Claure bets on AI Startup K Health with a $900 million valuation

(Bloomberg) — AK Health, an artificial intelligence company that provides patients with a chatbot before they speak with primary care doctors, raised $50 million in an equity financing round led by Marcelo Claure’s Claure Group , said CEO Allon Bloch 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, said people with knowledge of the matter, who requested anonymity discussing confidential information.

“About half of the insured population in America is not managing their health well because they don’t have regular primary care – there aren’t enough doctors, it’s hard to get appointments,” Bloch said.

The cash injection will be used to refine the company’s AI and facilitate growth in the U.S., including through integration with additional healthcare systems, Bloch said.

Claure, a former SoftBank Group Corp. executive, is co-chair of an advisory board for Harvard’s Digital Data Design Institute, a group established to “oversee the reinvention of the future of digital and AI-driven business.” When researching areas where AI could have a relatively immediate effect, healthcare came first, he said in an interview.

“There is so much excitement around AI that it’s difficult 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 “copilot” that helps doctors make personalized diagnoses and treatment plans. He was attracted to the startup because of its use of anonymized patient data from the Mayo Clinic and Israel’s Maccabi Healthcare Services, as well as its integration with electronic medical records.

“Primary care physicians are critical to the healthcare ecosystem, this is where it all starts,” said Claure. “If doctors can be more efficient, they can see more patients.”

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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 problems, treatment of chronic conditions such as hypertension, thyroid and diabetes, or preventive treatments, he said. “With the click of a button, a patient and their medical record can be in front of a doctor.”

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AK Health operates in 48 continental U.S. 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 a month for an unlimited membership, Bloch said. On average, the platform serves about 2,000 patients per day, he said.

The company is not yet profitable, but is expected to be profitable next year, Bloch said, adding that he would like to see K Health pursue a future initial public offering, although no timeline has been set.

Bloch said he is 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.”

Certainly, there are widespread concerns about the use of AI in diagnosing 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. About 60% of adults said they would feel uncomfortable if their doctor relied on AI to make a diagnosis, according to a 2023 Pew Research Center survey.

–With assistance from Sophia Vahanvaty.

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