Innovaccer annual recurring revenue tops $200 million after healthcare pivot

Innovaccer annual recurring revenue has passed $200 million, Fortune reported, up from about $130 million last year. The milestone shows how a company that once sold general analytics tools has built a large business around healthcare’s fragmented data systems.

Chief executive Abhinav Shashank was 26 when he and his cofounders shifted Innovaccer away from paying customers including Disney and NASA, according to Fortune. The team then spent four months inside the IT department at Mercy Medical Center in Des Moines, Iowa, to study how hospital data worked in practice.

Fortune reported that the hospital stint helped explain why clinicians often have to confirm basic patient details at the start of visits, including names and dates of birth. Interest in the product spread to hospitals in Nebraska, Texas and California before Innovaccer had built out much of a sales operation, according to the report.

What does Innovaccer do?

Innovaccer pulls information from electronic health records and insurance claims systems, combines it, and makes it usable for AI tools and care coordination, Fortune reported. The company works with seven of the 10 largest U.S. health systems and across 80 million patient records, according to the same report.

The company has raised $675 million in total, Fortune reported. That includes a $275 million round announced through Business Wire, with investors including B Capital, Danaher Ventures, Generation Investment Management, Kaiser Permanente and Microsoft’s M12.

Why did Innovaccer focus on healthcare data?

Shashank told Fortune that healthcare lacks the kind of connective layer that lets information move easily across systems. “Healthcare doesn’t have internet,” he said, arguing that AI companies are trying to build on top of missing infrastructure.

The bet is that hospitals and insurers need data plumbing before AI can deliver much value. Innovaccer’s platform is aimed at linking records and claims data that often sit inside separate systems, so care teams and software tools can use a more complete view of a patient.

Bloomberg has reported that U.S. healthcare spending is expected to top $6 trillion this year. Shashank estimates that $1.5 trillion of that amount is administrative waste tied to paperwork, calls and denied claims, Fortune reported.

Innovaccer customers reported about $2.5 billion in savings to federal regulators last year, mostly tied to better care coordination, according to Fortune. The report did not say those savings came from new hospital hardware.

Gartner has also given the company a prominent position in healthcare technology. Fortune reported that Gartner named Innovaccer a leader in its first healthcare technology Magic Quadrant, ranking it above Microsoft, Google, AWS and Salesforce on vision and execution.

Manthan Shah of WestBridge Capital, an early Innovaccer backer, told Fortune that the firm’s 2016 investment was based on the view that healthcare’s scattered data was an infrastructure problem. Innovaccer’s revenue growth suggests that many large health systems are now buying that premise.

This story draws on original reporting from Fortune.