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Is Practice Fusion Heading for an IPO?

Posted on January 21, 2016 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

The New York Times recently reported that Practice Fusion is said to have hired JP Morgan Chase to evaluate an IPO. Here’s a look at the estimated IPO number for Practice Fusion according to the New York Times:

Practice Fusion later created a way to estimate its I.P.O. valuation if revenue came in at $155 million in 2018 instead of $181 million, according to one of the people. Using the lower revenue assumption, the company could command a valuation of $1.1 billion to $1.2 billion if it goes public. It is unclear if the lower revenue estimate was made in response to the market turmoil.

Practice Fusion itself is of course not really commenting on their plans for an IPO or not. However, since it has raised $149 million to date at a valuation of $635 million, you have to imagine that an IPO is in their future. However, many big silicon valley companies have stuck to the private market lately and avoided the IPO. I’m not sure Practice Fusion will be in a similar position to them though. A look at their revenue numbers is one indication of why they’re a bit different than other companies that have raised larger rounds in the private markets:

Practice Fusion’s revenue was $26.9 million in 2014 and was expected to increase by 71 percent to $46.1 million in 2015, with the company projecting it would pare losses by 40 percent to $25.8 million in 2015, according to the document prepared by bankers and the company.

At the time the document was prepared, the company estimated revenue would hit $70 million in 2016.

I personally think that an IPO is in Practice Fusion’s future. It’s just a question of when it will happen. Certainly the market volatility we’ve seen lately isn’t helping their case to do an IPO. However, I bet the bigger challenge is going to be creating attractive revenue numbers that make sense to the public markets. I believe public markets have a hard time valuing number of users and other metrics that make Practice Fusion look attractive.

Ever since the first venture capitalists asked me about Practice Fusion, I’ve said that the company has created value. The number of doctors they were able to sign up on their platform was impressive. That’s the power of offering something for free that other doctors pay hundreds of thousands of dollars to buy. No doubt their network of physician users is a valuable asset. I hope it is since they raised $149 million to build it.

The real question for me around Practice Fusion isn’t whether they created value. Instead, the question is how valuable is what they created? I once heard Peter Thiel suggest at their user conference that Practice Fusion was building the platform for healthcare. Building that would be worth multiple billions of dollars. However, Practice Fusion hasn’t built anything close to that since Practice Fusion is doing nothing in the hospital EHR space. It’s naive to think that Practice Fusion could compete in that piece of healthcare. Not to mention they have a very small part of the hospital owned ambulatory practice space where the trend is to go with the integrated hospital EHR solution.

Long story short, I think that Practice Fusion will do an IPO. I could even see them doing an IPO for a billion dollars. I’m sure that’s what Ryan Howard, Practice Fusion Founder and former CEO, wants so he can claim his startup unicorn status. Although, I’ll be interested to see how Practice Fusion’s revenue grows between now and an IPO. The golden age of EHR is over and we’re entering the dirty slog of EHR sales and EHR switching. I don’t think that makes for a compelling story for investors.

100Plus Founded by Practice Fusion Founder Ryan Howard and Chris Hogg

Posted on November 4, 2011 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I just saw the news hit Techcrunch that a new company 100Plus raised $500k from Peter Thiel and is being founded by Chris Hogg and Ryan Howard, CEO of free EHR vendor Practice Fusion.

My first response was, wait…Ryan Howard is founder of a new startup company. What about Practice Fusion. Then, as I read about 100Plus, I realized that 100Plus is basically an extension of Practice Fusion. I see it as Practice Fusion’s research division. Sure, Practice Fusion already has a research division, but 100Plus is likely going to be the way that Practice Fusion is able to leverage their currently 24 million records.

Techcrunch describes the new company, 100Plus as such:

Essentially, 100Plus is a personalized health prediction platform that uses data analytics and game mechanics to show just how much small changes in one’s behavior can lead to a longer and fuller life.

I’ll be interested to see what they produce. I’m sure they’ll reach out beyond just the Practice Fusion data to other healthcare data repositories as well. However, the game mechanics part of it sounds interesting to me. I’ve always believed that someone is going to find a way to improve our health using some form of game mechanics. I’m not sure if 100Plus will be the company to do that (they’re still in stealth mode until next year), but someone will.

Latest Practice Fusion Stats Continue to Skyrocket

Posted on August 26, 2011 I Written By

Dr. West is an endocrinologist in private practice in Washington, DC. He completed fellowship training in Endocrinology and Metabolism at the Johns Hopkins University School of Medicine. Dr. West opened The Washington Endocrine Clinic, PLLC in 2009. He can be contacted at doctorwestindc@gmail.com.

Just thought I would share with my readers the continued phenomenal climb in users and patients served by my EMR, EHR provider, Practice Fusion.  They continue to impress the heck out of me in terms of their user number, which is now over 100,000 users strong.  They reportedly add to this over 500 per day and 10,000 per month.  The patient count is now up to 16,000,000 apparently.  Considering there are about 312,000,000 citizens in the US population, that’s about 5.1%.  Quoting from the above link, “the company started the year with 55,000 users (82% increase) and 6 million patients (166% increase).”

Just remember that a while ago I predicted that Practice Fusion would be the next Gmail and that eventually every doctor would eventually have an account.  Looks like my prediction may be coming true.  No wonder venture capitalists like Peter Thiel have been pumping in the dollars.

Dr. West is an endocrinologist in private practice in Washington, DC.  He completed fellowship training in Endocrinology and Metabolism at the Johns Hopkins University School of Medicine. Dr. West opened The Washington Endocrine Clinic, PLLC, as a solo practice in 2009.  He can be reached at doctorwestindc@gmail.com.