting investment.
Strategic Partners. Rock Health benefits from several strategic partners ranging from venture capital investors to the government to technology providers, see Exhibit 34.
Exhibit 34: Rock Health’s Strategic Partners
Source: Company documents, Rock Health
In Exhibit 35, we provide a summary of Rock Health‟s current portfolio companies. We note that Rock Health‟s current portfolio consists of 58 interesting digital technology startup companies.
Exhibit 35: Rock Health Portfolio Company Summary
Source: Company documents, Rock Health
Digital Healthcare 32 Industry Analysis — Fall 2013
StartUp Health
StartUp Health is a national academy for health and wellness entrepreneurship. StartUp Health Academy provides health and wellness innovators with a structured curriculum to help build a sustainable long-term growth business in the healthcare sector. The Academy‟s goal is to help 1,000 Health Transformers (entrepreneurs) build sustainable growth businesses over the next decade. Steven H. Krein serves as the Chief Executive Officer and was a co-founder of StartUp Health. Unity Stoakes serves as President and was a co-founder of StartUp Health. Howard Krein, M.D., Ph.D. serves as StartUp Health‟s Chief Medical Officer. StartUp Health is headquartered in New York City. More information can be found at the Academy‟s website www.startuphealth.com.
Structure and Focus. The accelerator is “stage” agnostic, but presents itself as “grad-school” for startups, whereas incubators are “undergrad.” The curriculum lasts 12-36 months and is focused on customer development in order to build sustainable long-term growth businesses in healthcare. The first class consisted of 24 companies and the second class will consist of nearly 75 companies. The accelerator provides infrastructure, resources, and services to entrepreneurs focused on building sustainable growth businesses in healthcare. StartUp Health receives between 2% and 10% of equity in the entrepreneur‟s company with a cost of 6% to 7% of equity for early-stage startups.
Strategic Partners. StartUp Health benefits from several strategic partners ranging from venture capital investors to the government to technology providers, see Exhibit 36.
Exhibit 36: StartUp Health’s Strategic Partners
Government PartnersScholarship Partners Perk Partners Advisor Partners StartUp Community
Source: Company documents, StartUp Health
In Exhibit 37, we provide a summary of StartUp Health‟s current portfolio companies. We note that StartUp Health‟s current portfolio consists of 40 interesting digital technology startup companies.
Exhibit 37: StartUp Health Portfolio Company Summary
StartUp Health Portfolio Current Companies
Source: Company documents, StartUp Health
Digital Healthcare 33 Industry Analysis — Fall 2013
Healthbox
Healthbox offers an accelerator program for healthcare technology entrepreneurs focused on stimulating innovation, and enabling entrepreneurial success through a collaborative, global ecosystem in order to drive change in healthcare. Healthbox is focused on early-stage high-potential healthcare technology startups addressing meaningful industry challenges. Promising healthcare technology startups can receive resources, support, and a network to enable rapid development and growth through the Healthbox accelerator program. Nina Nashif serves as Chief Executive Officer and founded Healthbox. Yechiel Engelhard serves as Entrepreneur in Residence. More information can be found at the accelerator‟s website www.healthbox.com.
Structure and Focus. The Healthbox accelerator program typically lasts four months, and includes a demo day, as well as one to two classes per year. Accelerator classes typically consist of 10 companies and are based in one of five cities: Chicago, Boston, London, Jacksonville, or Nashville. Startups receive $50,000 in seed capital, as well as a wide range of resources and support. We note that startups benefit from particularly close ties with BlueCross BlueShield Venture Partners.
Strategic Partners. Healthbox benefits from several strategic partners ranging from venture capital investors to healthcare IT to technology providers, see Exhibit 38.
Exhibit 38: Healthbox’s Strategic Partners
Source: Company documents, Healthbox
In Exhibit 39, we provide a summary of Healthbox‟s current portfolio companies. We note that Healthbox‟s current portfolio consists of 43 interesting digital technology startup companies.
Exhibit 39: Healthbox Portfolio Company Summary
Source: Company documents, Healthbox
Digital Healthcare 34 Industry Analysis — Fall 2013
Blueprint Health
Blueprint Health is an accelerator program geared toward healthcare companies seeking help to find customers and capital. The program lasts three months and the majority of the startups‟ executives must commit to work from Blueprint‟s New York headquarters. The foundation of the program is access to a network of more than 150 healthcare entrepreneurs, investors, and industry executives. Blueprint Health‟s headquarters are in New York City. More information can be obtained at the accelerator‟s website www.blueprinthealth.org. Startups receive $20,000 in cash, as well as over $50,000 in perks, which include legal, hosting, human resources, public relations, and other services. In return for these perks and resources, startups must provide a 6% equity stake to Blueprint Health.
Strategic Partners. Blueprint Health benefits from several strategic partners ranging from venture capital investors to healthcare IT to technology providers. According to the Blueprint Health website, the accelerator program benefits from partnerships with insurance companies (eight total), hospitals (12 total), healthcare IT companies and startups (31 total), biopharmaceutical companies (two total), and venture capital firms (22 total), see Exhibit 40.
Exhibit 40: Blueprint Health’s Strategic Partners
New York Presbyterian
Montefiore Hospital
Partners Healthcare
Johns Hopkins Hospital
University of Pennsylvania
Health System
Greenwich HospitalRobert Wood Johnson
University HospitalCedars Sinai Medical
Center
Mayo Clinic
United Healthcare
Cigna
Premera
BCBS
Regence BCBS
Aetna ZocDoc
Phressia
ShapeUp
Keas
Alliance Health
Activate Networks
Happtique
MedHelp
Community Health Systems
Ascension Health
Kaiser Permanente
HealthiNation
Definity Health
Eliza
Liazon
Cerner
Healthcare IT / Startups
Vitals
Teladoc
Zeel
Patients Like Me
Founder Collective
Google Ventures
Health Enterprise Partners
Heritage Group
Highland Capital Partners
Aberdare Ventures
Bessemer Venture Partners
Cardinal Partners
Edison Ventures
Essex Woodlands
FirstMark Capital
Epocrates
Medivo
Sermo
HLM Venture Partners
InterWestKleiner Perkins Caufield &
Byers
Milestone Venture Partners
Mohr Davidow Ventures
Decision Resources
Massive Health
Health 2.0
Zeo
Objective Health
Kaplan Health
Biopharmaceuticals Venture Capital
Union Square Ventures
OrbiMed
Blueprint Health's Strategic Partners
Physic Ventures
Psilos
Rho Ventures
Safeguard Scientifics
WebMD
Allscripts
Insurance Partners Hospital Partners
Humana
Well Point
Pfizer
Johnson & Johnson
Simplee
Red Brick Health
Source: Company documents, Blueprint Health
In Exhibit 41, we provide a summary of Blueprint Health‟s alumni portfolio companies. We note that Blueprint Health‟s alumni portfolio consists of 39 interesting digital technology startup companies.
Exhibit 41: Blueprint Health Alumni Portfolio Company Summary
Blueprint Health Alumni Portfolio Companies
Summer 2013 Winter 2013 Summer 2012 Winter 2012
Source: Company documents, Blueprint Health
Digital Healthcare 35 Industry Analysis — Fall 2013
Digital Healthcare Technology Industry Overview We believe the unique transformative potential of digital healthcare technologies lies in the opportunity to drive reduced costs throughout the healthcare supply chain over time. In Exhibit 42, we illustrate U.S. national health expenditures (NHEs) for the period 2010 to 2021, as forecast by the Centers for Medicare and Medicaid Services. As of 2010, total national health expenditures were $2.594 trillion, are expected to rise to $2.916 trillion by 2013, and are expected to rise to $4.781 trillion by 2021.
Exhibit 42: Domestic Healthcare Costs Are Forecast to Increase Through 2021
16.5%
17.0%
17.5%
18.0%
18.5%
19.0%
19.5%
20.0%
$0.0
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
NH
E a
s a
% o
f G
DP
Nati
on
al H
ealt
h E
xp
en
dit
ure
s (N
HE
, $B
illio
ns)
National Health Expenditures, 2010 to 2021E
National Health Expenditures (NHE) NHE as a % of GDP
McKinsey & Company estimates digital healthcare technology might lower annual
NHEs by $300 billion to $450 billion
Source: Centers for Medicare and Medicaid Services, Office of the Actuary
We provide an illustration of where the U.S. healthcare dollar is spent in Exhibit 43. According to the Centers for Medicare and Medicaid, the U.S. is forecast to spend $2.916 trillion on healthcare expenditures in 2013. The majority of these expenditures are for hospital care and physician and clinical services, which represents 51% of total expenditures. We believe digital healthcare technology companies are poised to become a catalyst to help reduce these expenditures.
Exhibit 43: How the U.S. Healthcare Dollar Is Spent
Hospital Care32%
Physician and Clinical Services
19%Other Professional Services
7%
Other Health, Residential, and Personal Care
5%
Home Health Care3%
Nursing Care Facilities and Continuing Care
6%
Prescription Drugs10%
Other Medical Products3%
Government Administration
1%
Net Cost of Private Health Insurance
6%
Government Public Health Activities
3%
Investment (R&D and Structures & Equipment)
5%
National Health Expenditures, 2013E
Total =
$2.916 Trillion
Source: Centers for Medicare and Medicaid Services, Office of the Actuary
Digital Healthcare 36 Industry Analysis — Fall 2013
Triangulating the Digital Healthcare Technology Industry Opportunity We believe the revenue-generating potential of the digital healthcare technology industry is quite vast and its potential remains relatively untapped. Estimates regarding the total addressable market opportunity for digital healthcare are quite diverse. In our view, most estimates seem conservative and likely only address mHealth in terms of mobile applications rather than the entire industry opportunity. Additionally, most estimates regarding digital healthcare technology focus solely on wearable devices. We note that mobile health industry estimates range from a low of $10.2 billion in 2018 to a high of $23.0 billion in 2017. We provide a recap of several estimates below.
