Health Catalyst becomes latest UPMC Enterprises portfolio company to go public

Data analytics company raised more than $200 million in IPO

Health Catalyst became the latest UPMC Enterprises portfolio company to “go public” when the data analytics company completed an initial public offering (IPO) of stock on the Nasdaq exchange in July.

The Utah-based company, which formed in 2008 when a team of health care veterans set out to solve the data and analytics problems they faced throughout their careers, raised a total of $209.3 million from investors in the offering.

Yet even as investors buy and sell shares in Health Catalyst (HCAT), UPMC’s role as an investor and key customer working to build products that improve health care isn’t changing.

“Health Catalyst’s IPO represents a huge milestone for our portfolio company and a success for UPMC Enterprises and its family of portfolio companies and partners,” said Tal Heppenstall, President of UPMC Enterprises. “We remain an investor in Health Catalyst and look forward to watching them grow, now and well into the future.”

Health Catalyst marked the IPO as a waypoint in a long-term journey toward creating massive, measurable, and data-informed health care improvement.

“Today is another milestone in our ongoing and important mission, and we look forward to keeping our mission at the center of everything we do in the months, years and decades ahead,” CEO Dan Burton said during his Nasdaq closing bell remarks on July 25.

Health Catalyst, which has been a part of UPMC’s portfolio since 2016, first partnered with UPMC to commercialize an activity-based cost management system for hospitals and health care systems that was developed at UPMC.

At the same time, UPMC co-led a $70 million Series E fundraising round for the company. UPMC’s financial support continued when it invested in Health Catalyst’s $100 million Series F equity and debt funding round in early 2019. That round valued the Health Catalyst at $1 billion.

In addition to funding, UPMC Enterprises has strengthened UPMC’s customer relationship with Health Catalyst by facilitating the implementation and operation of the company’s products within the UPMC health system. These activities have helped Health Catalyst to mature its quality and reporting products and build application programming interfaces (APIs) that enable best of breed applications. UPMC Enterprises has also created a rounding application that augments the Health Catalyst platform.

The UPMC-developed cost management system acquired by Health Catalyst allows health systems to more accurately track specific health care activities, such as surgical procedures, with the goal of reducing spending. For its part, Health Catalyst leveraged its expertise in enterprise data warehousing infrastructure, analytics, and professional services to power the system, which is commercially available as CORUS Suite.

Since announcing its strategic partnership with Health Catalyst, UPMC has reduced the average length of stay for surgical patients by two to three days, realized an 81 percent relative reduction in patient-controlled pain management following complex abdominal surgery, and achieved $3 million in cost savings and avoidance for surgical patients using CORUS Suite.

The collaboration between UPMC and Health Catalyst won a 2018 Microsoft Health Innovation Award for enabling finance officers, physicians, service line leaders, and clinical and financial analysts to deeply understand the true cost of providing care across the continuum, and to relate those costs to patient outcomes.

When Health Catalyst formed, the company worked to replace the typical home-built database used by most hospitals and health systems with an advanced, standards-based health care data warehouse open to all organizations. The company’s technology sifts through electronic health record (EHR) data to provide doctors and other decision-makers with the analytics needed to deliver better care while managing and reducing costs.

Since then, the company has evolved to become a leading provider of data and analytics technology and services to health care organizations. Health Catalyst’s customers leverage its cloud-based data platform — powered by data from more than 100 million patient records, and encompassing trillions of facts — for massive, measurable, data-informed health care improvement.

Health Catalyst’s IPO marks the second for a UPMC portfolio company after Evolent Health went public in 2015.

Evolent (EVH), which supports efforts by health systems to create their own insurance arms and build population health programs, was formed between The Advisory Board Company and UPMC Health Plan.