Yahoo Finance Claure Bets on AI Startup K Health at $900 Million Valuation
(Bloomberg) -- K Health, an artificial intelligence company that provides a chatbot to patients before they speak with primary care-focused physicians, raised $50 million in an equity funding round led by Marcelo Claure’s Claure Group, Chief Executive Officer Allon Bloch said in an interview.
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Royalty Pharma Plc founder Pablo Legorreta, and existing investors Mangrove Capital Partners, Valor Equity Partners and Atreides Management LP also participated.
The transaction values New York-based K Health at about $900 million, people with knowledge of the matter said, asking not to be identified discussing confidential information.
“About half the insured population in America are not managing their health well, because they don’t have regular primary care — there are not enough physicians, it’s tough to get appointments,” said Bloch.
The cash injection will be used to refine the company’s AI, and to facilitate growth across the US, including by integrating with additional health systems, Bloch said.
Former SoftBank Group Corp. executive Claure is co-chair of an advisory council for Harvard’s Digital Data Design Institute, a group established to “oversee the reinvention of the future of AI-driven and digital businesses.” While researching areas where AI may have a relatively immediate effect, health-care took the top spot, he said in an interview.
“There’s so much hype around AI, it’s hard to figure out which startups will reap the benefits and be able to solve the world’s problems,” Claure said. He said K Health has made tangible progress and is essentially a “co-pilot” that helps doctors make personalized diagnoses and treatment plans. He was drawn to the startup due to its use of anonymized patient data from Mayo Clinic and Israel’s Maccabi Healthcare Services, as well as its integration with electronic medical records.
“Primary care physicians are key to the health-care ecosystem, this is where it all starts,” said Claure. “If doctors can be more efficient, they can see more patients.”
Projected Profits in 2025
Founded in 2016, the startup added doctors to its platform in 2019 and has recorded more than 3 million patient visits, Bloch said. Users turn to K Health for acute issues, the management of chronic conditions such as hypertension, thyroid and diabetes, or preventative treatments, he said. “With a click of a button, a patient and their medical chart can be in front of a doctor.”
K Health operates in 48 continental US states, and has partnerships with Cedars-Sinai, Elevance Health Inc., formerly known as Anthem, and UnitedHealthcare. For uninsured patients, it charges $73 for a one-time visit or $49 per month for an unlimited membership, Bloch said. On average, the platform works with about 2,000 patients a day, he said.
The company isn’t yet profitable, but is projected to be by next year, Bloch said, adding that he’d like K Health to pursue a future initial public offering, though no timing has been finalized.
Bloch said he’s optimistic that K Health can have a positive impact. “If we do this right, people will have better access to personalized primary care at a lower cost.”
To be sure, there are widespread concerns about the use of AI in the diagnosis of medical conditions. A 2021 study in Nature Medicine found that AI algorithms applied to chest X-rays underdiagnosed women, Black and Hispanic patients and those on Medicaid.
Patients are also skeptical of doctors’ use of AI. Some 60% of adults said they would feel uncomfortable if their doctor relied on AI to make their diagnosis, according to a 2023 Pew Research Center survey.
--With assistance from Sophia Vahanvaty.
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