Transparency Market Research estimates worldwide mobile health technologies and services revenue will reach $10.2 billion by 2018.
Deloitte estimates worldwide revenue mobile health technologies and services revenue will reach $11.7 billion by 2018.
PwC/GSMA estimate worldwide mobile health revenue will reach $23.0 billion by 2017.
PwC/GSMA forecast nearly 50% of revenue share will go to mobile operators. Adjusting for this assumption, PwC/GSMA forecast worldwide mobile health revenue (excluding mobile operators) will reach $11.5 billion by 2017.
PwC/GSMA forecast roughly 28% of worldwide mobile health revenue in 2017 will go to device vendors, content/application players, and healthcare providers. This translates into a total revenue opportunity of $6 billion.
In Exhibit 44, we provide estimates regarding global mHealth revenue according to a PwC/GSMA study published in February 2012. While these estimates are at the high end of the range, we believe they are conservative. Our assessment that these estimates are conservative is based on the fact that PwC/GSMA believe that nearly 50% of global mHealth revenue will go to mobile operators. PwC/GSMA forecast that U.S. mHealth revenue will reach $5.9 billion by 2017.
Exhibit 44: Worldwide Addressable Market ($ in billions)
$4.5
$6.9
$10.2
$15.4
$23.0
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
2013E 2014E 2015E 2016E 2017E
Global mHealth Revenue
U.S.Market
2017E = $5.9B
Global mHealth Revenue is Forecast to Grow at a 50% 4-YR CAGR (2013-2017)
Source: PwC and GSMA, “Touching Lives Through Mobile Health: Assessment of the Global Market Opportunity,” February 2012
In Exhibit 45, we provide the PwC/GSMA breakout of global mHealth revenue by market participant. We note that the report suggests that mobile operators will garner roughly 50% of global revenue share by 2017. Adjusting the PwC/GSMA worldwide global mHealth revenues to exclude mobile operators, their global mHealth revenue estimate becomes $11.5 billion, which is somewhat similar to Deloitte ($11.7 billion in 2018) and Transparency Market Research ($10.2 billion in 2018). While we believe these estimates illustrate the vast opportunity facing digital healthcare, we believe that these estimates may prove conservative.
Digital Healthcare 37 Industry Analysis — Fall 2013
Exhibit 45: The Digital Healthcare Opportunity Remains Vast; Estimates Seem Conservative ($ in billions)
$2.3 $2.6
$6.6
$11.5
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
Healthcare Providers Content / Application Players
Device Vendor Mobile Operator
Global mHealth Revenue by Market Participant
Mobile Operators Are Expected to Represent 50% Market Share in 2017E.
This Assumption Makes Us Believe Estimates Are Likely Conservative
Source: PwC and GSMA, “Touching Lives Through Mobile Health: Assessment of the Global Market Opportunity,” February 2012
In our view, data regarding consumer spending for digital healthcare technology products from Rock Health suggests the opportunity may be larger than PwC/GSMA forecast. According to Rock Health estimates, consumers could spend $14 billion on just three areas of digital healthcare technology alone: mHealth apps, health-related video games, and resources rating doctors and hospitals. We illustrate Rock Health‟s consumer spending estimates in Exhibit 46. We believe these estimates speak to the vast size of the digital healthcare technology opportunity.
Exhibit 46: Consumer Spending for Digital Healthcare Products ($ in millions)
$700
$4,000
$8,900
$0
$2,000
$4,000
$6,000
$8,000
$10,000
mHealth Apps Health-Related Video Games Resources Rating MDs & Hospitals
Consumer Spending Estimates
Source: Rock Health, “Business Models in Digital Health Consumer & Enterprise,” May 2012.
We note that PwC/GSMA break down their global mHealth revenue estimates by treatment category (Exhibit 47). According to their report, monitoring services are expected to generate the majority of mHealth revenue, consisting of $10.7 billion in revenue for chronic disease management services and $4.3 billion in revenue for independent ageing services. The report notes that chronic disease management revenues will likely be from monitoring services for metabolic conditions (diabetes and obesity) and cardiovascular conditions (hypertension, coronary artery disease, and congestive heart failure). The diagnostic services category consists of interactive messaging to help patients self-diagnose
Digital Healthcare 38 Industry Analysis — Fall 2013
minor ailments, medical call centers manned by healthcare professionals, and telemedicine solutions allowing doctors to consult with patients via wireless broadband. The third and fourth largest categories are treatment and healthcare systems improvement. The other category includes administration, healthcare surveillance support, and emergency response.
Exhibit 47: The Digital Healthcare Opportunity Encompasses Numerous Categories ($ in billions)
$0.9 $1.4 $2.3
$3.4
$15.0
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
Other Healthcare Systems
Improvement
Treatment Diagnostic Services
Monitoring
Global mHealth Revenue by Treatment Category
Monitoring Revenues Consist of:$10.7 Billion for Chronic Disease Management
and$4.3 Billion for Independent Ageing
Source: PwC and GSMA, “Touching Lives Through Mobile Health: Assessment of the Global Market Opportunity,” February 2012
In our view, the area of digital healthcare technology with the most reliable estimates is fitness tracking/wearable computing. IMS Research estimates that sports and fitness device shipments will total 43.8 million in 2013 and forecasts shipments to grow to 56.2 million by 2017 (Exhibit 48). Additionally, IMS Research estimates that total cumulative sports and fitness device shipments for the 2013 to 2017 period will total roughly 250 million units. We note that IMS Research forecasts that the global market for wearable technology will reach 171 million shipments with an associated market opportunity of $6 billion by 2016.
Exhibit 48: IMS Health Sport & Fitness Device Shipment Forecast (in millions)
43.8
56.2
0
10
20
30
40
50
60
2013E 2017E
Sports & Fitness Device Shipments
IMS Health Estimates Cumulative Sports & Fitness Device Shipments, Between 2013E and 2017E, To Be Roughly 250 million Units
4-YR CAGR of 6.4%
Source: IMS Research, “The World Market for Sports & Fitness Monitors,” May 2013
Digital Healthcare 39 Industry Analysis — Fall 2013
The Digital Healthcare Industry: Many Exciting Opportunities and Many Ways to Invest We believe digital healthcare technology companies represent an important change agent that will help facilitate the further digitization of healthcare. Based on the StartUp Health database, we have identified more than 350 public and private digital healthcare companies, and using StartUp Health and FactSet estimates we believe total cumulative funding for the 2000-to-present period is between $7 billion and $8 billion. In Exhibit 49, we provide an illustration of cumulative venture investments in digital healthcare technologies for 2011, 2012, and 2013 according to Rock Health.
Exhibit 49: Digital Healthcare Venture Investments, January 2011 to June 2013 ($ in millions)
$216
$312 $365
$533
$670
$849
$757
$1,401
$343
$890
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Digital Healthcare Venture Funding 2011-2013
2013 2012 2011
Note: Each year represents the cumulative total venture funding for that year
Source: FactSet, Rock Health, StartUp Health
While some digital healthcare startups find it difficult to attract customers, we note that there are several proven business models utilized throughout the space. In Exhibit 50, we provide an analysis that compares several different business models of selected digital healthcare technology companies. The diagram maps select digital healthcare companies by business model according to who uses the product/service (business or consumer) and who pays for the product/service (business or consumer). Companies making fitness trackers are at the most basic level as these devices are sold to and used by consumers. Other models provide consumer-facing services and monetize their services through advertising or physician payments. At the farthest end of the spectrum exist digital healthcare companies with consumer-facing products paid for by insurance or pharmaceutical companies. Lastly, there are those companies providing products or services that are paid for and used by a single organization.
Digital Healthcare 40 Industry Analysis — Fall 2013
Exhibit 50: Business Model Comparison – Who Uses Versus Who Pays?
Source: Rock Health
In Exhibit 51, we provide a summary of venture capital funding for digital healthcare technology companies by focus area. Our summary divides the digital healthcare technology private company universe into 10 focus areas. We estimate total cumulative funding to date across the 178 companies that comprise our 10 categories totals approximately $7.0 billion.
