Tebra, which calls itself the healthcare industry’s version of Shopify, announced on Dec. 17 that it has closed $250 million in new equity and debt financing to accelerate its research into AI and automation.
“We see an incredible opportunity to supercharge our practices with AI capabilities,” Tebra co-founder and Chief Executive Dan Rodrigues told the Business Journal.
Tebra plans to use the funding to rapidly deploy AI-powered capabilities across every aspect of practice management, including electronic health records (EHR), billing and payments, patient experience, and practice marketing.
“The opportunities with AI are creating the next platform shift in software,” Rodrigues said.
The latest funding is the second major investment announced since Tebra was formed in 2021 by the combination of two similar companies. At that time, it raised $72 million and Rodrigues said its revenue run rate was $200 million and its valuation was $1 billion.
“The business is north of $200 million and highly profitable,” Rodrigues said last week, declining to disclose the current valuation.
Tebra calls itself “the Digital Backbone for the Connected Healthcare Practice,” claiming it is the only all-in-one electronic health records platform built exclusively for independent healthcare practices.
The company says private providers using its platform have grown from 100,000 in 2022 to 140,000. The company estimates there are 1 million providers altogether with a $20 billion total addressable market.
Deep Pedigree
Rodrigues has a deep pedigree in software. Before he graduated with a Bachelor of Science in computer science from UCLA in 1998, he worked at two software firms and then co-founded Scour, a music search engine that was sold in 2000.
After a stint starting a boutique software consulting firm, he founded Kareo in 2004 as a cloud-based clinical and business management platform designed specifically for independent medical practices. It raised more than $120 million from a variety of investment firms.
In 2021, Kareo merged with PatientPop, a Santa Monica-based firm founded in 2014 that offers a growth-focused marketing platform to help healthcare providers promote their practices and attract new clients. It provides services like patient surveys, search engine optimization, reputation management and online scheduling.
The combined company’s name, Tebra, was derived from “vertebrae” and symbolizes its “backbone role” in medical practices.
Tebra ranked No. 6 on the Business Journal’s annual list of software companies this year with 350 employees in Orange County and 725 companywide.
Tebra in 2022 moved into a 30,000-square-foot office along the water in Corona del Mar.
The company notes that while consumers on a smartphone can order a meal, hail a ride and buy a car, healthcare is a sea of complexity and fragmented software where doctors use seven different platform systems that don’t work well together.
“Private practices are the backbone of American healthcare,” Rodrigues said. “For years, they’ve been drowning in administrative work.”
The Deal
Rodrigues said that, about six months ago, the company began seeking backers for its next round.
The financing consists primarily of equity capital led by Hildred, a healthcare-focused private equity firm with $3.5 billion in assets under management, as well as a debt facility from J.P. Morgan.
Newport Beach’s Toba Capital, which invested in the earlier round, signed up again for the newest round. Toba, the largest VC firm in Orange County, was founded by Vinny Smith, the CEO who engineered the $2.4 billion sale of Quest Software to Dell.
The newest round was oversubscribed and included significant participation from existing investors Transformation Capital and HLM Venture Partners.
“Tebra has built the rare platform that doesn’t just digitize records but actually performs work on behalf of the provider,” Hildred co-founder and Managing Partner Andrew Goldman said in a statement.
“We believe Tebra’s vision for an AI-enabled ‘System of Action’ is the critical unlocking mechanism this market needs to restore profitability and focus back to patient care.”
Confidence Signal
The company said the newest financing round signals “confidence in Tebra’s vision to level the playing field for independent providers squeezed by rising overhead, declining reimbursements, and expanding competitive pressure.”
Tebra says its platform delivers a “System of Action” that automates manual tasks, reduces common errors, and simplifies workflows for practice owners and their teams.
“AI represents the great equalizer for healthcare,” Rodrigues said in a posting on YouTube.
“For far too long, independent providers have been outgunned, competing with hospital systems with endless resources. AI levels the playing field.”
Kirkland & Ellis LLP served as legal advisor to Hildred while Tebra’s financial advisor was Jefferies while its legal advisor was Fenwick & West LLP.
Tebra CEO Says Healthcare Burnout is Rising
Tebra CEO Dan Rodrigues issued a note on his company’s website. What follows are excerpts.
“Independent healthcare is under pressure. Burnout is rising, margins are shrinking, and private practices are being swallowed by consolidation at a historic pace. Yet every day, we meet clinicians who refuse to give up on the model of care they believe in.
“One of them is Dr. Arjun Reyes, a psychiatrist who has served more than 5,000 clients in Southern California. After nearly 30 years in practice, he was close to burning out under the weight of documentation, administrative work, and a caseload that kept growing.
“Then he adopted Tebra’s AI Note Assist—and got 3 to 5 hours of his day back.
“(AI Note) could keep me from retiring,” he told us. “I get time back to research treatments, care for my patients, and take care of myself.”
“His practice is now saving $750,000 annually through AI-powered documentation; preserving $600,000 in revenue by reducing no-shows; saving $160,000 through streamlined workflows compared to legacy EHRs; and growing from five reviews to 230+, now averaging 4.5 stars
“And they’re expanding to a second location. This is the kind of transformation AI can make possible. This is why we raised $250 million.”
—Peter J. Brennan
