SaaS Interviews with CEOs, Startups, Founders
1568 Why This Medical Tech CEO Is Considering 50% Sale of His Company for $3m
09 Nov 2019
Chapter 1: What inspired Andre Etherly to start eMedicalFusion?
launched this company back many years ago, bootstrapped it, then raised about a million bucks. This was back in 2011. Now about 10 people, again, helping and selling to small physicians across maybe one, two, three locations, helping them and really becoming their payment provider and running many, many different parts of their business. 100 customers today, 700 bucks a month.
They're doing about 700 grand per month in revenue, less than 5% revenue churn per year, growing 20 to 30% year over year. Hello, everybody. My guest today is Andre Etherly. He is the founder of eMedical Fusion LLC. He holds a master's of science information system technology from George Washington University.
Seeing the unmet needs of direct pay medical practices, he founded the company to design and build solutions that enable direct pay practices to succeed and excel both clinically and financially. Andre, are you ready to take us to the top? Absolutely, sir. Thank you. All right. eMedical Fusion. So first thing, what's the revenue model here? Is it a SaaS company? Yeah. It is a SaaS company, yes.
We have a couple of other revenue streams as well, but principally we're a SaaS company. Okay, that's great to understand. And then take us back to the product. So give me an example of a customer that's using you guys and how they use you. So a customer that's using us would typically be some form of a direct pay practice.
It might be a concierge practice or it might be an integrative medical practice or functional medical practices. These are all sort of synonymous, but they all exist out there in the industry to the tune of about 12% of the medical practices are direct pay, meaning that they do not accept insurance. So that's our first criteria if you want to use the Medical Fusion program.
We don't support an insurance-type practice at all. All of our practices are purely direct pay, meaning that the patient is paying them directly for services. We don't have the interference of insurance. Okay, interesting. And who's actually paying you, the consumer or the service provider? No, the consumer.
The consumer, well, in terms of who's providing, who's paying medical fusion, no, it's of course the service provider, the physician. So our clients are either mostly smaller physician practices, sometimes larger physician practices or physician group practices even that have, you know, locations around the country.
So, but it's always basically a medical professional, typically physicians, but also other allied providers. In other words, other non-physician medical service providers as well. I see. And what do they pay on average per month, would you say? Um, average, if it's just a single practitioner, they're going to pay somewhere around, you know, $500 a month for 75 is the actual starting point.
And is that like per location that, well, that that's for a single practitioner. If we add additional locations, it's another one 50 per location. Okay. Interesting. And, and how many additional practitioners are also one 50 per additional practitioner. Okay, so if you look at the average kind of company that joins you, how many locations and practitioners on average?
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Chapter 2: How does eMedicalFusion's revenue model work?
Two to three practitioners is fairly typical for us. I see. We don't get the really large ones. We do have a few of the large group practices where they might have multiple locations. Things like men's clinics that have multiple locations around the country or women's clinics. So we do have some of those that have multiple locations around the country.
They might have 20, 25, 30 locations in different places around the country. And we have some of those as clients as well. I got it. Okay.
Chapter 3: Who are the typical customers of eMedicalFusion?
And when did you launch the company? What year? 2011. 2011. And then fast forward today, have you raised capital or bootstrapped? Mostly bootstrap. We had one small investor back, uh, in 2012 and 13. Uh, but since then it's mostly been bootstrap. Okay. And how much did you raise in 2013? About a million bucks. Okay. A million.
And, uh, do you still work closely with that investor or no, they, they're kind of a silent partner. No, they, they kind of, we divested with them about 2013. Ah, okay. Okay. Very good. And then, um, again, over the past, what is that? I guess it's been seven years now over the past seven years, how many customers have you grown to?
Yeah, we've grown to, I mean, we don't exactly talk about the exact number of customers, but I mean, we've got, uh, cause it depends on how you're counting. If you're counting the one customer with 30 locations is 30 customers or one customer, but I just call it around, you know, a couple hundred customers. Okay. And no, no, I, I, yes. So sorry. I don't want to know the number of locations.
I just want to know like parent kind of companies. Right. So, so you're working with, it sounds like about a hundred kind of groups of physicians and locations. Right. Right. It might be, some of them might be just single docs. Some of them might have two or three docs and some of them might have, like I said, we have a couple that have, you know, 25, 30 locations. Yes.