Exhibit 51: Digital Healthcare Venture Funding by Focus Area ($ in millions)
Category Funding
Clinical Back-Office & Clinical Front-Office $1,681.0
Analytics $928.8
Health and Wellness/Gamification $874.7
Med Devices (Sensors/Monitoring/Imaging) $827.8
Diagnostics/Genomics/Clinical Trials $591.8
Provider Information/Insurance/Education $582.0
Fitness $436.9
Diabetes $409.3
Cardiovascular Diagnostics/Sensors $387.5
Telehealth $253.5
Total Funding $6,973.3
Venture Funding by Focus Area
$0.0 $500.0 $1,000.0 $1,500.0 $2,000.0
Telehealth
Cardiovascular Diagnostics / Sensors
Diabetes
Fitness
Provider Information / Insurance / Education
Diagnostics / Genomics / Clinical Trials
Med Devices (Sensors/Monitoring/Imaging)
Health and Wellness / Gamification
Analytics
Clinical Back-Office & Clinical Front-Office
Source: FactSet, Rock Health, StartUp Health, and Stifel estimates
We note that the largest area based on funding is the clinical back-office and clinical front-office category. We define the category to include digital healthcare companies working on digital EMR/EHR solutions, digital practice management solutions, digital revenue cycle management solutions, as well patient/doctor communication solutions. Analytics represents the second largest category and represents companies focused on analyzing and unlocking the value of data in numerous ways. Health and Wellness encompasses companies focused on consumer-facing solutions for tracking or improving health. Med Devices consists of companies developing solutions focused on sensors, monitors, and imaging. Diagnostics/Genomics/Clinical Trials includes companies focused on creating and improving testing to
Digital Healthcare 41 Industry Analysis — Fall 2013
genetic sequencing technology. The Provider Information category represents companies focused on digitizing the appointment process or building consumer-driven healthcare provider rating systems. The Fitness category includes companies developing wearable computing devices to track health information. The Diabetes category includes companies focused on developing blood monitoring devices or glucometers. The Cardiovascular Diagnostics/Sensors group consists of companies developing sensors or applications specifically for heart-related monitoring. The Telehealth category consists of companies developing solutions that help remove time and geography constraints from healthcare. We now provide a directory of important digital healthcare companies according to our 10 focus areas below.
Exhibit 52: Important Digital Healthcare Companies – Clinical Back-Office and Clinical Front-Office ($ in millions)
Company Venture Funding Company Venture Funding Company Venture Funding
Castlight Health $177.3 NuScriptRX $31.7 Healthrageous $15.0
Practice Fusion $137.0 COMS Interactive $28.8 Change Healthcare $15.0
Airstrip Technologies $131.8 PatientsLikeMe $25.8 gloStream $14.3
MedSynergies $118.0 Valant Medical Solutions $24.1 Privia Health $14.1
PatientSafe Solutions $90.3 PerfectServe $22.9 Healthation $14.0
PatientKeeper $86.4 Wavemark $21.9 Truveris $13.8
Awarepoint $73.3 Hello Health $21.5 Resilient Network Systems $13.2
Healthline Networks $59.0 Remedy Partners $20.5 PathCentral $13.0
CareCloud $47.4 Medley Health $20.0 DocuTAP $11.9
Kareo $44.5 AventuraHQ $19.6 Razor Insights $11.4
LifeImage $43.4 Silverlink Communications $19.4 Shareable Ink $11.0
Audax Health $42.5 Modernizing Medicine $19.1 ConsultingMD $11.0
Skylight Healthcare Systems $39.8 Alliance Health Networks $17.9 Clinicient $10.9
ABILITY Network $38.3 Medicalis $16.9 Kit Check $10.4
InstaMed $37.9 Doxo $15.3 MD Tech Pro $10.0
Digital Healthcare Companies - Clinical Back-Office and Clinical Front-Office
Source: FactSet and StartUp Health
Company:
Castlight Health
Company Description: Castlight Health provides healthcare transparency solutions to consumers, employers, providers, and health plans. Healthcare transparency involves providing the ability for constituents to analyze provider-specific information on costs and quality of medical services. The Castlight solution encompasses multiple channels, including online, mobile, and phone. The company is based in San Francisco, California. Additional information can be found at www.castlighthealth.com.
Product: The Castlight healthcare management suite is a software-as-a-service solution customizable to all types of health benefit designs. The suite integrates with health plan carrier data to simplify benefits information and provides a common, cross-carrier experience.
Management: Giovanni Colella serves as Chief Executive Officer, and co-founded the company in 2008. John Doyle serves as Chief Financial Officer, and Dena Bravata serves as Chief Medical Officer and Head of Products.
Key Investors: Allen & Co., Athenahealth, Cleveland Clinic Innovations, Maverick Capital, Morgan Stanley, Oak Investment Partners, Redmile Group, T. Rowe Price, U.S. Venture Partners, Venrock, Wellcome Trust Centre for Stem Cell Research.
Digital Healthcare 42 Industry Analysis — Fall 2013
Company:
Practice Fusion
Company Description: Practice Fusion is an online electronic health record (EHR) community. The company provides a free web-based EHR solution to physicians. The Practice Fusion community consists of more than 150,000 physicians and practice users. Practice Fusion monetizes its web-based EHR solution through advertising. The company is based in San Francisco, California. Additional information can be found at www.practicefusion.com.
Product: Provides a fully functional web-based EHR to physicians. Features included are charting, e-Prescribing, labs, scheduling, referrals, and billing.
Management: Ryan Howard serves as Chief Executive Officer and co-founded the company in 2005. Matthew Douglass serves as Vice President of Platform and co-founded the company in 2005. Jonathan Malek serves as Senior Vice President of Technology. Todd Martin serves as Senior Vice President of Business Development.
Key Investors: Artis Capital Management, Band of Angels, Felicis Ventures, Founders Fund, Ghost Angel, Glynn Capital Management, Hadi Partovi, Morgenthaler Ventures, Scott Banister, and SV Angel.
Company Description: AirStrip is focused on leveraging mobile innovation and technology to change the way healthcare is practiced. The AirStrip ONE enterprise mobility solution helps to improve quality and timeliness of care, increases patient and clinician satisfaction, enhances financial performance, and reduces risk. The company is based in San Antonio, Texas. Additional information can be found at www.airstriptech.com.
Product: AirStrip ONE is an enterprise platform solution that provides the architecture and ability to rapidly exchange information for clinical decision-making across disparate systems while providing clinical mobility. The AirStrip ONE has FDA clearance, facilitates data communication across multiple systems and providers, provides dynamic feedback improving patient care, and allows for customization to fit provider workflow.
Management: Alan Portela serves as the Chief Executive Officer. Angela Pierce serves as the Chief Financial Officer. Wm. Cameron Powell serves as the Chief Medical Officer.
Key Investors: Health Insight Capital, Hospital Corporation of America, Qualcomm Ventures, Sequoia Capital, Wellcome Trust for Stem Cell Research.
Company Description: MedSynergies provides revenue cycle management, practice management, consulting, business process, analysis, and software integration services to healthcare providers. The company partners with healthcare organizations to meet the challenges of healthcare delivery and physician alignment. MedSynergies focuses on the business side of medicine by providing innovative financial and operational systems to healthcare clients. The company is based in Irving, Texas. Additional information can be found at www.medsynergies.com.
Digital Healthcare 43 Industry Analysis — Fall 2013
Product: MedSynergies MSIGHT helps physicians better manage the business side of their practice, allowing greater focus on quality of care. The company states that clients experience a 25% increase in revenue after implementing MSIGHT. The platform helps hospitals understand physician-alignment components. Additionally, practices and hospitals can integrate with existing technology while only using one provider.
Management: Bill Hutton served as the first Chairman and Chief Executive Officer of MedSynergies, and helped found the company in 1996. John Thomas serves as Chief Executive Officer and has held progressively more senior roles since joining the company in 1996. Frank Marshall serves as President. Bill Murray serves as Executive Vice President and Chief Financial Officer.
Key Investors: Financial Technology Ventures Management Co., Texas Health Resources, Inc.
Company:
PatientSafe Solutions
Company Description: PatientSafe Solutions focuses on transforming healthcare through the convergence of consumer mobile technologies and enterprise clinical systems. Through the PatientTouch system, the company gives care providers an intuitive interface, mobile-enabled workflows, which can be built upon existing EHR infrastructure. The PatientTouch platform enables Connected Patient Care through a suite of smart point-of-care mobile solutions. The company is based in San Diego, California. Additional information can be found at www.patientsafesolutions.com.
Product: The PatientTouch system is a smart point-of-care mobile solution that orchestrates people, data, and processes in a healthcare setting in real time. The system operates on an easy-to-use handheld Apple iOS based device.
Management: Joseph Condurso serves as President and Chief Executive Officer. Frank Pecaitis serves as Senior Vice President of Sales. Bruce Eklund serves as Senior Vice President of Operations. Paul Seelinger serves as Vice President of Clinical Affairs and Services.
Key Investors: American River Ventures, Camden Partners, Integral Capital Partners, J.F. Shea and Company, Menlo Ventures, Merck Global Health Innovation Fund, North Bay Angels, Psilos Group, Sacramento Angels, Shoreline Venture Management, and TPG Capital.
Company:
PatientKeeper
Company Description: PatientKeeper is a provider of healthcare information systems with highly intuitive software, improving workflow in order to improve productivity and patient care. The company provides a suite of solutions, most notably PatientKeeper CPOE, physician documentation, HIE, and other applications across multiple screens (PC, laptop, smartphones, and tablets). PatientKeeper works with more than 53,000 physicians across more than 450 hospitals, which equates to 5% of total U.S. physicians and 10% of U.S. physicians seeing patients in a hospital. The company is based in Waltham, Massachusetts. Additional information can be found at www.patientkeeper.com.
Product: PatientKeeper CPOE (PatientKeeper Computerized Physician Order Entry) designed for meaningful physician use.
Management: Paul Brient serves as Chief Executive Officer. Donald Burt serves as Chief Medical Officer. Jim Melanson serves as Chief Financial Officer.
Digital Healthcare 44 Industry Analysis — Fall 2013
Key Investors: Flybridge Capital Partners, Frazier Healthcare Partners, J.H. Whitney & Co., Lighthouse Capital Partners, Mediphase Venture Partners, Mosaix Ventures, New Enterprise Associates (NEA), Pacific Venture Group, and Saints Capital.
Company:
Awarepoint
Company Description: Awarepoint provides cloud-based real-time location systems to help enable predictive workflows to manage assets, patients, and personnel across the healthcare organization. The company‟s main product offering is the aware360°Suite, which automates core processes in the hospital environment using real-time locating system (RTLS) technology. The company is headquartered in San Diego, California. Additional information can be found at www.awarepoint.com.
