Ciox Health, an Alpharetta health data company, is merging with San Francisco’s Datavant in a $7 billion deal.
The combined company wants to make personal healthcare data less fragmented and more accessible to medical professionals and clinical researchers, Ciox Health CEO Pete McCabe said.
"It will be the biggest healthcare advancement in the last 30 to 50 years,” McCabe said. “The challenge is solving for data fragmentation.”
The combined company, called Datavant, will have a dual headquarters in Alpharetta and San Francisco, along with other offices across the country. The company has more than 8,000 employees. McCabe will lead the new company as CEO, and Datavant CEO Travis May will become the president.
McCabe says Ciox Health has the industry’s most extensive clinical data network, meaning it facilitates secure and private exchanges of identified medical records. Datavant links de-identified personal health datasets to each other.
“When you put the largest exchanger of identified, clinical data and the largest exchanger of de-identified health data together, you can now accelerate by 10 times the ability to build full patient data profiles,” McCabe said.
Ciox Health is one of the many health tech companies based in Alpharetta, a hub for health innovation. Last month, Alabama-based Computer Programs and Systems Inc. bought Alpharetta’s TruCode LLC for $61 million, and health operating startup LifeQ raised $47 million to expand its cloud capabilities.
The city says it’s home to nearly 700 tech companies, with more than 70 in health IT or biotech. For the last decade, Alpharetta has invested in technology as an economic driver for the city. In 2012, it created Tech Alpharetta, a nonprofit that incubates startups in a city-owned space.
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McCabe says creating this data-driven healthcare system is both a huge market opportunity and a moral imperative.
About 25% of the $3.8 trillion spent annually on U.S. healthcare could be characterized as waste, according to the Journal of the American Medical Association, Datavant says solving fragmentation in healthcare can prevent some of that waste.
Data-driven care also gives a better patient experience, McCabe says. If a person goes to the emergency room, that doctor could have access to records from their primary care physician and specialists. Better access often means better medical decisions.
Clinical researchers could also have access to more complete medical records to better develop pharmaceutical treatments.
"All of that data is informing you on the development for next treatment, drug or next preventative measure, which are lifesaving,” McCabe said.
The combined company reaches 40% to 45% of the U.S. population, McCabe said. It includes more than 2,000 hospitals, 15,000 clinics, 120 health plans, 70 academic institutions and nonprofits and 75 government agencies. That broad network is a necessary component to creating a healthcare system connected through data.
Ciox Health was created in a 2016 merger of four industry companies — HealthPort, IOD, Care Communications and ECS. All were identified and acquired by New Mountain Capital on an exclusive, proprietary basis between December 2014 and September 2015.
Ciox Health raised a $30 million funding round from Merk Global Health Innovation Fund and New Mountain Capital in 2019.
Those firms, along with other existing investors that include Cigna Ventures and Johnson & Johnson Innovation, supported the merger. New investors Sixth Street and Goldman Sachs Asset Management also joined. The merger is expected to close in the third quarter.
