record—including trips to a physician’s o;ce, urgent care
facility, or local CVS for a flu shot, hospital stays, and notes
from a pharmacist—and know that all systems are actually
communicating. Hospitals can flag patients who are juggling
multiple chronic conditions and most likely to wind up
back in the emergency room after a procedure—which could
cost them Medicare penalties—so clinicians can proactively
adjust care plans. Dunleavy cites research showing that
with predictive analytics in play, the average hospital stay
drops by nearly a day, the number of ER visits declines by
more than 20 percent, and complications from chronic
conditions (such as infections and amputations) plummet.
For a brand that no one beyond the health care industry
has heard of, Inovalon became a quiet behemoth before
stepping onto the public stage. In 2015, looking to attract
talent, to reach a broader variety of health care clients, and
to access capital for big-budget acquisitions, Dunleavy took
the company public. Inovalon raised just over $600 million
in its IPO, and last year recorded $449 million in revenue.
In March, the company announced a $1.2 billion acquisition
of the clinician-focused Ability Network, with the goal of
getting its One Platform into more provider hands.
Dunleavy never dreamed of being a doctor. “I was born
an engineer,” he says. As a geeky, code-all-night teen, he was
more obsessed with robotics and computer science than
with flesh-and-blood patients. He studied neuroscience
and engineering at Dartmouth, footing the tuition by taking
on every programming gig that came his way and, with a
classmate, launching a small computer company from his
campus apartment. For his honors thesis, he developed a
system that could simulate the way the human brain works
in order to, someday, power robotic limbs. But when a
ou don’t need to be the founder’s mom to
benefit from Inovalon’s analytics. If you’ve
enrolled in a health plan, visited a doctor,
filled a script at the pharmacy, or used a
medical device, there’s a better than one
in two chance that the Bowie, Maryland–
based company has run your health info through its real-
time algorithms. Inovalon counts hundreds of insurance
companies, provider systems, and pharma, device, and
diagnostic companies as clients, including 19 of the top 25
health plans and 13 of the top 15 pharma and life sciences
companies. It pools data on more than 240 million patients.
While its clients are household names—Walgreens,
Medtronic, Merck, Anthem, Aetna, Blue Cross Blue Shield—
none of them could do what Inovalon has done, which is
build ways for massive data sets to talk to one another and
develop predictive analytics that can drive better patient
outcomes and lower medical costs. For decades, our health
care industry has been dangling the prospect of a system in
which each of us has an electronic health care record that
follows us around so every provider has real-time access.
Instead, issues such as the inability of systems to exchange
data have hindered progress. Meanwhile, U.S. health care
costs continue to climb—hitting $3.3 trillion in 2016, a
4. 3 percent bump over 2015. The Inovalon One Platform, as
this combination of analytics and massive cloud computing
muscle is called, is transforming the tsunami of big data
into something actionable and understandable.
Today, a pharma manufacturer might use the platform
to track not just side e;ects and drug interactions, but also
how compliant patients are in taking their meds, as well as
a drug’s e;ectiveness compared with other options on the
market. Doctors can look at a patient’s electronic health care
Narbeh Derhacobian, the co-founder and CEO of chipmaker Adesto
Technologies, wasn’t prepared for the valuation his company got after
he took it public in October 2015: about $60 million, after raising only
$25 million. That was half what investors believed Adesto would fetch.
“That particular week was the worst time to go public,” he says. On the
flight home, Derhacobian recalls, he applied several gin and
tonics to mitigate his depression.
Nevertheless, Derhacobian says, going public was the right
move. Adesto powers the internet of things. Its long-lasting,
low-energy-consuming semiconductors run everything from
glucose monitors to smart home sensors. But Derhacobian
had been in dire need of a cash infusion to invest in sales and
marketing to grow the business. “It was still a time that private
equity money going to chip companies was very rare,” he says.
Meanwhile, his institutional investors—from whom he’d raised
some $60 million over nearly a decade—were hungry for an exit.
Adesto rebounded. The company is now growing revenue
Adesto Technologies Gin, tonic, perspective: His IPO was a dud, but his company is flourishing.
by 30 percent annually and has turned profitable. It generated
$56 million in 2017 sales, an increase of more than 27 percent. The expe-
rience taught the founder an important lesson: Keep losses in perspective,
and measure progress against the past. —Z.H.
IPO October 2015