Before she became a partner with McKesson Ventures, Michelle Snyder spent many years building operational experience in digital health at companies such as Epocrates, which became the proving ground for the management teams of future digital health companies and founders of Doximity, One Medical, and Galileo. She also recently helped build Welltok, and has served as an advisor or board member for many digital health companies including Propeller Health and GoCheck.
With that accrued insight, Snyder and her colleagues at McKesson Ventures are well positioned to identify emerging trends in digital health and invest in innovative business models. As a corporate venture group, the team also tries to introduce the companies to the broader McKesson Corporation to see if there are opportunities for both portfolio companies and McKesson to find value, where and when it makes sense.
“One of our mantras has always been to be there for the companies we invest in and to support those companies over their lifespan. We like to say that we’re a valued investor,” said Snyder. “I think one of the benefits we bring as a team is this great mix of both venture experience and operating experience. And that helps us better support our companies as they navigate the ups and downs of building a successful business.”
Snyder pointed out that with the investment team’s experience, they know what companies need at different stages and how they can best support them. She noted that when companies have a successful IPO or acquisition, people tend to assume that they have had hockey stick growth, but that’s often not true.
“Almost any health IT company has challenging times and has to make tough decisions. They may have had to pivot their business model, swap out products, re-evaluate resource prioritization or shift certain team members. For me, as an investor, I’m really looking for whether the management team can be adaptable and responsive to the inevitable challenges and opportunities that come their way.”
Typically, McKesson invests in companies that are managed by exceptional teams and are already generating meaningful revenue. These companies have found product market fit and are typically at a commercialization inflection point, ready to scale. Asked which areas reflect the firm’s investment priorities, Snyder said the firm is doubling down in some areas where her team has strong convictions, such as biopharma clinical and commercial services, pharmacy transformation, oncology, data and analytics and alternative/risk based models of care.”
Despite the pandemic, or maybe because of the attention it drew to the needs for more healthcare and life science innovation, McKesson Ventures has had a stream of exits that illustrate the six year-old investment firm’s success, including American Well, Accolade, and most recently, Hims and Hers.
Snyder observed that new models of primary care is one of the most active areas in the market right now in terms of deal flow. Although many companies came into being before the public health crisis, Covid-19 magnified the need for these businesses. One early entrant into the primary care revolution space was One Medical, which scaled concierge care. It identified ways to improve the healthcare experience for patients and, even more important, people who were prepared to pay out of pocket for it — a business model that has failed to bear fruit for most healthcare companies. One Medical only recently went public 13 years after its launch. Other innovators followed including Oak Street Health and Iora Health, which have added preventive care and addressing social determinants of health to the primary care services they provide. Virtual care models followed.
“We’re now at this point where we have exciting hybrid models of care, which are a mix of virtual and in-person care,” Snyder said. “These companies are addressing how to deliver lower cost, but effective, quality care, using technology and evidence-based guidelines with multidisciplinary teams. They know virtual care won’t work for everybody so a hybrid model is best to provide an elevated primary care experience.”
McKesson Ventures is one of the most active investors in the biopharma software sector with Komodo Health, Evidation and M2Gen among its portfolio companies They are excited about unlocking the powerful combination of clinical and patient data to drive better patient experiences and improve outcomes.
In addition, another area for which Snyder expressed enthusiasm is the supply chain where the industry is ripe for digitization. As new personalized therapies become more prevalent in the market, the industry will need to have the capability to to support individualized therapies and reimagine the supply chain with the patient at the center. That’s where portfolio company Vineti has a role to play.
It’s fitting that supply chain is a top priority considering McKesson’s role as a Covid-19 vaccine and medical supply distributor.
“It’s going to be a complicated, but necessary problem to solve. Success will depend not only on getting these therapies to market but also eventually reducing the cost of them so that they can become more widely available.”