Product: Awarepoint‟s aware360°Suite is a web-based hospital automation system, which automates and streamlines patient flow, medical equipment and medical tray logistics, monitoring and documentation of personnel, temperature control, and patient turnover. The company‟s awareAssets offering is a web-based enterprise visibility and workflow automation system that maps and provides real-time interaction between staff and patient movements. Awarepoint‟s awareHandHygiene is an auto-ID hand hygiene monitoring solution using RTLS technology. The company‟s awareED provides automated patient and asset tracking. Awarepoint‟s awareSurgical provides an automated surgery scheduling system.
Management: Jay Deady serves as President and Chief Executive Officer. Tim Roche serves as Chief Financial Officer. Matt Perkins serves as Chief Technology Officer & Senior Vice President of Engineering. Dennis O‟Leary serves as Chief Medical Officer.
Key Investors: Avalon Ventures, Cardinal Partners, Heritage Group, Jafco Ventures, Kleiner Perkins Caufield & Byers (KPCB), New Leaf Venture Partners, Top Tier Capital Partners, and Venrock.
Company:
Healthline
Company Description: Healthline Networks provides health information to consumers via www.healthline.com, but also provides a suite of health information solutions for Internet portals and healthcare companies. The company‟s solutions identify, organize, and present healthcare information powering health search, content, applications, and advertising services to a broad array of leading health plans, employers, publishers, and marketers. According to Healthline Networks, the company‟s Healthline HealthWeb portfolio generates 54 million unique visitors per month. The company is based in San Francisco, California. Additional information can be found at www.healthline.com.
Product: Healthline‟s HealthSTAT is the company‟s contextual ad targeting technology used to broaden condition-specific reach for health advertisers. The company‟s Medically Guided Search and Healthline HealthWeb (a filtered set of 200,000 consumer health public websites) uses a customer‟s database to crawl, index, and present clinically accurate search results. Other consumer-focused offerings are Healthline BodyMaps and Bodies in Motion, interactive 3-D models of the body; HealthlLinks, allows customers to hyperlink from any health concept to other relevant/related health content; SmartAnswers, provides highly relevant health-related search results. Healthline‟s clinical applications include SymptomSearch, TreatmentSearch, DocSearch, and DrugSearch.
Management: Dean Stephens serves as President and Interim Chief Executive Officer. Niraj Katwala serves as Chief Technology Officer. Paul Auerbach serves as Chief Medical Officer. Scott Heys serves as Vice President, Finance.
Digital Healthcare 45 Industry Analysis — Fall 2013
Key Investors: Aetna Ventures, Comcast Ventures, Investor Growth Capital, JHK Investments, Kaiser Permanente Ventures, Mitsui & Co. Venture Partners, Reed Elsevier Ventures, Peacock Equity, Vantage Point Venture Partners.
CareCloud
Company:
Company Description: CareCloud provides cloud-based practice management, electronic health record, and medical billing software and services to healthcare professionals. The company‟s products and services provide healthcare professionals a fully integrated digital healthcare ecosystem accessible across any browser or mobile device. CareCloud currently works with physicians in over 46 states and helps manage over $2 billion in annualized accounts receivable on behalf of its clients. The company is headquartered in Miami, Florida. Additional information can be found at www.carecloud.com.
Product: CareCloud Central comprehensive practice management software. CareCloud Charts is the company‟s cloud-based EHR solution. CareCloud Concierge represents the company‟s revenue cycle management solution. CareCloud Community is the company‟s healthcare social network, which facilitates meaningful patient and physician interaction in a secure portal.
Management: Albert Santalo serves as President and Chief Executive Officer. John Walsh serves as Chief Technology Officer.
Key Investors: Adams Street Partners, Intel Capital, Norwest Venture Partners, and Tenaya Capital.
Company:
Kareo
Company Description: Kareo provides cloud-based software to help doctors, practice managers, and billing companies better manage their businesses. The company‟s software solutions are aimed at helping small practices succeed. Kareo is based in Irvine, California. Additional information can be found at www.kareo.com
Product: The company offers a web-based EHR, Kareo Practice PM, a practice management solution, and Kareo Billing Service.
Management: Dan Rodrigues founded Kareo in 2004 and currently serves as the Chief Executive Officer. Jason Gardner serves as the Chief Executive Officer. Tom Giannulli serves as the Chief Medical Information Officer. Rob Pickell serves as the Chief Marketing Officer.
Key Investors: Greenspring Associates, Minor Ventures, OpenView Venture Partners, Western Technology Investment.
Digital Healthcare 46 Industry Analysis — Fall 2013
Exhibit 53: Important Digital Healthcare Companies – Analytics ($ in millions)
Company Venture Funding Company Venture Funding Company Venture Funding
D-Wave Systems $119.9 Liaison Technologies $40.9 iVantage Health Analytics $18.6
RainDance Technologies $89.2 Ayasdi $40.9 DNAnexus $16.6
Access MediQuip $77.9 Phytel $40.4 Aglium Healthcare Intelligence $16.2
Blue Health Intelligence $63.5 xG Health Solutions $40.0 Activate Networks $16.0
Humedica $63.0 Valence Health $30.0 Lineagen $15.8
WorldOne $60.0 Healthx $22.0 Explorys $15.1
Roambi $50.0 Enclarity $22.0 RemitDATA $10.5
Health Catalyst $41.0 Kyruus $19.6
Digital Healthcare Companies - Analytics
Source: FactSet and StartUp Health
Company:
D-Wave Systems
Company Description: D-Wave Systems designs and develops quantum computer systems. The company‟s primary quantum computing product is the D-Wave Two System. D-Wave Systems is headquartered in Burnaby, British Columbia. Additional information can be found at www.dwavesys.com.
Product: The company‟s D-Wave Two System is a high-performance computing system designed to solve industrial problems encountered by Fortune 500 companies, government, and academia.
Management: Vern Brownell serves as President and Chief Executive Officer. Dr. Geordie Rose serves as Chief Technology Officer and co-founded the company in 1999 with Eric Ladizinsky, who serves as Chief Scientist. Steve Cakebread serves as Chief Financial Officer and Chief Administrative Officer. Robert “Bo” Ewald serves as President, D-Wave U.S. and Chief Revenue Officer. Warren Wall serves as Chief Operating Officer.
Key Investors: BDC Venture Capital, Bezos Expeditions, British Columbia Investment Management, Business Development Bank of Canada, Discovery Capital, Draper Fisher Jurvetson (DFJ), GrowthWorks Capital, Harris & Harris Group, In-Q-Tel, International Investment and Underwriting, Kensington Capital, and PenderFund Capital Management.
RainDance Technologies
Company:
Company Description: RainDance Technologies, the Digital Biology Company, develops innovative microdroplet-based solutions for human health and disease research. The company‟s RainStorm technology generates million of discrete droplets that can encapsulate a single molecule, cell, or reaction, and allows these droplets to be digitally analyzed and sorted individually. The company is headquartered in Billerica, Massachusetts. Additional information can be found at www.raindancetech.com.
Product: RainDance Technologies offers the RDT-1000, a fully automated low-to-medium-throughput sequencing system for accelerating the targeted sequencing of the human genome. The company‟s ThunderStorm System is a fully automated, high-throughput targeted sequencing solution that facilitates increased sample processing and generates higher-quality data. RainDance Technologies also offers the RainDrop Digital PCR System.
Management: S. Roopom Banerjee serves as President and Chief Executive Officer. Andy Watson serves as Chief Commercial Officer.
Digital Healthcare 47 Industry Analysis — Fall 2013
Key Investors: Alloy Ventures, Arcadia Wood Partners, JDS Capital Management, Mohr Davidow Ventures, Pequot Partners, Quaker Partners, and Sectoral Asset Management.
Company:
Access MediQuip
Company Description: Access MediQuip is a surgical and implant management company (SIMS). The company‟s Implant Management Platform gives payers analytic insights into implant costs, the quality and safety of surgical procedures, and provides full access and choice of implants to facilities, surgeons, and patients. Access MediQuip is headquartered in Lake Mary, Florida. Additional information can be found at www.accessmediquip.com.
Product: Access MediQuip‟s Implant Management Platform provides services to help manage the surgical/implant treatment cycle beginning with preauthorization and continuing through billing and reimbursement.
Management: Prakash Patel serves as Chief Executive Officer. Steven Arnold serves as Chief Medical Officer. Jorge Amaro serves as Chief Information Officer.
Key Investors: Cohesive Capital Partners, Mistral Equity Partners, and Water Street Healthcare Partners.
Company Description: Humedica is a clinical intelligence company that provides software-as-a-service business solutions to healthcare companies. The company‟s analytic tools help healthcare providers and life sciences organizations improve decision-making capabilities by unlocking the value of unconnected data from multiple sources. Humedica‟s analytic tools address several healthcare constituencies: inpatient and outpatient healthcare providers, pharmaceutical and biotechnology firms, medical device manufacturers, government agencies, and even financial services firms. We note that the company was acquired by UnitedHealth Group in January 2013. Humedica is headquartered in Boston, Massachusetts. Additional information can be found at www.humedica.com.
Product: Humedica offers three solutions: Humedica MinedShare, Humedica NorthStar, and Humedica Customized. Humedica MinedShare provides business analytics for healthcare providers across the entire continuum of care. Humedica NorthStar allows life sciences companies to better understand how physicians are adopting brands. Humedica Customized combines de-identified electronic health record data with claims, prescription, and practice management information to generate deeper analytic insights.