Some one physician, one location, some three physicians, four locations. It just depends. Correct. Okay. Very, very good. And then look, I mean, I, so I can kind of multiply that a hundred number times that $700 price point earlier. You guys are doing about a million bucks per year right now on run rate. Uh, we can call it that. Okay. Well just correct me if I'm wrong though.
I'm just multiplying those two numbers. You're doing about 70 grand a month right now. That's close enough. Okay. And then in terms of growth. So if you go back a year ago today, how much were you doing then? About three fourths of that. We've grown quite a bit in the last year. Oh, wow. That's incredible. So teach us. I mean, how'd you grow that fast?
Um, we just, you know, for one hitting the big groups really helps, you know, as opposed to hitting one by ones. If we, you know, when we get a hit, uh, where we get a client with 25, 30 locations that typically really pushes the revenue up. Otherwise, you know, it's just word of mouth and difficult things. We don't have a big staff, so we don't have a big sales presence. How many folks are you?
Uh, about 10 altogether. 10. And where's everyone based? Um, they're based around the country and we have a few employees out of the country that on the development side. Okay. So everyone's remote. Mostly remote. That is correct. Yeah. That's great. I love that. Okay, good. So remote, uh, all around. And what's the breakdown? So you have engineers, you said offshore.
What are the rest of the employees? What are they doing? Uh, support. I mean, basically we do two things really, right? We develop software and test it and promote it into production and we've got to support it. So really everybody else is doing support. If you're not developing, you're pretty much doing support. Sales, marketing. Sales, marketing support. Okay. How many folks, sales, marketing?
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Chapter 4: What growth metrics does eMedicalFusion currently have?
And then look, in any kind of SaaS company, churn is really critical. What is your churn today and how do you make sure to keep it low? Well, I mean, that's, you know, that's tough. I think in terms of when you talk about churning, you're talking about employees, you're talking about customers. What are you talking about? I'm talking about customers churning. Yeah.
I mean, what, what tends to keep the customers from churning too much is that, you know, we have, um, in our, in our model, we give them a pretty steep discount if they sign into a three-year contract as opposed to a month to month. So that's kind of what, that's what kind of keeps the customer base pretty steady.
So they get a pretty significant, pretty material discount to do a month to do a three-year contract. Okay. So what, do you know what your churn is annually right now? It's less than 5%. Okay. Less than 5% revenue turn per year. Yep. Okay. That's look, that's pretty healthy. And then help us understand why it's so sticky. I mean, do you literally become basically their payment processor?
We are their payment processor. So we're everything. We're their everything solution. Everything from lead management all the way through to the EHR. So we're documenting all the charts, all the documentation of the charts, all the e-commerce revenue. We've got a lot of unique features that direct pay practices need that they can't really find in other tool sets.
So we've got a few competitors out there, but there's still a couple of years behind us. And we just keep adding new features literally every 45 days. We have a new release that brings out new features. So I think one of the things that makes us sticky is that we actively listen to our customers. So when they ask us for things, we actually do it.
I know a lot of companies will say that, but it might take three years before they ever bring it out. We actually, a customer might ask us for something and we'll take a look at it. It might end up in the software in the next release. So we're pretty responsive. And I think that's what helps us to be pretty sticky.
Because, you know, the tool set, some people feel like the software was almost built directly for them because it's, you know, we've got so many, as I call them, switches that allows a software to kind of be used in many different ways by many different types of practices. And that's what I think helps to keep it sticky. And the fact that we keep bringing out new features.
And how do you land new customers? Are you just traveling the country and selling one to one? No, it's all done. I mean, sometimes we go to conferences where we know that our customers are aggregated. So that's one way. Otherwise, we don't really do much traveling. The only time we'll travel is if it's a really large customer. Otherwise, everything is done over the Internet.
We use Zoom meeting as our meeting tool and we conduct demos and meetings and things of that nature over Zoom meeting. Very good. We don't really travel other than if it's a 25, 30 location deal, we'll travel. But other than that, we don't travel. Yeah. Under any plans to raise additional capital to fuel growth? Yeah, we are looking at that right now.
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