The electronic health records company formerly known as Allscripts, now operating as Veradigm, has faced a series of crises, including a $145 million settlement with the Department of Justice and a delisting from Nasdaq. In an effort to revamp its business, interim CEO Yin Ho orchestrated the $140 million acquisition of AI startup ScienceIO to tap into its data, a major competitive advantage over industry giants like Epic.
ScienceIO, founded in 2019 by Will Manidis, specializes in AI models that can streamline the process of cleaning and structuring medical data. Veradigm plans to leverage ScienceIO’s technology to process its vast trove of medical records, which includes data from independent doctor’s offices across the country. By de-identifying and packaging this data, Veradigm aims to sell valuable insights to pharmaceutical companies seeking real-world patient outcomes for drug research and development.
Unlike other medical records companies that do not own patient data, Veradigm’s ownership of its data rights allows for unprecedented longitudinal studies and data linking capabilities. This unique advantage positions the company to offer valuable insights to pharma companies looking to understand how patients react to drugs over time. With a growing market for real-world data in healthcare, Veradigm hopes to achieve revenue growth by selling structured data to pharmaceutical companies focusing on cardiac, metabolic, and central nervous system diseases.
While Veradigm is financially stable and profitable, some analysts are skeptical of its growth targets given its recent performance. Despite these concerns, Ho and Manidis are confident in their strategy to utilize ScienceIO’s AI models to unlock the value of Veradigm’s data assets. By pre-selling data products to pharma customers and planning for pilots by the end of the year, the company is positioning itself for revenue and margin expansion in the coming years.
Veradigm’s history of reinvention dates back nearly four decades, with significant M&A activity under its belt. Former CEO Glen Tullman had recognized the potential value in collecting and reselling patient data, laying the foundation for the company’s current focus on leveraging its data assets. The decision to acquire ScienceIO as a way to control and leverage its AI technology signals a new era for Veradigm as it seeks to capitalize on the burgeoning market for real-world healthcare data.
Privacy experts caution about the potential risks of AI impacting health privacy once data has been de-identified. However, Veradigm maintains that it does not train its models on re-identifiable data. With plans to start generating revenue from data products and expanding margins in the near future, Veradigm is poised for a transformational period as it repositions itself as a key player in the healthcare data industry.