Management: Michael Weintraub serves as Chief Executive Officer and co-founded the company with Allen Kamer and A.G. Breitenstein in 2008. A.G. Breitenstein serves as Chief Product Officer, Provider Markets. Stan Norton serves as Chief Technology Officer. Bill Romeo serves as Vice President and Chief Financial Officer.
Key Investors: Bain Capital Ventures, General Catalyst Partners, Leerink Swann, and North Bridge Venture Partners.
Digital Healthcare 48 Industry Analysis — Fall 2013
Exhibit 54: Important Digital Healthcare Companies – Health and Wellness/Gamification ($ in millions)
Company Venture Funding Company Venture Funding Company Venture Funding
Lumos Labs $67.4 Keas $25.5 Health Guru $17.5
MindBody $60.6 Sharecare, Inc. $22.8 INRange Systems $16.2
RedBrick Health $59.2 Medivo $22.7 OneHealth $16.0
HealthTap $37.9 Treato $20.0 HealthiNation $12.0
SeeChange Health $37.0 QuantiaMD $20.0 Ecomom $11.2
Posit Science $36.6 Affectiva $19.4 Retrofit $10.7
Linkwell Health $28.3 Sebacia $18.6 OPTIMIZERx $10.0
Welltok $25.8 Cerego $18.0
Digital Healthcare Companies - Health and Wellness / Gamification
Source: FactSet and StartUp Health
Company Description: Lumos Labs focuses on cognitive neuroscience research and development working to develop software tools for improving brain health and performance. The company‟s first brain fitness program is called Lumosity. Lumos Labs is headquartered in San Francisco, California. Additional information can be found at www.lumosity.com.
Product: Lumosity is Lumos Labs‟ first web-based brain fitness program.
Management: Kunal Sarkar serves as Chief Executive Officer and co-founded the company in 2005 with Michael Scanlon and Dave Drescher. Michael Scanlon serves as Chief Scientific Officer. Dave Drescher serves as Chief Technology Officer. Krishna Kakarala serves as Chief Financial Officer.
Key Investors: Discovery Communications, FirstMark Capital, Harrison Metal Capital, Menlo Ventures, Michael Dearing, Norwest Partners, and Pequot Ventures.
Company:
MINDBODY
Company Description: MINDBODY provides web-based business management solutions to the health, wellness, and beauty industries. The company‟s primary customers are fitness, yoga, Pilates, salons, spas, and martial arts businesses. The company is headquartered in San Luis Obispo, California. Additional information can be found at www.mindbodyonline.com.
Product: The company‟s MINDBODY Processing solution provides an integrated merchant account that enables business owners to organize and streamline their business. MINDBODY‟s online business management software allows customers to connect with their business from any Internet connected device and ranges in cost from $75 per month to $175 per month.
Management: Rick Stollmeyer serves as Chief Executive Officer and co-founded the company in 2001 with Robert Murphy. Robert Murphy serves as Chief Operating Officer and Chief Sales & Marketing Officer. Chet Brandenburg serves as Chief Product Officer & Co-Creator. Bill Donohue serves as Chief Information Officer.
Key Investors: Catalyst Investors, Bessemer Venture Partners, and Institutional Venture Partners.
Digital Healthcare 49 Industry Analysis — Fall 2013
RedBrick Health
Company:
Company Description: RedBrick Health is a health engagement technology company offering employers solutions that reinvigorate their health and wellness programs. The company combines financial accountability, clinical and behavioral insights, social networking and gamification, as well as data analytics to create a personalized customer experience. RedBrick serves large self-insured employers and strategic distribution partners. The company is headquartered in Minneapolis, Minnesota. Additional information can be found at www.redbrickhealth.com.
Product: The RedBrick Solution allows employers to offer personalized health programs to their employees, offers social interaction, and utilizes financial incentives to reward healthy behavior.
Management: Dan Ryan serves as Chief Executive Officer. Gregg Waldon serves as Chief Financial Officer. Jeff Dobro serves as Chief Medical Officer. Eric Zimmerman serves as Chief Marketing Officer.
Key Investors: Fidelity Ventures, Kleiner Perkins Caufield & Byers (KPCB), Highland Capital Partners, Versant Ventures, and Volition Capital.
Company Description: HealthTap offers a mobile health platform connecting people with their doctors. The company offers an interactive health network, as well as mobile apps, connecting physicians and patients in more meaningful ways. Additionally, HealthTap provides education and disseminates trusted, vetted, and peer-reviewed health information. As of November 2012, the company‟s health network consisted of 1.2 million doctors and dentists who speak 101 languages. HealthTap is headquartered in Palo Alto, California. Additional information can be found at www.healthtap.com.
Product: The HealthTap Interactive Health Network and mobile apps facilitate more meaningful patient-to-physician communication. Patients can leverage a vast network of physicians in order to obtain the most relevant health information. Physicians have the ability to control and develop their online reputation. The platform seeks to link patients with the best doctors available.
Management: Ron Gutman serves as Chief Executive Officer and co-founded the company with Sastry Nanduri and Dr. Geoff Rutledge in 2010. Sastry Nanduri serves as Chief Technology Officer. Dr. Geoff Rutledge serves as Chief Medical Information Officer. Michael Nichols serves as Chief Privacy Officer.
Key Investors: Esther Dyson, Innovation Endeavors, Khosla Ventures, Mayfield Fund, and Mohr Davidow Ventures.
Digital Healthcare 50 Industry Analysis — Fall 2013
Company:
SeeChange Health
Company Description: SeeChange Health provides value-based health insurance plans through its SeeChange Health Insurance and SeeChange Health solutions offerings. The company utilizes value-based benefit solutions to create better health and quality of life for employees. SeeChange Health uses value-based service offerings to incentivize patients to manage their own health in order to prevent, detect, and treat health issues today, so that they do not escalate into something more serious. The company is based in Studio City, California. Additional information can be found at www.seechangehealth.com.
Product: SeeChange Health Insurance offers value-based benefit plans to small and mid-size employers in California and Colorado. SeeChange Health Solutions offers value-based benefit plans and services to self-insured companies and carriers.
Management: Martin Watson serves as Chief Executive Officer and founded the company in 2004. Daniel Boivin serves as Chief Legal Officer. Christopher Chang serves as Chief Information Officer. Susan Cotton serves as Chief Marketing Officer. Mark Gastineau serves as Chief Operations Officer. Vince Iantorno serves as Chief Underwriting Officer. Sean Penwell serves as Chief Medical Officer. Don Powers serves as Chief Financial Officer.
Key Investors: Maverick Capital and Psilos Group.
Company:
Posit Science
Company Description: Posit Science offers consumers brain training software clinically proven to improve cognitive performance. The company‟s brain exercises are available online at www.BrainHQ.com and have been proven to significantly improve brain speed, attention, and memory. The company is headquartered in San Francisco, California. Additional information can be found at www.positscience.com.
Product: The company‟s brainHQ platform provides cognitive fitness training using exercises proven to make real and lasting improvements in brain function. Think of brainHQ as the gym for mental fitness.
Management: Henry Mahncke serves as Chief Executive Officer and Dr. Michael Merzenich serves as Chief Scientific Officer.
Key Investors: Aberdare Ventures, Cooley Goodward Kronish, Draper Fisher Jurvetson (DFJ), and VSP Capital.
Digital Healthcare 51 Industry Analysis — Fall 2013
Exhibit 55: Important Digital Healthcare Companies – Med Devices (Sensors/Monitoring/Imaging, $ in millions)
Company Venture Funding Company Venture Funding Company Venture Funding
Proteus Digital Health $117.3 Watermark Medical $53.2 Movea $18.9
VisionCare Ophthalmic Technologies $76.2 MC10 $40.5 TrueVision Systems $16.8
InterAct911 $63.5 EarlySense $37.0 Pathfinder Therapeutics $15.8
Sotera Wireless $61.1 LumoBack $35.4 Vital Connect $14.0
LensAR $59.3 Foundation Radiology Group $25.5 Zephyr Technology $11.3
iWalk $57.0 DICOM Grid $24.9 Valkee $10.2
Sensimed $56.0 OrSense $24.2 Rapid Diagnostek $9.9
Digital Healthcare Companies - Medical Devices (Sensors, Monitors, Imaging)
Source: FactSet and StartUp Health
Company:
Proteus Digital Health
Company Description: Proteus Digital Health is focused on creating a new category of products called Digital Medicines. The company works with device, pharmaceutical, and biotechnology companies to better understand how its ingestible sensor technology can aid therapeutic areas with great complexity. Proteus is currently working on solutions for three therapeutic areas: cardiac disease and heart failure, central nervous system disease (MS, Huntington‟s, schizophrenia, Parkinson‟s, and Alzheimer‟s), and transplants. The company is headquartered in Redwood City, California. Additional information can be found at www.proteusdigitalhealth.com.
Product: Proteus Digital Health provides patients and care providers a real-time medicine tracking information system called Helius. Additionally, the company continues to work on developing its ingestible sensor technology.
Management: Andrew Thompson serves as Chief Executive Officer and co-founded the company in 2001. George Savage serves as Chief Medical Officer and co-founded the company in 2001. Mark Zdeblick serves as Chief Technology Officer and co-founded the company in 2001. David O‟Reilly is Chief Product Officer.
Key Investors: Adams Street Partners, Asset Management Company, The Carlyle Group, Essex Woodlands, Fletcher Spaght Ventures, Frazier Healthcare Partners, Kaiser Permanente Ventures, Medtronic, Novartis, ON Semiconductor, Oracle, Otsuka, Sino Portfolio, Spring Ridge Ventures, and St. Jude.
