Acme Digital Healthcare
Acme Digital Healthcare (ADH) is the #1 cloud-based Electronic Health Record platform for doctors and patients in the U.S.; with over five million patient visits a month and 30,000 active medical practitioners. One of our Angel groups seeded this company in 2009 and their members had since invested in multiple rounds as the company grew. Key to their growth has been offering the service free to practitioners, generating all their revenue from referral fees to labs and other service providers. We looked at investing several times, even as the valuations increased, but did not pull the trigger.
- Assessment: ADH was the first of dozens of online health portals that made sense to us. While there were a whole series of opportunities, however, something seemed off. By the time we got close to it, the company was valued way above our $10MM pre-money target.
- Outcome:In Spring 2016, we were invited to invest in Series E, to be led by a renowned West Coast VC. We declined once again – after learning that Acme had granted $350MM in redemption preferences as part of previous investment rounds. This means new investors would not receive any returns until the first $350MM in sale proceeds had been distributed to earlier investors.
- Learning:ADH turned out to be a “West Coast Deal” – aimed at becoming the ubiquitous provider of EHR services. Despite multiple rounds of investment at valuations as high as $600MM and almost universal support for their technology, the company has yet to reach breakeven. It is not obvious who the buyer will be – or that there will be a buyer.