German health scaleup Patient21 has raised a €100m Series C — the biggest raise by a European health platform in 2023.
The round was roughly 70% equity and 30% debt, according to founder Chris Muhr, who is also former COO of unicorn car trading platform AUTO1. Israeli VC Pitango led the round and Luxembourgish debt funder IPF Partners provided the debt financing.
The startup plans to use the money to develop its software platform and expand into two European countries.
Patient21's main business is acquiring and outfitting dental clinics with its proprietary management software for appointment booking and patient data. The startup also provides a patient-facing health platform allowing them to look at their digital case history, access diagnosis and plan treatment. Patient21 owns and manages all of its clinics.
It's more than doubled the number of dental clinics it manages from 19 to 43 in the past 17 months, making it the fourth largest dental provider in Germany, according to the startup. Patient21 has also launched four GPs and six women’s health clinics in that time.
About half of Patient21’s revenue comes from state reimbursements and the other half directly from its patients. While 95% of the money it makes from GP and women’s health is paid for by the state, dentistry — the larger part of the business — is a more even split. It currently has about 200k patients across all clinics.
Pitango was joined by Germany’s Bertelsmann Investments and the UK’s Artian in the round. Existing investors Target Global, Piton Capital and PICO Venture Partners also participated.
Investors are now more comfortable with both physical and digital
Muhr tells Sifted that when he started the business, many investors asked why he wasn’t building a purely digital company.
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“You have no idea how much shit I had to deal with in the first two years,” he says.
Now the mood music among investors has shifted. Despite having the potential for faster initial growth, digital-only healthtech businesses will only ever control a limited portion of the patient journey because there will always be some in-person element, Muhr argues.
Babylon and Kry both opened physical clinics in 2016 and 2018, respectively. More recently, healthtechs built to be digital-physical hybrids from the very start have launched.
One is Germany’s Avi Medical, which provides primary care clinics and raised €50m in April 2022. Polish counterpart Jutro Medical raised €6m in July 2021.
They’ve seen real success. In February 2023 Avi founder Vlad Lata said that his startup had tripled in size since its raise. Jutro founder Adam Janczewski says it opened six clinics by the end of 2022 — one more than it said it planned to when it raised.
But it hasn’t all been plain sailing. These digital-physical startups use debt financing or bank loans to finance buying and opening clinics — and rising interest rates put pressure on that business model. Lata said that Avi had initially wanted to double in size again in 2023, but decided to spend the year developing its product instead.
There have also been positives to the wider economic downturn for Patient21, says Muhr. The real estate economy is deflating so building companies are looking for projects, meaning Patient21 can get clinics renovated on the cheap, he tells Sifted.
Plans for the future
Patient21 plans to spend part of the equity building out a generative AI tool to help medical professionals diagnose from X-rays, which Muhr says will be released by the end of 2023.
The startup will also work towards selling its software platform to other clinics as a white-label solution starting in 2024.
“I can imagine some form of hybrid model where we form partnerships with doctors and sell our platform to clinics we don’t own,” says Muhr. “That could happen in the form of a franchise or partnership.”
Patient21 also hopes to expand into two more European countries in the next 12 months — although Muhr is coy about exactly which. It will start by launching 10-15 dental clinics across those markets, in addition to 40-50 new clinics in Germany in the next 12 months.
But expanding internationally as a health platform is no mean feat given healthcare systems differ significantly from country to country. It’s why Patient21 is starting with dental clinics when it expands. “In dentistry, patients receive similar treatment across the world. It’s surgical in nature and has comparable clinical flows,” Muhr says.
There’s also less red tape than in areas like primary care as so much dental care is paid for by the patient, he adds. In 12 months' time Patient21 hopes to have more than doubled patient numbers.