Health tech companies are striving to prove their value amid a correction that has seen lower investments in digital health startups in the last two years, although it has stabilized somewhat recently. A small stabilization is still a far cry from the telehealth-fueled boom in the broader category during the pandemic. Not surprisingly, startups are on a quest to differentiate themselves, shore up investor support and prove their value — not just to their customers, but also publicly.
That desire has led to interesting tactics from companies and their public relations professionals eager to stand out in the busy inboxes of journalists or to bait them with a juicy pitch. One such news release landed in my inbox last July and I ranted about it on LinkedIn. A less puzzling, but far bolder pitch arrived a month ago. I couldn’t ignore it.
It came from an external public relations professional on behalf of Ada Health, the Berlin-based AI-powered symptom checker and care navigation platform. The very first sentence of the pitch dated June 6 did what other pitches don’t: criticize another firm.
The Boast
The email stated: “As digital health companies, like Babylon Health, struggled to generate sustainable revenue, Ada Health, the world’s most accurate AI symptom assessment platform, is announcing its first year of profitability and 260% YoY revenue growth.”
I remember thinking, “Wow.” First, the pitch named the erstwhile highly-visible European AI telehealth unicorn which closed its U.S. operations and filed for bankruptcy in August 2023. Later, Babylon Health’s assets were bought by eMed, a Miami-based company and the name Babylon Health retired with one prominent critic likening the firm’s CEO to the now-disgraced Elizabeth Holmes of Theranos.
Second, the pitch said Ada Health was now profitable — in the supercharged health tech investment world of the pandemic, all startups and investors worshipped at the altar of revenue growth with nary a word on profitability or how they improved ROI of buyers of their own solutions. But in 2024 and the return to fundamentals, here is a startup actually saying it is profitable.
A call with Daniel Nathrath, the CEO of Ada Health, was in order. He graciously took me up on the Zoom interview. I decided to start with what seemed like the most important bit of the pitch — achieving profitability.
Most normal folks consider profitability with a simple equation: revenue minus expenses (which includes taxes) = profits. But in the world of business, there are certain twists in the tale of financial success — you hear terms like pro forma earnings, cash flow positive, EBITDA (earnings before income tax, depreciation, amortization) positive. These terms help companies tell, and analysts measure, potential for future financial success. But the bottom line is what I was interested in, so I kept asking until Nathrath clarified that the company has positive net income and is also EBITDA positive.
Predictably, given the company is private, Nathrath declined to share income statements, assuring me however, that the company doesn’t engage in “funny things” a reference to questionable accounting practices. Nathrath added that Ada Health is no longer raising capital, an indication of being on sure financial footing.
The profitability issue checked off, I moved on to the next — the PR pitch that called out the bankrupt and now defunct Babylon Health while boasting how well Ada Health was faring in comparison. Here, Nathrath balked and pleaded ignorance.
The Balk
“I don’t know, I mean I didn’t see that,” he demurred, referring to the pitch that the PR professional sent. “Personally, I don’t want to be quoted regarding any particular other company. I didn’t know that was in whatever you received.”
Except that when talking about questionable accounting practices that companies employed, Nathrath specifically called out WeWork.
“I remember laughing when I read this,” Nathrath recalled, most likely referring to the WeWorks’ community-adjusted EBITDA metric that people found outrageous. Ironically enough and similar to Babylon Health, WeWork, a tech-powered office rental business, also rose to dizzying heights before going bankrupt in late 2023.
So it’s not like Nathrath is averse to commenting on companies, but clearly he doesn’t want to be the healthcare CEO dancing on the grave of another continental competitor.
“I am happy to give general comments about what’s happening in the market, but I think it’s always difficult to specifically talk about one particular company because as you know, when you’re not inside it, it’s very hard to really — I don’t feel like I should pass any judgment on any individual company,” he said after declining to comment on Babylon Health
Perhaps, then, the better route is to instill your public relations professionals with the same high mindedness, instead of allowing them to run rogue in telling your company’s story — assuming that is indeed what happened here.
Still, if one were to believe that Nathrath and his team have built a profitable digital health company, then its important to get to the bottom of the company’s success.
