SaaS Interviews with CEOs, Startups, Founders
This Software for Doctors hit $51m revenue last year (100% growth). $5m profit.
19 Mar 2024
Chapter 1: What is the main topic discussed in this episode?
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now using a little bit of machine learning AI room to do there, but he scaled nicely.
Chapter 2: How did Revelier achieve $51 million in revenue last year?
Broke $51 million of revenue last year with about 10% EBITDA margin. The year before that, about $25 million, so doubled over the past 18 months. Hoping to break $100 million this year. That's the stretch goal. We're rooting for them. Funding the business in a very capital-efficient way, keeping an equity new deal done with Hercules.
I can't talk about Jay's specific deal, but Hercules public filings They're usually targeting a 15.5% all-in weighted yield and 11% headline rates.
Sounds like they got a good deal done here as Jay's going to hopefully use that money to go fund future acquisitions as they look to continue to expand ACV, which they've done over the past three years, expanding ACV almost 3X to $900,000 in annual revenue per average customer. Hey folks, my guest today is Jay Ackerman.
He's an enterprise software executive responsible for setting the vision, strategy, and objectives for Revelier. As a leader, he's also keenly focused on shaping and stewarding the culture at the company to attract a robust collaborative team while driving an innovative mandate to accelerate value-based care mission to make this really specific.
Revelier is a data and analytics platform for healthcare. So super specific. We're going to jump into it today. Jay, you ready to take us to the top? Yeah. Can't wait, Nathan. Let's go. We were just chatting pre-show. Our first chat was all the way back five years ago in 2019. You said you re-listened to the episode last night. Did you get most of the predictions right? More right than not. Yes.
Yeah. What was the biggest surprise? As I mentioned to you, the one we didn't get right is we thought we would end 2019 with a business that was generating positive cash. And we didn't hit that point until 2020, 2023. But we're there now and really excited about how the business is performing.
So just to be clear, last year in 2023, you guys ended up EBIT deposit of cash flow positive at the end of the year. We did. Yeah. That's incredible. Congratulations. Now, I have a bunch of questions in terms... You're doing a lot of very unique things. You've raised a large round from Hercules in a down market. You have successfully executed that I know of two acquisitions. A lot of founders...
love the idea of inorganic growth via acquisitions, but then they fail with the integrations. I think you've done a really nice job. I want to dig into that. But you also have a really efficient capital structure, I think. But before we dig into any of that, let's talk about what we love, which is your customers. What are they buying from you? What are you selling? Yeah.
And there's been one major change in our customer segment since we talked in 2019. So we're selling a data and analytics platform to payers, insurance companies, and risk-bearing providers, think health systems, hospitals, doctors who take risks to support value-based care. And so those are our two market segments.
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Chapter 3: What is the strategy for reaching $100 million in revenue this year?
So yeah, that's a new offering for us. I mean, Jay, I go to my primary care doctor once a year and they don't remember the stuff I told them 12 months ago. How do you sit on enough data to be able to tell the doctor focus on these three things about Nathan? Because we learned about these four years ago from this other data set we sit on.
Yeah, well, so the thing that you've probably experienced this, something pops up for you and you'll go to an urgent care setting. You might have a prescription filled from CVS. You might have it fulfilled from a local small pharmacy. You may then go see a doctor out of network and you have a lab done. And so that data is not consolidated in an easy format. We're able to sweep
We identify like a geography based upon where you are, how many miles we're going to sweep, all the care settings that exist, pull that data in.
Chapter 4: What interest rate is associated with the $65 million debt facility?
We're really successful. We can capture incremental data by 90% of the patients that kind of run through our platform. But the challenge is when you get all that data, you better be really good at mining it because you can have thousands of pages of data. So we take that thousands of pages of data and we synthesize it down to the top two or three things.
And if the doctor is curious and doesn't understand what we're suggesting, they can click in and go exactly to the precise spot in one of those records where we're drawing that conclusion. Okay. So let's just use me as an example real quick. So I'm making this up, right? But it's for the sake of the example. Last year, I had strep throat. I went to urgent care.
I didn't go to my PCP because she was too slow, right? They were too slow to see me. I went to urgent care. It's only four miles from the PCP. It's 12 miles away. What public data set are you able to use to know that I purchased cough drops or nasal spray at CVS because the urgent care prescribed something?
Yeah, well, we're connected into a couple of the major lab systems, pharmacy data companies. So when we put your name in, we can pull what data they have on your prescriptions that have been fulfilled. What are those big ones? Can you name the top three? You'll see a lot tied to diabetes. In our target segment in healthcare, Medicare patients,
And Medicaid patients, those are our two biggest segments. So Medicare, you're going to see people with diabetes, chronic heart condition, kidney disease. And so those are examples of the, let's call it top conditions that stand out, obesity, morbid obesity. So you'll scrape data sets related to those things, not like strep throat from a guy like Nathan at the CVS. No, no. I see. Yeah.
