With the goal of making data a facet of every healthcare decision—and spinning that information back into life science research—Datavant and the medical records platform developer Ciox Health, plus their VC backers, have agreed to lay out $7 billion to combine their enterprises.
The deal promises to expand Datavant's reach to thousands of U.S. clinics. The resulting company plans to offer a joint technology ecosystem that brings disparate health records together and allow for secure, anonymous exchanges among patients, providers and biopharma companies alike.
It's the largest transaction by far among recent deals in the space, which focuses in part on de-identifying patient data so researchers can easily—and legally—use it.
Healthcare mapmaker Komodo Health raised at least $260 million over two funding rounds in the last year, and it acquired the cloud-based software developer Mavens alongside a new partnership with the drugmaker Janssen. Meanwhile, in April, the health IT provider Cerner finalized its $375 million cash buyout of Kantar's health and real-world evidence division in a big data play for the drug discovery and clinical research markets.
“The fragmentation of health data is one of the single greatest challenges facing the healthcare system today,” said Ciox CEO Pete McCabe, who will become chief executive of the new company set to emerge under Datavant's banner. Datavant’s current CEO, Travis May, will serve as the company's president and join its board of directors.
Datavant's technology encrypts patient-identifying information within health records—such as names, addresses and birthdays—and replaces them with a unique code, which allows an individual's medical history to be matched up across different systems, while maintaining their anonymity.
On the researchers' end, all they see a single large data set collated from multiple sources, spanning the course of a patient's treatment as they may move from provider to provider—useful data that could otherwise end up siloed away in different institutions, according to McCabe.
Together, the companies aim to provide data management services to more than 2,000 hospitals and 15,000 clinics, as well as more than 30 life science companies and 70 academic research institutions and non-profits, for an expected $700 million in combined annual revenue.
The $7 billion deal was supported by a slate of the companies’ existing investors—including Ciox’s New Mountain Capital and Datavant’s corporate parent Roivant Sciences, alongside Transformation Capital, Merck Global Health Innovation Fund, Labcorp, Cigna Ventures, Johnson & Johnson Innovation and Flex Capital.
The transaction also includes “a significant new investment” by Sixth Street, earning it a seat on the board, plus funds from Goldman Sachs’ West Street Strategic Solutions.
“Datavant’s groundbreaking tokenization technology and the strength of Ciox’s expanded network across providers, payers, health application developers, and life sciences markets makes this combination compelling,” said Sixth Street partner and Vice Chairman R. Martin Chavez.
At the same time, the deal will give the overarching Roivant greater reach in its own drug development efforts, spread across its various “vants” focused on autoimmune conditions, dermatology and rare diseases. “We look forward to developing additional differentiated technologies at Roivant going forward,” said Roivant CEO Matthew Gline.
The deal is expected to close in the third quarter of this year.