Digital Healthcare 52 Industry Analysis — Fall 2013
Company:
Sotera Wireless
Company Description: Sotera Wireless is a medical device company focused on the development, marketing, and sale of a new generation of vital signs monitoring devices. The company is based in San Diego, California. Additional information can be found at www.soterawireless.com.
Product: Sotera Wireless developed and operates the ViSi Mobile System, which is a platform for comprehensive vital signs monitoring. The platform monitors all core vital signs and is designed to provide information output in electronic form.
Management: Tom Watlington serves as Chief Executive Officer. James Moon serves as Chief Technology Officer. Mark Spring serves as Chief Financial Officer.
Key Investors: 3i Group, Cerner Capital, Delphi Ventures, EDBI, Intel Capital, Qualcomm Life Fund, Safeguard Scientifics, Sanderling Ventures, and West Health Investment Fund.
Digital Healthcare 53 Industry Analysis — Fall 2013
Exhibit 56: Important Digital Healthcare Companies – Diagnostics/Genomics/Clinical Trials ($ in millions)
Company Venture Funding Company Venture Funding Company Venture Funding
23andMe $121.7 Nant Health $31.1 Interleukin Genetics $15.5
Foundation Medicine $89.5 VirtualScopics $27.1 aMDx Laboratory Science $13.5
Applied Proteomics $54.5 Seno Medical Instruments $25.5 Intellicyt $13.3
Veran Medical Technologies $38.8 STAT-Diagnostica $25.4 Second Genome $12.7
Quanterix $38.6 Daktari $22.4 BINA Technologies $10.3
Acutus Medical $34.4 goBalto $17.5
Digital Healthcare Companies - Diagnostics / Genomics / Clinical Trials
Source: FactSet and StartUp Health
Company:
23andMe
Company Description: 23andMe is a personal genetics company providing genetic information regarding ancestry and health traits. The company performs DNA analysis on an individual‟s saliva and provides web-based interactive tools to help individuals better understand their genetic information. The company is headquartered in Mountain View, California. Additional information can be found at www.23andMe.com.
Product: Provides a Personal Genome Service that enables individuals to garner more information about their ancestry and inherited traits.
Management: Anne Wojcicki serves as Chief Executive Officer and co-founded the company in 2006. Andy Page serves as President. Jeffrey Pollard serves as Director of Medical Affairs.
Key Investors: Anne Wojcicki, Esther Dyson, Google Ventures, MPM Capital, New Enterprise Associates (NEA), Sergey Brin, and Yuri Milner.
Company:
Foundation Medicine
Company Description: Foundation Medicine is a commercial stage company focused on the development of diagnostic tests designed for use in the routine care of patients with cancer. The company‟s comprehensive cancer diagnostic test helps physicians recommend treatment options based on the particular molecular subtype of a given patient‟s cancer. The company is headquartered in Cambridge, Massachusetts. Additional information can be found at www.foundationmedicine.com.
Product: FoundationOne is a genomic profile that complements traditional cancer treatment decision tools, and helps expand treatment options by matching patients with targeted therapies relevant to molecular changes in their tumor.
Management: Michael Pellini serves as President and Chief Executive Officer. Steven Kafka serves as Chief Operating Officer. Kevin Krenitsky serves as Chief Commercial Officer. Ronald Collette serves as Chief Information Officer. Vincent Miller serves as Chief Medical Officer.
Key Investors: Casdin Capital, Deerfield Capital, Google Ventures, Kleiner Perkins Caufield & Byers (KCPB), Redmile Group, Roche Venture Fund, Third Rock Ventures, and the WuXi Corporate Venture Fund.
Digital Healthcare 54 Industry Analysis — Fall 2013
Exhibit 57: Important Digital Healthcare Companies – Provider Information/Insurance/Education ($ in millions)
Company Venture Funding Company Venture Funding Company Venture Funding
ZocDoc $97.4 Oscar $40.0 HealthTeacher $14.3
One Medical Group $76.5 Liazon $31.9 Bloom Health $12.5
Vitals $63.3 Medical Simulation Corp $31.6 My Health Direct $10.9
Phreesia $46.9 Doximity $27.8 HealthEngine $10.4
Best Doctors $45.5 Analyte Health $22.0 TigerText $10.1
Orbis Education $41.0
Digital Healthcare Companies - Provider Information / Insurance / Education
Source: FactSet and StartUp Health
Company:
ZocDoc
Company Description: Founded in 2007, ZocDoc provides a web-based service with complementary mobile apps that facilitate booking doctor and dentist appointments. Patients can access physician availability via ZocDoc.com or ZocDoc‟s mobile apps, check for insurance plan compatibility, and book an appointment. The company claims that most patients are able to receive access in 24–72 hours. According to ZocDoc, more than 2.5 million people use ZocDoc each month across more than 1,800 cities. The company is headquartered in New York City. Additional information can be found at www.zocdoc.com.
Product: The company‟s products include its web-based appointment booking website ZocDoc.com, as well as iPhone and Android apps. ZocDoc Check-In allows patients to fill out paperwork online in advance of their appointment. ZocDoc en Espanol is ZocDoc‟s Spanish language product.
Management: Cyrus Massoumi serves as the Chief Executive Officer and co-founded the company in 2007. Oliver Kharraz serves as Chief Operating Officer and co-founded the company in 2007. Nick Ganju serves as Chief Technology Officer and co-founded the company in 2007. Netta Samroengraja serves as Chief Financial Officer.
Key Investors: Bezos Expeditions, DST Capital, Founders Fund, Goldman Sachs, Jason Finger, Khosla Ventures, SV Angel, and Yuri Milner.
Company:
Vitals
Company Description: Vitals provides tools to help people make more informed decisions about the quality and cost of their medical care. According to Vitals, more than 150 million patients are served by Vitals annually. The majority of patients served are women with a household income greater than $100,000 and are college educated. Additionally, 81% of Vitals users plan to see a doctor within 30 days of visiting the Website, and 72% take a prescription on a regular basis. The company works with 13 of the 25 largest health plans. Vitals is headquartered in New York City. Additional information can be found at www.vitals.com.
Product: Vitals Patient Exchange allows patients to find doctors, schedule appointments, discuss treatment options, and helps patients prepare for their visit.
Digital Healthcare 55 Industry Analysis — Fall 2013
Management: Mitch Rothschild serves as Chief Executive Officer and co-founded the company in 2008. Ken Mulley serves as President. Orlena Yeung serves as Chief Marketing Officer. Bryan Perler serves as Chief Executive Officer.
Key Investors: Cardinal Partners, Cross Atlantic Partners, Greycroft Partners, Health Enterprise Partners, Health Venture Group, Milestone Venture Partners, and Piper Jaffray & Co.
Company:
Phreesia
Company Description: Phreesia provides automated patient check-in and payment collection technology to physicians. The company is headquartered in New York City. Additional information can be found at www.phreesia.com.
Product: Provides self-service patient technology to the doctor‟s office, facilitating accurate patient information collection and automated payment collection.
Management: Chaim Indig serves as Chief Executive Officer and co-founded the company in 2005. Ralph Gonzales serves as Chief Medical Advisor. Mark O‟Leary serves as Chief Marketing Officer.
Key Investors: Blue Cross Blue Shield Venture Partners, HLM Venture Partners, Long River Ventures, Polaris Venture Partners, Sandbox Industries, and Village Ventures.
Digital Healthcare 56 Industry Analysis — Fall 2013
Exhibit 58: Important Digital Healthcare Companies – Fitness ($ in millions)
Company Venture Funding Company Venture Funding
Jawbone $198.3 MapMyFitness $20.7
FitBit $66.4 Basis $20.5
BodyMedia $44.1 MyFitnessPal $18.0
Withings $36.7 Runkeeper $11.5
Netpulse $20.7
Digital Healthcare Companies - Fitness
Source: FactSet and StartUp Health
Company:
Jawbone
Company Description: Jawbone is a technology company focused on developing wearable technology for humans. The company‟s principal products include wireless speakers, speakerphones, Bluetooth headsets, and a fitness tracker. Jawbone has three principle brands, including: Jawbone, NoiseAssassin, and JAMBOX. We note that Jawbone acquired BodyMedia in April 2013 for more than $100 million. The company is headquartered in San Francisco, California. Additional information can be found at www.jawbone.com.
Product: Jawbone UP is a wristband and app that allows users to track sleep, movement, and food intake. Based on collected user data, the app provides users with information that helps the user take the necessary action needed to feel his or her best.
Management: Hosain Rahman serves as Chief Executive Officer and founded the company with Alexander Asseily, Chairman, in 1999. Michael Tamaru serves as Chief Financial Officer. Yves Behar serves as Chief Creative Officer. Monica Rogati serves as Vice President of Data.
Key Investors: Andreessen Horowitz, Deutsche Telekom AG, Khosla Ventures, Kleiner Perkins Caufield & Byers (KPCB), Mayfield Fund, and Sequoia Capital.
Company Description: Fitbit is a wearable computing company focused on developing devices used to track an individual‟s health data. The company‟s wearable computing devices allow users to track a wide variety of activities including: calories burned, sleep quality, steps, and distance. Individuals can monitor their progress using the data collected allowing them to monitor self-set measurable goals. Fitbit is located in San Francisco, California. Additional information can be found at www.fitbit.com.
