VCs Help cMore Make Less Work For MDs

Recognizing that medical school doesn?t really teach physicians how to handle the finances of a modern health-care practice, cMore Medical Solutions is developing a computer automation system that is able to handle such issues.

To support its research, the Minneapolis-based company recently secured $11 million in the first tranche of a Series D venture capital financing. As for how large the round will be when finally completed, it depends on who you ask.

Mark Sweeney, chief operating officer of cMore, said the company is looking to net $4 million more. Ryan Drant, a principal with New Enterprise Associates, actually put the figure closer to $6 million, with $1 million of that set to be provided by Tenant Ventures.

Drant went on to say that NEA put $4 million into the round after cMore merged with Med Specialist, which NEA also invested in. “Med Specialist had a strong management team but less near-term revenue. We thought the combination of the two would be a stronger offering. We then immediately led the new financing,” said Drant.

Terms of the fourth round deal?s first tranche provided cMore with a $32 million post-money valuation. The company has raised $24 million of venture capital to-date. In addition to lead investor NEA, Affinity Ventures also participated in the transaction.

CMore is already seeing around $7 million in revenue and 160 hospitals using its equipment. The company, which currently has 71 employees, plans to use the cash for marketing, sales and working capital.

Additionally, with an expected burn rate of $6 million, Drant anticipates that this round will carry cMore to cash flow positive by mid 2002.

“We have proven that when a physician captures procedure data in a structured way, most administrative and financial tasks can be eliminated by the power of computing. With a cMore system, referral networks and reimbursements are routine procedures,” Sweeney said.

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