Healthcare

Chrysalis portfolio company bCatalyst, founded as a business accelerator for promising Louisville start-ups, was an original investor in Louisville, KY-based Advanced Imaging Concepts, Inc. (AIC), a leading provider of document imaging solutions for the medical industry. AIC was acquired by Allscripts Healthcare Solutions (NASDAQ: MDRX), a leading provider of clinical software, connectivity and information solutions for physicians, in July 2003.

Chrysalis’ investment was in American Pathology Resources, a Nashville, TN-based physician management company focusing on pathology practices. American Pathology merged with Pathology Consultants of America, which was subsequently purchased by Inform DX before being acquired by AmeriPath (Former NASAQ: PATH) in November 2000. Today the company is a provider of cancer diagnostics, genomics and related information services.

Chrysalis was an original investor in Louisville, KY-based Aperture Credentialing, Inc., a leading physician credentialing company. The company was acquired by Ingenix Health Intelligence, a subsidiary of UnitedHealth Group (NYSE: UNH), in October 2002.

BioSeek, Detroit, MI, develops high-throughput biological systems for the validation and development of novel human therapeutics.

CerviLenz, Cleveland, OH, a manufacturer and distributor of a disposable device used to predict the risk of preterm birth in pregnant women.

Chronicity, Dallas, TX, provides compounding pharmacy services, healthcare marketing services and a coordinated care platform.

Connecture, Waukesha, WI, a provider of integrated web-based sales and service automation solutions for the health insurance industry.

Chrysalis’ investment was in Richmond, VA-based Manorhouse Assisted Living, Inc., an owner and operator of assisted living centers in the mid-Atlantic states. Manorhouse was subsequently acquired by Nashville-based LifeTrust America LLC, the owner and operator of Morningside Assisted Living communities throughout the Southeast, in October 2002. LifeTrust America was acquired by Five Star Quality Care (AMEX: FVE) in November 2004.

Foundation Radiology Group, Pittsburgh, PA, a provider of diagnostic imaging and radiology services to hospitals through a unique hybrid staffing model.

HCCA Holdings, Nashville, TN, a leader in global healthcare recruitment and staffing services.

Chrysalis invested in Ann Arbor, MI-based HealthMedia, a behavioral science technology company that builds and delivers tailored behavioral programs for the pharmaceutical/medical device, healthcare and disease management markets. The company was acquired by Johnson & Johnson in October 2008.

HealthTeacher, Nashville, TN, is the interactive leader in youth health, creating games, apps, and educational resources that make health awesome for kids. HealthTeacher’s research-based products are designed to get kids moving and to develop healthy behaviors that last a lifetime.

Intervention Insights, Grand Rapids, MI, is a health information services company helping community oncologists incorporate molecular oncology into their practice.

Lab Partners, which does business as MedLab, Cincinnati, OH, a regionally focused full-service provider of clinical diagnostic laboratory services for hospitals, healthcare facilities and physicians in the Midwest.

Chrysalis invested in Clear Vision Laser Centers, Inc., a Denver, CO-based laser vision correction services company. The company was acquired by LaserVision Centers, Inc. (Former NASDAQ: LVCI) in August 2001 and subsequently merged with Ontario, Canada-based TLC Laser Centers Inc. (TSX: TLC) to form TLC Vision in 2001.

meQuilibrium, Boston, MA, a provider of personalized online stress management solutions for consumers and employers.

MyHealthDIRECT, Delafield, WI, a provider of web-based access management solutions to healthcare providers and payers.

NextImage Medical, San Diego, CA, a provider of next-generation radiology services to the workers’ compensation market.

Here at Chrysalis, we love us some data. Venture investing isn’t all about “trusting the gut” after reading through a business plan or listening to an elevator pitch, when deciding whether to partner with an entrepreneur. A considerable amount of time is spent by a venture capitalist in the due diligence process — crunching industry, geographic and economic data; and speaking with current and former employees to make sure the decision to fund is in the best interest of our limited partners. All VCs win some and lose some….but it isn’t because we don’t crunch the numbers. The risk we take to fund a company is calculated and measured.

Each year, Inc Magazine comes out with the “Inc 5000”, a list of America’s fastest growing companies. They slice and dice the data and rank companies by industries, geography, and revenue. As healthcare and technology investors in the Midwest and South, here are a few of our takeaways:

1.The healthcare startup ecosystem is strong and continues to innovate.

Of the 377 healthcare companies on the list, the aggregate growth rate of these companies between 2008 – 2011 was 61%. Of the 25 industry categories, healthcare outperformed 10 other industries.

2. Entrepreneurs have many choices when looking for outside capital. Many entrepreneurs who take venture capital are looking for a growth partner not just cash.

 Of these 377 companies, about 21% of them are now or have ever been venture or private equity-backed.

3.Innovation happens between the coasts. Startups aren’t only hatched and grown in California, Boston and New York.

 66% of healthcare companies in the Inc 5000 are in non-coastal regions (e.g., including Southeast, Midwest, North Central, Texas, Southwest, South Central, Upstate NYC, Northwest and Colorado)

 62% of aggregate revenues of healthcare companies in the Inc 5000 are in non-coastal regions (e.g., including Southeast, Midwest, North Central, Texas, Southwest, South Central, Upstate NYC, Northwest and Colorado)

Sanovia, Philadelphia, PA, a provider of automated pharmaceutical management software solutions to health plans and pharmacy benefit management companies.

Chrysalis’ investment was in ActaMed, an Atlanta, GA company that merged with Healtheon in June 1998. Healtheon went public in February 1999 and subsequently merged with WebMD, changing its name to Healtheon/WebMD Corporation and later to WebMD Corporation in 2000. Further, the parent company changed its name to Emdeon Corporation (NASDAQ: HLTH) in 2005 when WebMD Health (NASDAQ: WBMD) completed its initial public offering. Today WebMD is a leading Internet-based provider of e-commerce solutions to the healthcare industry.