[Updated 5/3/19, 12:55 pm CT. See below.] As hospitals and clinics have shifted from paper-based records to digital systems, one of the biggest challenges has been sharing patient data between healthcare providers, and between providers and outside software applications. This “interoperability” problem has created a market for companies such as Redox, a Madison, WI-based startup that develops software tools to make the flow of patient information more seamless.
Redox has worked on the problem for about five years, and now investors think the company is ready to take a big step forward: The startup said Wednesday it pulled in $33 million in a Series C funding round.
Battery Ventures led the investment, and was joined by previous Redox backers .406 Ventures, RRE Ventures, and Intermountain Ventures. RRE led Redox’s $10 million Series B round in 2017, and .406 led Redox’s $3.5 million Series A round in 2015. Redox’s other past investors include Flybridge Capital Partners and Madison-based HealthX Ventures.
The $33 million round is one of the largest venture investments in a Wisconsin-based startup in recent memory. Most VC deals for Badger State companies don’t exceed $10 million. Others that have include a $30 million-plus Series B round for Shine Medical Technologies last November; a $12 million investment in Phoenix in 2017; and a $21.5 million round for Propeller Health in 2016. Propeller was acquired by San Diego-based medical device maker ResMed (NYSE: [[ticker:RMD]]) last year for $225 million, the largest reported exit for a Wisconsin startup since 2011.
Redox’s latest funding round elevates the stakes for the company to continue growing and achieve an exit of its own in the next few years. Its investors think it’s on the right path.
“Redox is a driving force in solving healthcare’s interoperability challenge,” said Battery Ventures general partner Chelsea Stoner in a prepared statement. Stoner has joined Redox’s board with the investment. “We were blown away by the network effects Redox has already generated and how foundational its platform has become to achieving the promise of digital health.”
Redox’s core product is an application programming interface (API) that lets healthcare applications move information into and out of patients’ electronic health records in a secure way. The idea is this will improve communication between healthcare providers and technology partners, and ultimately help improve patient care. A Redox spokesperson said the API can be used to talk to records software developed by 36 different vendors. The company has said those vendors include Allscripts (NASDAQ: [[ticker:MDRX]]), Athenahealth, Cerner (NASDAQ: [[ticker:CERN]]), and Epic Systems, located in the Madison area.
More than 450 healthcare organizations now use Redox’s software to “integrate and exchange” 5 million patient records per day across various electronic health records systems, the spokesperson said in an email message. Redox’s healthcare users include Brigham and Women’s Hospital in Boston, Cleveland Clinic, Memorial Sloan Kettering Cancer Center in New York, and Utah-based Intermountain Healthcare, whose venture arm invested in Redox. Hundreds of cloud-based software applications use Redox’s tools; the startup says its technology partners include Microsoft (NASDAQ: [[ticker:MSFT]]), Fitbit (NYSE: [[ticker:FIT]]), and ResMed.
Redox was born in a healthtech startup incubator in Madison, 100health, launched by three former Epic employees: Luke Bonney, Niko Skievaski, and James Lloyd. As Xconomy chronicled, the trio struggled to make their unusual startup incubator structure work, but in the process of helping launch seven ventures, they saw a big opportunity with one of them: Redox. They decided to scrap the incubator less than a year after its launch in order to focus full time on building Redox.
“We started seven companies. Five of those companies we realized would need to integrate with electronic medical records at some point in order to be successful, to have some sort of scale,” Skievaski told Xconomy at the time.
Redox itself has grown to around 80 employees located around the US, and the cash infusion could help it grow to an even larger scale. Skievaski tells Xconomy the plan is to expand to about 150 employees by the end of the year. (The team photo above is from 2017.) [Added employee numbers.—Eds.]
“We’re grateful to be in a position to help solve one of healthcare’s thorniest challenges,” Bonney, Redox’s CEO, said in a prepared statement.