Ada Health was founded in 2011 and is co-founded by clinicians. The company’s AI-driven symptom checker and care navigation tools are available to both health systems and insurance companies. Ada Health is also available through Epic’s App Orchard. It’s current customers — those that can be named publicly are — Novartis, Bayer, Pfizer, Orion Health and Jefferson Health.
What One Customer Says About Ada Health
In April 2023, Ada announced that Jefferson Health was deploying its AI-powered symptom checker and care navigation tools throughout Jefferson’s operations to make patient triage more convenient and efficient. Based in Philadelphia, Jefferson has 18 hospitals and more than 50 outpatient facilities across Pennsylvania and New Jersey. Since adopting the technology, Dr. Judd Hollander, senior vice president of healthcare innovation delivery at Jefferson Health, has been very satisfied. Dr. Hollander is also the associate dean for strategic health initiatives at Sidney Kimmel Medical College at Thomas Jefferson University and professor and vice chair of finance and healthcare enterprises in the Department of Emergency Medicine. In an email response to questions, Dr. Hollander said that he would recommend the tool to other health systems because It “facilitates after hours care (40% of our visits), and is used by all age groups (20% > age 60) so we believe it is very useful to extend care to any time any day any where.”
Since Jefferson Health introduced Ada Health, about 15,000 patients have used the tool, Hollander said.
“Ada provides a solution that gives patients 24/7 access via web, mobile device and patient portal that has AI within it to help patients evaluate their condition,” he wrote. “Rather than focus solely on the diagnosis it makes recommendations to patients about the next steps to take.”
If that next step is to make an appointment, Ada Health’s tool allows patients to do so.
“It allows patients to determine the urgency of the complaint and directs them to the right next step,” he explained. “There is feedback to the clinician when the patient seeks further care within Jefferson.”
He declined to answer questions about specifics of the contract, how Ada is paid and whether payment is based on agreed-upon metrics. And, while applauding its ease of use, when asked the central question about all health tech — is the tool is able to improve outcomes and lower costs — Dr. Hollander said that it is too early to answer that.
AI and Human, or AI Versus Human
But answering the value question with evidence is rightly what Ada has been trying to do. On its website, the company lists several peer reviewed studies, which all show that Ada’s AI tools are more accurate than those of competitors. The answer remains the same when the AI tool is pitted against physicians. In a study published in the Rheumatology International in 2022, Ada’s software had significantly higher diagnostic accuracy in recognizing inflammatory rheumatic diseases compared to physicians (70% vs 54%). Ada also was able to make the final diagnosis much more accurately than its human counterparts, which included experienced physicians (54% of the cases vs physicians’ 32%). [One study author’s research is supported by drugmaker Novartis (an Ada customer and maker of several rheumatology drugs). Two other authors are members of a group whose partner is Novartis.)
Interestingly, Nathrath deliberately eschewed any such comparisons. He believes his approach in describing Ada’s capabilities is what differentiates it from other digital health firms touting their AI chops.
“We never went out and made claims saying we are somehow better than doctors or something like that,” he said. “Because I think first of all, that’s not what it’s about. It’s about how you can best support the patient and it’s not about competing with doctors.”
He also added that Ada Health deliberately has stayed away from taking on risk. That too, is interesting given my understanding that the only way healthtech proves its dollars and cents value is putting its money where its mouth is.
“We also decided to not take on risk or, for instance, on value-based care contracts in the U.S. which was a thing that I think some market participants decided to do, but we felt this is not our core competence,” Nathrath said.
Doing so would help revenue grow much faster, but without experience in these things it’s not a wise move, Nathrath declared.
For its part, Ada has grown its revenue 250% in the last year, but Nathrath wouldn’t reveal details. A Pitchbook analysis, which has numbers from the year ended December 31, 2021, found that the company’s revenue grew to $8.7 million from $2.7 million in the year ended December 31, 2020, a 210.5% growth. Pitchbook has no data for 2022 and 2023.
AI-powered solutions are all the hype these days, and Ada Health is certainly part of the mix of companies trying to wield the technology to make patient care more convenient and efficient. It’s great that Jefferson Health is having such a positive experience with the company’s products and it’s only natural to want that story told in publications such as MedCity News. But approaching media can be a double-edged sword. Founders and other senior executives need to be on the same page as the external communications professionals being hired to amplify their story.
Deliver what you promise in the pitch. Please.
Photo: Westend61, Getty Images