Product: Fitbit offers four primary product offerings: Fitbit Flex, Fitbit Zip, Fitbit One, and Fitbit Aria. Fitbit Flex allows users to track steps, distance, and calories burned during the day, and at night tracks sleep quality and silently wakes the user in the morning. Fitbit Zip allows users to track steps, distance, and calories burned, and syncs these stats to the user‟s computer and select Smartphones. Fitbit One provides users a comprehensive lifestyle tracker. Fitbit Aria is a WI-FI enabled smart scale that tracks weight, body fat percentage, and BMI, allowing users to track long-term progress.
Digital Healthcare 57 Industry Analysis — Fall 2013
Management: James Park serves as Chief Executive officer and co-founded the company with Eric Friedman, Chief Technology Officer, in 2007. Hans Hartman serves as Chief Operating Officer. Woody Scal serves as Chief Revenue Officer.
Key Investors: Felicis Ventures, Foundry Group, Qualcomm Life Fund, SAP Ventures, SoftBank Capital, and True Ventures.
Company:
PatientKeeper
Company Description: Withings is a technology company focused on creating and developing connected objects that help consumers better track their health. The company offers several products including: a smart body analyzer, wireless scale, blood pressure monitors, smart baby monitors, baby companion, and health mate applications. Withings was founded in 2008 and is headquartered in Paris, France. Additional information can be found at www.withings.com.
Product: Withings core product is a wireless scale and offers both the Wireless Scale WS-30 and Smart Kid Scale. The Withings Blood Pressure Monitor allows a consumer to measure their blood pressure via the iPhone, iPad, or iPod touch. The Withings Smart Baby Monitor allows the consumer to turn their iOS or Android device into a baby monitoring system. The Withings Pulse is the company‟s smart tracker that allows consumers to track any number of statistics regarding their daily mobility and exercise. The company also provides the Health Mate app suite.
Management: Cedric Hutchings serves as Chief Executive Officer. Eric Carreel serves as Chairman.
Key Investors: 360 Capital Parnters, Bpifrance, IDInvest Partners, and Ventech.
Company:
MapMyFitness
Company Description: MapMyFitness is a health and fitness technology company that provides a suite of Internet and mobile apps through a social network for fitness enthusiasts. The company provides two flagship product suites: MapMyRun and MapMyRide, which allows users to map, record, and share their exercise routes in an online database. Users can search a database of over 120 million global exercise routes, online training tools, nutrition tracking, fitness calculators, event listings, and at the same time share their activities with others. MapMyFitness is based in Austin, Texas. Additional information can be found at www.mapmyfitness.com.
Product: The company offers five product suites that consist of a website, mobile app, and social network that provide access to route and activity information for the U.S., Ireland, Scotland, and Canada. The five products include: MapMyFitness, MapMyRun, MapMyRide, MapMyWalk, and MapMyHike.
Management: Robin Thurston serves as Chief Executive Officer. Daniel Hurwitz serves as Chief Media Officer.
Key Investors: Austin Ventures, Competitor Group, Milestone Venture Partners, Running Specialty Group, Square 1 Bank.
Digital Healthcare 58 Industry Analysis — Fall 2013
Exhibit 59: Important Digital Healthcare Companies – Diabetes ($ in millions)
Company Venture Funding Company Venture Funding
Intuity Medical $116.0 Glytec $12.7
c8 MediSensors $84.4 Integrity Applications $11.0
Glumetrics $45.4 LabStyle Innovations $10.0
TelCare $28.0
Digital Healthcare Companies - Diabetes
Source: FactSet and StartUp Health
Company:
Intuity Medical
Company Description: Intuity Medical focuses on developing technology to simplify diabetes management. The company‟s main product is the Intuity POGO Blood Glucose Monitoring System. Intuity is headquartered in Sunnyvale, California. Additional information can be found at www.presspogo.com.
Product: The Intuity POGO Blood Glucose Monitoring System.
Management: Emory Anderson serves as President and Chief Executive Officer. Robb Hesley serves as Vice President of Corporate Development and Finance. Kelley Lipman serves as Vice President of Marketing.
Key Investors: Accuitive Medical Ventures, FirstMark Capital, Investor Growth Capital, Oxford Finance, Sarnoff, Silicon Valley Bank, Thomas McNerney & Partners, U.S. Venture Partners, Venrock, and Versant Ventures.
Digital Healthcare 59 Industry Analysis — Fall 2013
Exhibit 60: Important Digital Healthcare Companies – Cardiovascular Diagnostics/Sensors ($ in millions)
Company Venture Funding Company Venture Funding
CardioMEMS $208.1 AliveCor $13.5
Heartflow $87.2 VasoNova $12.0
iRhythm $66.6
Digital Healthcare Companies - Cardiovascular Diagnostics / Sensors
Source: FactSet and StartUp Health
Company:
CardioMEMS
Company Description: CardioMEMS designs and manufactures wireless sensor and communication technology for the human body. The company‟s efforts are focused on improving the management of severe chronic cardiovascular diseases, such as heart failure and aneurysms. CardioMEMS is headquartered in Atlanta, Georgia. Additional information can be found at www.cardiomems.com.
Product: CardioMEMS develops and manufactures wireless sensors using microelectromechanical systems to help manage severe chronic cardiovascular diseases.
Management: Jay Yadav serves as Chief Executive Officer and founded the company in 1999. Mark Allen serves as Chief Technology Officer. Sandeep Yadav serves as Chief Operating Officer. Daniel Bauer serves as Chief Financial Officer.
Key Investors: Arcapita Ventures, Aperture Venture Partners, Arboretum Ventures, Boston Millennia Partners, Deerfield Capital, Easton Capital, Foundation Medical Partners, Georgia Department of Community Affairs, Guidant, Johnson & Johnson Development Corp., Medtronic Ventures, Rockport Venture Partners, St. Jude Medical, and Vision Capital.
Company Description: HeartFlow focuses on developing technology to allow physicians to non-invasively diagnose coronary artery disease. The company‟s Fractional Flow Reserve Computed Tomography technology is based on 15 years of research completed by the founders at Stanford University. The company is headquartered in Redwood City, California. Additional information can be found at www.heartflow.com.
Product: HeartFlow provides Fractional Flow Reserve Computed Tomography to provide a non-invasive tool to help guide treatment decisions for patients with coronary artery disease.
Management: Dr. John Stevens serves as Chairman and Chief Executive Officer. Dr. Charles Taylor serves as Chief Technology Officer and co-founded the company in 2007 with Christopher Zarins. Dr. Campbell Rogers serves as Chief Medical Officer. Christopher Zarins serves as Senior Vice President of Medical Affairs.
Key Investors: Blue Cross Blue Shield Venture Partners and U.S. Venture Partners.
Digital Healthcare 60 Industry Analysis — Fall 2013
Exhibit 61: Important Digital Healthcare Companies – Telehealth ($ in millions)
Company Venture Funding Company Venture Funding Company Venture Funding
Prodea Systems $60.4 SoloHealth $23.3 TruTouch Technologies $16.3
InTouch Health $49.8 Healthsense $22.5 HealthSpot $14.7
Kinnser Software $40.0 Reach Health $16.4 American Well $10.0
Digital Healthcare Companies - Telehealth
Source: FactSet and StartUp Health
Company Description: Prodea Systems focuses on simplifying people‟s digital lifestyles to facilitate better communication. The company provides a platform to deliver telehealth solutions to the home across existing wireless infrastructure. The company is based in Plano, Texas. Additional information can be found at www.prodeasystems.com.
Product: Provides a lifestyle-immersive solution to improve health by grouping an easy-to-use, powerful health management service with incentives such as educational VOD offerings, and social TV apps.
Management: Amousheh Ansari serves as Chairman and Chief Executive Officer, and co-founded the company in 2006 with Hamid Ansari and Amir Ansari. Hamid Ansari serves as President. Amir Ansari serves as Chief Technology Officer.
Key Investors: Amir Ansari, Anousheh Ansari, Hamid Ansari, Modab Venture Group, and Mubadala Development Co. PJSC.
Company:
InTouch Health
Company Description: InTouch Health focuses on the development and manufacturing of remote presence telemedicine medical devices. The company uses robotics and wireless technology to enable physicians the ability to conduct medical and consulting operations from a single location to patient wards, ambulances, and homes. The company is based in Santa Barbara, California. Additional information can be found at www.intouchhealth.com.
Product: InTouch provides a suite of FDA-cleared class II telemedicine remote presence medical devices. The company‟s suite of robots includes RP-VITA, RP-7i, RP-Lite, RP-Vantage, and RP-Xpress. Clinical apps provided by InTouch include Stroke Respond and Sure PACS. Additionally, the company provides a suite of services solutions to support its products.
Management: Yulun Wang serves as Chairman and Chief Executive Officer, and Mr. Wang founded the company in 2002. David Adornetto serves as Chief Operating Officer. Stephen Wilson serves as Executive Vice President and Chief Financial Officer.
Key Investors: InvestCare Partners, iRobot, and Twenty One East Victoria Investments.
Digital Healthcare 61 Industry Analysis — Fall 2013
Company:
Kinnser Software
Company Description: Kinnser Software is focused on improving the home healthcare industry‟s ability to deliver a better quality of life to patients. The company provides web-based home health software and customer support. We note that Kinnser Software serves more than 1,500 home health agencies across the United States. The company is headquartered in Austin, Texas. Additional information can be found at www.kinnser.com.
Product: Kinnser Software provides two software platforms to the home health industry: Kinnser Agency Manager and Kinnser Therapy Manager. The Kinnser Agency Manager is a web-based electronic health record and billing services platform accessible across all Internet-enabled devices. The Agency Manager is utilized by 1,200 agencies coordinating care for more than 130,000 patients. The Therapy Manager is a web-based electronic health record and billing services platform for therapy companies.
