With $43.8 million worth of new venture capital in hand, Lexington, Mass.-based ehealthDirect Inc. recently chose to slough off that identity and change its name to deNovis in an effort to distance itself from the less-than-favorable Internet sector.
“The name eHealthDirect confuses people,” said deNovis CEO Tuan Ha-Ngoc. “The word direct makes people think we are a product for consumers and we’re not. Our customers are the health-care players. And the e’ at the beginning of our old name made the financial community think we were only an Internet-based business, which is also not true.”
DeNovis, which has developed a health-care administration plan, claims to bring 100% accuracy to the health-care industry with its real-time transaction platform. Its product includes automatic claims adjudication, which enables health-care companies to reduce the time they currently spend processing claims.
“The insurance industry is not famous for tech adoption, but deNovis is going to present an opportunity for them to reduce their costs by eliminating the need for direct labor,” said Will Oliver, a vice president at 3i Group PLC, which led the deal with a $16 million investment.
In addition to 3i, which gave the company a flat post-money valuation of $125 million, first-round investors Advanced Technology Ventures, Audax Ventures, Bain Capital Partners, JP Morgan Partners, Psilos and Utah Ventures also participated in the Series B transaction.
“We are pleased with our valuation, considering so many companies are getting funded this year at a major discount,” Ha-Ngoc said. “Right now, we have no plans for another round but at the right time, if the market is open, we will be going for an IPO.”
If the company does need additional capital to see it through to a Wall Street debut, it could possibly do a small mezzanine round, 3i’s Oliver said.
Founded in December 1999, deNovis plans on using its newfound capital to finish developing its products and bulk up its operations force. The company plans to start shipping the majority of its products within the next several months and projects profitability in 2003.
Although it’s still in beta stage, Tufts Health Plan and California-based Health Net Inc. are already using DeNovis’ system.
Oliver said he expects the company to grow its customer base significantly by next year.
“There are 150 major insurance companies in the U.S.,” he added. “All 150 will be calling deNovis by the end of next year and the challenge is going to be who to respond to first.”
Danielle Fugazy can be contacted at:Danielle.Fugazy@tfn.com