Investment Notes #5 – Myia Health

We are excited to announce Movac has led the Series A bridge investment in Myia Health. Myia Health is a data driven virtual care platform enabling hospital systems to better serve their populations of elderly and chronically ill patients in their own homes. It uses a combination of IoT devices, daily patient surveys and telehealth visitations to predict which patients are most likely to suffer a health event and prioritize them for proactive care. To do this with high accuracy Myia has built fully explainable AI models using 100m Electronic Health Records from over 600k patients. Myia has developed this leading solution by working closely with Mercy Health, one of the 5 largest health systems in the US and a leader in virtual care. Together Myia and Mercy hope to both improve patient quality of care and reduce cost-to-serve. Mercy is not only a co-development partner but is also an investor and Myia’s first paying customer. However, with backing from other organizations such as the American College of Cardiology, Myia have weighted sales pipeline of over $10m USD in front of them in 2021. Sounds big, but honestly it’s only the first nibble at a massive opportunity.

Usually “massive and growing” is a good thing?

“How large is the opportunity?” is the first question a VC asks. No problem for the US healthcare market which weighs in at $3.5 trillion and is perhaps the largest addressable market opportunity going. It employs 1 in 10 American employees, consumes 1 in every 4 dollars spent by the government and 1 in every 12 dollars spent by consumers. But the most scary statistic is how fast it is growing – US healthcare spend quadrupled from 1980 to 2018 and its share of GDP is twice as high as the OECD average. You would expect immortal life for this amount of money, but actually Americans have the lowest life expectancy and highest infant mortality in the OECD. Furthermore, it is a rapidly ageing population – by 2040, about one in five Americans will be 65 or older (this was one in eight in 2000). In short, change is badly needed. The US needs to find a way to deliver high quality healthcare at lower cost. Estimates are that IoT can lower costs by $100b a year by reducing unplanned hospital visits and increasing patient to provider ratios. In the past there has been massive inertia in the system created by complex and arcane healthcare regulations, a for-profit healthcare system that is trying to drive price increases and a chaotic interlocking network of health insurance providers and hospital systems who combine to make change so difficult. Myia is navigating through this mess by focusing on the small set of high risk patients who drive the majority of the costs. These are chronically ill patients who have multiple diseases and are largely on Medicare or some other “single payor insurance” scheme where the impetus to reduce average per patient costs is the highest. The COVID pandemic has also played a major role in breaking through the inertia as it has ushered in important regulatory changes such as reimbursement for remote patient monitoring and permission to deliver health services across state lines. In VC timing is everything and our bet here is that the time is right for the type of change that Myia is enabling.

Investing in the kiwi diaspora

One unusual aspect of this investment is that it is not a NZ domiciled company like our other investments. In Fund 5 our investment mandate included a 10% allocation to non-NZ companies to allow us to work with kiwi’s founders who have located their companies offshore in their target markets. The US healthcare market is so complex it’s an almost insurmountable task to understand it from afar. The CEO of Myia Health, Simon MacGibbon, is a kiwi lad who graduated from Otago and Canterbury Universities in the ’90s. He started his career in New Zealand in various top consulting companies such as IBM, Deloitte and McKinsey which eventually took him overseas. He co-founded and was Managing Partner of BCGs Digital Ventures practice in San Francisco. His clients pulled him more and more towards the opportunities for digital transformation in healthcare and in 2017 he left BCG to start Myia Health. Those years offshore spent deeply understanding the healthcare industry and building a network and reputation are what gives him a viable shot at building a $10b enterprise value company. It won’t be easy but we are proud to be able to back him in this journey.

The NZ VC village

In closing, I wanted to thank some people for helping make this deal happen. Because the thing about our country is that it’s a village, and many hands sometimes touch the ball in small and large ways before it crosses the line. Thanks firstly to Simon for casting his net back to New Zealand for investors. Thanks to our CTO in residence Jeremy Ginsberg and operating partner Rob Shaddock for help in the due diligence. Thanks to Ash Fontana from Zetta Ventures who gave us insight into Myia’s AI systems. Thanks to Randy Komisar for introducing us to a collection of US healthcare VCs to better understand the market opportunity. Love our village!