More chronic, you know, things that are going to carry, you know, kind of year to year. Okay. I think our audience now clearly understands sort of what you're providing customers. That was extremely helpful. Help me understand how you've priced this. So what does an insurance company pay you and what would the doctor or the hospital pay you? Yeah.
So our pricing model has shifted from our last discussion predominantly to a per member per month model. So that health plan, that provider, they'll pay us a set dollar amount for every number, every one of the patients in their care. And we bill them quarterly on that. And they run their businesses under those models. So that's a well-understood model in running a health plan.
It's a well-understood model in running a large health system. Yep. Yep. Okay. So yeah, that makes sense. And then when you're selling to an insurance company, what does that, what does that package look like? The same thing. It's, it's a per member per month. Ah, okay. Okay. So both, so it's two different segments, but it's the same sort of pricing model per member per month. Yeah. Okay.
And what, what did you, I forget, pardon me. What, what did you switch from? What were you, what were you doing? We were predominantly in a cell phone cellular plan model where you would pre-purchase units on our platform. So you would pre-purchase. If a health plan had 100,000 members that they were caring for, they would pre-purchase. They might look at 25,000 of their patients.
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Chapter 5: How does Revelier integrate acquisitions effectively?
So we're not asking our sales team to go learn kind of the buying pattern of a new executive inside of a health system that has nothing to do with the people that we're currently talking with. So that's kind of number one. We did our first acquisition, acquired a more dated tech stack, and we took traditional kind of data center hosted tech stack. We've migrated it to AWS. Which company was that?
Dynamic Healthcare? Yeah. So we moved it into AWS. We've modernized the tech stack. Now the same single brand. So the experience for the customer is they're seeing one company. The data flows across both applications.
Chapter 6: What are the customer segments Revelier is targeting?
Culture is important. Dynamic was a slower moving company when we acquired it. About 30, 38 on the team when you bought it?
uh yeah probably actually a little smaller than that um and uh and we in the first 12 months of owning them we sold more new business than they had sold in the prior five years and the reason i call that out is because all of a sudden we were asking everybody to run a lot faster to move a lot quicker and how we were standing up new customers operationalizing it um
And for some, they weren't used to that. Some didn't really want to do that. We had some people who self-selected out, didn't want to move at that pace. We're really excited about the way the team has contributed and some of the talent that has risen up. But yeah, that wasn't for everybody. MD Portals, the second acquisition, much more culturally aligned in the way we operate and the way we move.
In fact, they probably have challenged us to move a little faster. How many people on their team when you bought them? Yeah, I mean, that was a small team. It was a team of sub-15. Okay, okay. So, I mean, both these companies, it looks like, were bootstrapped in under $3-4 million in revenue when you bought them. Is that a fair statement? Fair for acquisition number two.
Acquisition one was a cash-generating business of about $7-8 million of ARR. Oh, wow. It had been a flat business for a long time. That's impressive though, because if they were under 30 FTEs when you bought them at 28, generating seven to 8 million bucks of revenue, that's a cash machine.
I mean, the revenue per employees with a roof, that's like record numbers, but they were bootstrapped, right? Friends and family back, yeah. You weren't dealing though in your negotiation with some VC that said, Jay, I want 100X return. It's a billion dollars for the M&A deal or bust. No, no. Yeah, interesting.
And by the way, on the acquisition front, both of them were companies we had established partnerships with. So we understood one another. We knew how our products were going to work together. We were already out selling them in the market and it made a lot of sense to just go quicker and move to acquisition. Yeah, this makes a lot of sense.
How did you make sure, I mean, do you have a history at other companies of doing M&A? Like how did you make sure to get that first one right? Are there any sort of a piece of advice you give our audience, consultants you use, things like that? Um, I, I have done, um, M&A in the past. I wouldn't say, I mean, I've done, I was a seller. I sold a business.
Uh, I was a part of buying, uh, two, three other companies in the past. So a number of experiences, but not, you know, not double digits, but I think what's most important is the product. You gotta have product fit. You can't do it for financial engineering purposes. you go down that path, yeah, your numbers might look nice for a little while, but it's going to break down.
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Chapter 7: How is Revelier pricing its services for healthcare providers?
The year before that, about 25 million, so doubled over the past year. 18 months, hoping to break 100 million this year. That's the stretch goal. We're rooting for them. Funding the business in a very capital efficient way, keeping an equity new deal done with Hercules.
I can't talk about Jay's specific deal, but Hercules public filings, they're usually targeting a 15.5% all-in weighted yield and 11% headline rates. Sounds like they got a good deal done here as Jay's going to hopefully use that money to go fund future acquisitions as they look to continue to expand ACV, which they've done over the past three years, expanding ACV almost 3X to $900,000 in
in annual revenue per average customer. Jay, thanks for taking us to the top.