GV-Backed Fabric Acquires Virtual Care Company From TeamHealth

Now, Fabric is moving even further into the telehealth space with yet another acquisition. The startup has acquired TeamHealth VirtualCare, the virtual care business within the giant TeamHealth physician practice group, Business Insider has learned exclusively.

Fabric’s four acquisitions have been made possible by a raft of funding from top investors including Google Ventures, Thrive Capital and Salesforce Ventures. The startup has raised $80 million to date, including a $60 million Series A round in February led by General Catalyst.

Dust is leaning on telehealth at a time when many others are pulling back. While virtual care saw a surge of VC interest during the pandemic, investors and healthcare companies are now pulling back. UnitedHealth Group’s Optum also shuttered its virtual care business earlier this year, and telehealth companies Amwell and Teladoc saw their shares tumble from pandemic highs.

But Aniq Rahman, founder and CEO of Fabric, is still optimistic about the future of virtual care.

“There are a lot of people who are a little hesitant to stick to their beliefs. For us, virtual care is not going away,” Rahman said. “We want to continue to push the envelope in virtual care, and there are some great teams and technologies that we’ve been able to assemble as a result.”

Get care everywhere

While Fabric’s M&A-focused strategy is unusual for an early-stage startup, it is not unfamiliar to General Catalyst’s portfolio.

Commure, the $6 billion startup co-founded by General Catalyst CEO Hemant Taneja, has made six acquisitions in the four years since its launch and has relied on those acquisitions to fuel its growth, a September BI survey found.

While Commure has made mistakes in developing technology itself, Fabric claims the acquisitions build on its own products.

Fabric, formerly known as Florence, launched emergency room software last year to help manage patients before, during and after their visits. But emergency rooms are often overcrowded, including with patients with nonurgent medical conditions who are better off seeking care elsewhere, Rahman said.

By acquiring Zipnosis from Bright Health, Fabric can provide telehealth options to these patients.

“That really boosted our business and we had such a good experience with the Zipnosis deal that we are now doing acquisitions en masse,” Rahman said.

Fabric then acquired Gyant, a generative AI platform that automates patient scheduling and routes patients to the right care.

Rahman said the startup continues to develop and improve products that speed patient admission to the ER, automatically capture health data into the hospital’s electronic medical record and follow up with patients after their visit.

By purchasing MeMD from Walmart earlier this year, Fabric acquired the retailer’s virtual care technology platform and expanded its business to contracts with payers, employers and providers.

Now, combined with the acquisition of TeamHealth, Fabric has a network of clinicians in 50 states and access to more than 100 million lives in managed care contracts with payers.

The startup says it serves 30,000 employers, payers and healthcare institutions, including major health insurer Highmark and health system Intermountain.

Signs of life in the M&A market

Rahman said Fabric’s position as an early-stage startup has proven surprisingly beneficial for deal closing.

“It has allowed us to be very agile and nimble. We have been able to guarantee speed and certainty to the sellers, and we have also been able to construct very creative deals that have allowed us to align the interests of the teams and the shareholders,” he said.

The strategy is new for Rahman, an entrepreneur and longtime investor at Vast Ventures. The last company he led, an advertising analytics firm called Moat, was sold to Oracle in 2017 for $850 million.

According to Rahman, Moat flirted with the idea of ​​mergers and acquisitions in the years leading up to the sale, but it was never a priority for the company.

Fabric is now eyeing increasingly larger acquisition targets, Rahman said, across the spectrum of private equity- and venture-backed startups and publicly traded companies. And with the IPO window still closed, many startups looking for liquidity are knocking.

“A lot of companies that are struggling to raise capital right now, or some of these larger companies that are reevaluating their position in the market, that also creates opportunities for us,” Rahman said. “We have investors coming in virtually every week saying, ‘We have assets in our portfolio that can help support what you’re doing with Fabric.’”