Management: Christopher Hester serves as President and founded the company in 2003. Keith Davis serves as Vice President for Finance and Operations.
Key Investors: Insight Venture Partners.
Digital Healthcare 62 Industry Analysis — Fall 2013
Conclusion: Who Leverages Digital Healthcare and Investment Potential? We believe healthcare is undergoing a digital transformation. Government stimulus funding from the HITECH/ARRA and ACA have enabled healthcare providers and enterprise electronic medical record companies to build the necessary foundation for a digital healthcare eco-system. As the number of physicians using EMRs/EHRs increases and the level of usage becomes more sophisticated, we believe the digitization of healthcare will move toward adding new solutions to this foundation. Currently, the Affordable Care Act is providing an impetus for digital healthcare innovators who are focused on leveraging the Internet and mobile to create interoperable solutions, provide mobility to the clinic, and are providing solutions that engage patients in their healthcare decisions. Although we have no specific knowledge of any M&A negotiations or discussions, over the next few years, we believe that several of the well-funded private digital healthcare companies will likely seek an Initial Public Offering, or combine with existing healthcare IT companies. We note that several enterprise-focused healthcare IT companies already exhibit an acquisitive appetite (e.g., Athenahealth‟s purchase of Epocrates and Aetna‟s purchase of iTriage). We believe the most relevant companies will be those that integrate the best technologies of Stage 1 and Stage 2 digitization. In our view, digital healthcare companies that provide innovative solutions via new technology and focus on improving quality of care via physicians or patients will become the most relevant. Finally, we believe the creation of a fully integrated digital healthcare eco-system will provide the foundation for healthcare to reach its “Holy Grail” using healthcare data to reduce healthcare costs.
While we believe the framework we put forth regarding the digitalization of healthcare seems sound, we realize the framework is not perfect. We look forward to updating our thoughts and views on the digitization of healthcare as new information becomes available. All prices in this report are as of the market close on 9/6/13.
Digital Healthcare 63 Industry Analysis — Fall 2013
Important Disclosures and Certifications
I, Steve Rubis, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Steve Rubis, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in this research report. For our European Conflicts Management Policy go to the research page at www.stifel.com
For applicable current disclosures for all covered companies please visit the Research Page at www.stifel.com or write to the Stifel Research Department at the following address. Stifel Research Department Stifel, Nicolaus & Company, Incorporated One South Street 16th Floor Baltimore, Md. 21202 Stifel.'s research analysts receive compensation that is based upon (among other factors) Stifel‟s overall investment banking revenues. Our investment rating system is three tiered, defined as follows:
BUY - For U.S. securities we expect the stock to outperform the S&P 500 by more than 10% over the next 12 months. For Canadian securities we expect the stock to outperform the S&P/TSX Composite Index by more than 10% over the next 12 months. For other non-U.S. securities we expect the stock to outperform the MSCI World Index by more than 10% over the next 12 months. For yield-sensitive securities, we expect a total return in excess of 12% over the next 12 months for U.S. securities as compared to the S&P 500, for Canadian securities as compared to the S&P/TSX Composite Index, and for other non-U.S. securities as compared to the MSCI World Index.
HOLD - For U.S. securities we expect the stock to perform within 10% (plus or minus) of the S&P 500 over the next 12 months. For Canadian securities we expect the stock to perform within 10% (plus or minus) of the S&P/TSX Composite Index. For other non-U.S. securities we expect the stock to perform within 10% (plus or minus) of the MSCI World Index. A Hold rating is also used for yield-sensitive securities where we are comfortable with the safety of the dividend, but believe that upside in the share price is limited.
SELL - For U.S. securities we expect the stock to underperform the S&P 500 by more than 10% over the next 12 months and believe the stock could decline in value. For Canadian securities we expect the stock to underperform the S&P/TSX Composite Index by more than 10% over the next 12 months and believe the stock could decline in value. For other non-U.S. securities we expect the stock to underperform the MSCI World Index by more than 10% over the next 12 months and believe the stock could decline in value.
Of the securities we rate, 47% are rated Buy, 50% are rated Hold, and 3% are rated Sell. Within the last 12 months, Stifel or an affiliate has provided investment banking services for 16%, 7% and 6% of the companies whose shares are rated Buy, Hold and Sell, respectively.
Digital Healthcare 64 Industry Analysis — Fall 2013
Additional Disclosures Please visit the Research Page at www.stifel.com for the current research disclosures and respective target price methodology applicable to the companies mentioned in this publication that are within Stifel‟s coverage universe. For a discussion of risks to target price please see our stand-alone company reports and notes for all Buy-rated stocks. The information contained herein has been prepared from sources believed to be reliable but is not guaranteed by us and is not a complete summary or statement of all available data, nor is it considered an offer to buy or sell any securities referred to herein. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of Stifel or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed within. Past performance should not and cannot be viewed as an indicator of future performance. Stifel is a multi-disciplined financial services firm that regularly seeks investment banking assignments and compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement agent in private transactions. Moreover, Stifel and its affiliates and their respective shareholders, directors, officers and/or employees, may from time to time have long or short positions in such securities or in options or other derivative instruments based thereon. These materials have been approved by Stifel Europe Limited, authorized and regulated by the Financial Conduct Authority (FCA) in the UK, in connection with its distribution to professional clients and eligible counterparties in the European Economic Area. (Stifel Europe Limited home office: London +44 20 7557 6030.) No investments or services mentioned are available in the European Economic Area to retail clients or to anyone in Canada other than a Designated Institution. This investment research report is classified as objective for the purposes of the FSA rules. Please contact a Stifel Nicolaus entity in your jurisdiction if you require additional information. The use of information or data in this research report provided by or derived from Standard & Poor‟s Financial Services, LLC is © 2013, Standard & Poor‟s Financial Services, LLC (“S&P”). Reproduction of Compustat data and/or information in any form is prohibited except with the prior written permission of S&P. Because of the possibility of human or mechanical error by S&P‟s sources, S&P or others, S&P does not guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. S&P GIVES NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P be liable for any indirect, special or consequential damages in connection with subscriber‟s or others‟ use of Compustat data and/or information. For recipient‟s internal use only.
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Rob Richardson (303) 291-5233
Communications Equipment
Sanjiv Wadhwani (415) 364-2538
Mike Lin (415) 364-2530
William C. Peterson (415) 364-2534
Electronic Supply Chain
Matt Sheerin (212) 271-3753
Nikhil Kumar (212) 271-3635
Paramveer Singh, CFA (212) 271-3809
Enterprise Hardware/Software and
Hard Disk Drives
Aaron C. Rakers, CFA (314) 342-8401
Joseph Quatrochi (314) 342-2180
Andrew Shinn, CFA (314) 342-2792
Enterprise Software
Brad Reback, CFA (404) 869-8051
Arvind Rajamohan (212) 271-3808
Adam Borg (212) 271-3794
Financial Technology
Christopher C. Brendler, CFA (443) 224-1303
John Davis (443) 224-1390
Information & Financial Tech Services
David Grossman (415) 364-2541
Irvin Liu (415) 364-5934
Semiconductors: Processors and Components
Kevin Cassidy (202) 778-1595
Dean Grumlose (202) 756-7767
Semiconductors: Analog & Mixed Signal
Tore Svanberg (415) 364-7461
Erik Rasmussen (415) 364-2553
Evan Wang (415) 364-7463
Semiconductor Capital Equipment
Patrick J. Ho (214) 647-3509
Software: Applications & Communications
Tom Roderick (312) 269-0323
Gur Talpaz (312) 269-0319
Matthew VanVliet (312) 454-3985
Software & Internet Infrastructure
Todd C. Weller, CFA (443) 224-1305
Ben Lowe, CFA (443) 224-1264
TRANSPORTATION & LOGISTICS
Trucking/Railroads/Domestic Logistics
John G. Larkin, CFA (443) 224-1315
David J. Tamberrino, CFA (443) 224-1356
Trucking/Airfreight/International Logistics
David G. Ross, CFA (443) 224-1316
J. Bruce Chan (443) 224-1386
Trucking Equipment (Manufacturing & Leasing)
Michael J. Baudendistel, CFA (443) 224-1357
Shipping/Maritime
Benjamin J. Nolan, CFA (312) 454-3986
EQUITY STRATEGY
Equity Macro & Sector Strategy
Barry B. Bannister, CFA (443) 224-1317
Jesse Cantor (443) 224-1344
Options Strategy
Brian Donlin (212) 271-3698
Matthew S. Heinz, CFA (443) 224-1382
Closed-End Funds
Alexander Reiss (212) 271-3772
Thomas Boyes (212) 271-3627
ADMINISTRATION
Amanda Cataldo (443) 224-1248
Candace Kane Conrad (415) 364-2516
Laura Kuhl (443) 224-1333
Jackie Matrosic (443) 224-1318
Tim McGurkin (443) 224-1323
Glenn Wharton (443) 224-1334
Supervisory Analysts
Christian R. Bell (443) 224-1373
Theresa Churchwell (215) 407-6925
Mariah Ehlert (303) 388-1421
Maureen Fitzgerald (410) 884-7728
Jackie Ganguly (781) 659-3809
Katherine Greiling (703) 910-6100
William Juliano (212) 271-3655
Kathleen Shipley (443) 224-1327
Paige Prichard Townsend (415) 364-2701
Gwen Wagner (443) 224-1328