Arsenal and McKesson close their investment in OncoHealth

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OncoHealth, a digital health company dedicated to oncology, has made strategic investments from Arsenal Capital Partners and McKesson (NYSE: MCK), the parties exclusively tell Axios.

Why is this important: The range of cancer treatment options continues to grow, increasing the complexity of clinical pathways and increasing drug costs. Meanwhile, the oncology care management model remains outdated and ripe for innovation.

What they say : Atlanta’s OncoHealth is the only player addressing the many pain points in the market, which also include the imbalance between supply and demand from providers and the removal of friction between payers and oncologists, said John DiGiovanni, partner of Arsenal.

  • There are standalone utilization management companies, virtual care tools, and a slew of “unicorns” in real-world evidence, but “nobody does all of these things in a cohesive and complementary way” like OncoHealth, says DiGiovanni .
  • “There are many point solutions that work around various aspects of this problem,” adds CEO Rick Dean. OncoHealth’s mission? Do everything.

Details: Arsenal, advised by Evercore, took a majority stake in OncoHealth, with McKesson assuming a significant minority position.

  • “We weren’t shopping the business,” Dean says, but Arsenal approached OncoHealth with a similar view, anticipating a formal process.
  • The McKesson partnership enables OncoHealth to further collaborate with Ontada, its oncology information and technology arm, and its US Oncology Network.

How it works: OncoHealth’s platform offers payers and providers insight into their overall cancer drug spend and provides a second opinion on drug reimbursements.

  • Offering the only digital prior authorization platform exclusively for oncology, OncoHealth helps health plans determine if a patient is taking the right drug with the right efficacy and toxicity profile, then reviews if the patient can afford it. .
  • The FDA has approved more than 285 new cancer indications since 2017, making it difficult for health plans and providers “to keep up with all the new science that’s happening,” Dean said.

Yes and: “The natural extension of this is to reinvent the managed care model that health plans have been using for a decade or more,” Dean says.

  • OncoHealth in March unveiled Iris, a digital telehealth service connecting oncology experts to patients throughout the treatment journey.
  • Through Iris, patients receive personalized virtual care, physical symptom management, and 24/7 access to oncology nurses and mental health therapists.
  • Although there are many cancer apps, Dean thinks Iris is the first of its kind. “I don’t see anyone doing what we do in terms of providing medical advice.”

State of play: An internal Arsenal report predicts the market opportunity will exceed $300 billion by 2025.

  • Big payers like Anthem and Cigna have acquired usage management tools, but Iris’ independence may appeal to other payers, Dean says.
  • Likewise, OncoHealth is not tied to any particular EHR, allowing it to better follow the patient journey, he says: [of data] becomes much richer.

Rollback: In May 2020, OncoHealth raised $28 million in Series C funding from Baird Capital, Oak HC/FT, McKesson Ventures, and The Blue Venture Fund.

  • Its customer base has grown by more than 500% over the past three years, with revenue growing 45% year-over-year.
  • OncoHealth today works with 16 health plans, 9,200 providers and five life science partners.

And after: Dean says growth plans include digital expansion and entering the employer market, where cancer management is a major expense.

  • Its M&A program will be driven by strengthening its real-world evidence product for life science customers, enabling the transition to value-based oncology care and cancer care at home.
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