K Health Expands to Virtual Childcare, Valued at $1.5B

K Health, a virtual healthcare company utilizing machine learning to reduce healthcare expenses through comprehensive health assessments, is introducing new childcare resources following a recent funding round that establishes the company’s valuation at $1.5 billion.

The $132 million investment secured in December will facilitate the company’s growth and support system enhancements, including integration with a majority of electronic health records – a feature anticipated to be available in the second quarter.

Throughout 2020, K Health capitalized on its unique position at the convergence of machine learning and direct-to-consumer healthcare, securing $222 million in funding within a single year.

This strong investor interest demonstrates the significant potential within the consumer healthcare market as businesses explore technological solutions to enhance care affordability.

K Health’s service offerings include a monthly subscription of $9 for unlimited access to the platform and its physicians, a $19 per-month virtual mental health service, and a $19 fee for individual urgent care consultations.

The company’s value proposition to both patients and investors centers on its ability to leverage data obtained through partnerships, such as with Maccabi Healthcare Services in Israel, which provided decades of anonymized patient data and health outcomes to refine K Health’s predictive algorithm, assisting its doctors with patient evaluations and diagnoses.

In principle, this positions the company’s service as a virtual primary care provider, possessing a substantial amount of patient information that, collectively, may enable quicker identification of underlying health issues or a more comprehensive understanding of patient well-being.

For pharmaceutical companies, this could translate into valuable population health insights, potentially opening new and lucrative avenues for drug development.

However, in reality, the quality of service aligns with its cost.

According to one provider on the platform, the company’s mental health services are delivered by medical doctors who are not necessarily licensed psychiatrists, which could result in interactions with insufficiently trained professionals and potentially detrimental outcomes.

While K Health’s chief executive, Allon Bloch, is likely accurate in his assessment that a large percentage of services can be delivered remotely (Bloch estimates 90%), these services should be provided by qualified professionals with the appropriate expertise.

There are inherent limitations to the extent to which algorithms or general practitioners should handle healthcare responsibilities, and K Health appears to be testing those boundaries.

“Remote care is suitable for drug referrals, urgent matters, and preventative care,” Bloch stated. “There’s a significant opportunity to improve and potentially lower costs.” 

K Health has already served hundreds of thousands of patients through its urgent care and subscription services, generating tens of millions of dollars in revenue during 2020, as reported by Bloch. He did not disclose the specific number of patients utilizing each service.

Telemedicine companies, like other remote service providers, have experienced substantial growth during the pandemic, with companies like Teladoc and Amwell witnessing significant increases in their stock values.

The investment in K Health was led by GGV Capital and Valor Equity Partners, with participation from Kaiser Permanente’s pension fund, the investment offices of 3G Capital, and 14W, Max Ventures, Pico Partners, Marcy Venture Partners, Primary Venture Partners and BoxGroup. 

K Health collaborates with organizations including Maccabi Healthcare; the Mayo Clinic, which is exploring virtual care models with the company; and Anthem, which offers the K Health service, branded as its own, to a portion of its membership base.