AI Health Startup K Health Secures $50 Million in Funding, Valued at $900 Million

K Health, an innovative artificial intelligence company that offers a chatbot for patients before they speak with primary care physicians, has raised $50 million in a recent equity funding round. The funding was led by Marcelo Claure’s Claure Group, according to K Health CEO Allon Bloch. The round also saw participation from Royalty Pharma Plc founder Pablo Legorreta and existing investors Mangrove Capital Partners, Valor Equity Partners, and Atreides Management LP.

This transaction values the New York-based K Health at approximately $900 million, as confirmed by individuals familiar with the matter who requested anonymity due to the confidentiality of the information. Bloch emphasized the challenges faced by many Americans in accessing primary care, noting that "about half the insured population in America are not managing their health well, because they don’t have regular primary care — there are not enough physicians, it’s tough to get appointments."

The newly acquired funds will be directed towards enhancing the company’s AI capabilities and expanding its growth across the United States. This includes integration with additional health systems, Bloch explained.

Marcelo Claure, a former SoftBank Group Corp. executive, currently serves as co-chair of an advisory council for Harvard’s Digital Data Design Institute, a body dedicated to overseeing the reinvention of AI-driven and digital businesses. Claure highlighted the potential impact of AI in healthcare, stating, "There’s so much hype around AI, it’s hard to figure out which startups will reap the benefits and be able to solve the world’s problems." He expressed confidence in K Health’s progress, describing it as a "co-pilot" that aids doctors in making personalized diagnoses and treatment plans. Claure was particularly drawn to the startup due to its use of anonymized patient data from Mayo Clinic and Israel’s Maccabi Healthcare Services, along with its integration with electronic medical records.

Claure underscored the importance of primary care physicians in the healthcare ecosystem, stating, "Primary care physicians are key to the healthcare ecosystem, this is where it all starts. If doctors can be more efficient, they can see more patients."

Founded in 2016, K Health integrated doctors into its platform in 2019 and has since recorded over 3 million patient visits. Users turn to K Health for a range of medical needs, from acute issues and chronic conditions such as hypertension, thyroid problems, and diabetes, to preventative treatments. Bloch explained that with the platform, "a patient and their medical chart can be in front of a doctor with a click of a button."

Operating in 48 continental US states, K Health has formed partnerships with Cedars-Sinai, Elevance Health Inc. (formerly known as Anthem), and UnitedHealthcare. For uninsured patients, the platform charges $73 for a one-time visit or $49 per month for an unlimited membership. On average, K Health serves around 2,000 patients daily, Bloch noted.

While the company is not yet profitable, Bloch projects it will achieve profitability by next year. He also mentioned the potential for a future initial public offering, though no specific timeline has been established. Bloch expressed optimism about the company’s impact, stating, "If we do this right, people will have better access to personalized primary care at a lower cost."

Despite the promising outlook, concerns remain regarding the use of AI in medical diagnostics. A 2021 study published in Nature Medicine found that AI algorithms applied to chest X-rays underdiagnosed women, Black and Hispanic patients, and those on Medicaid.

Additionally, patient skepticism towards AI in healthcare persists. A 2023 Pew Research Center survey revealed that 60% of adults would feel uncomfortable if their doctor relied on AI for their diagnosis.

The future of K Health and its AI-driven approach to primary care continues to unfold as it navigates these challenges and opportunities, striving to improve healthcare access and efficiency for millions of patients across the United States.