HealthDataInsights Sells for $400 Million. Big Win for GRP Partners.

Posted on Nov 8, 2011 | 50 comments


The tech market is filled with many stories of early-stage funding. It’s even more exciting when you can report an exit of a company that is a major win. That’s why I’m proud to announce today that HealthDataInsights (founded by Victor Chaltiel), where GRP Partners was a 30% owner, has been acquired for $400 million. It maps to several themes about “solving bigger problems,” “taking more meaningful ownership positions” and “women in entrepreneurship.”

Let me explain all three.

1. Solving bigger problems
HealthDataInsights (HDI) is a company that helps to recover money for the government or private insurers who have been incorrectly billed or fraudulently charged. This is important because at the US federal level Medicare is billed about $500 billion (yes, that’s half a trillion!) / year and it estimates that up to 9% of its billings are over-billed or fraud. That’s $45 billion just in federal billings. HDI also focused on state Medicaid programs as well as private insurers.

Just how effective has HDI been at recoveries? At the federal level HDI is responsible for auditing 22% of the US territory yet has been responsible for 41% of all US refunds or a whopping $658 million between the original pilot program and the current program.

So when I talk about solving big problems – 2/3rd of a billion dollars to taxpayers is high on my list. The longer-term potential of this is enormous, which is why the company was acquired by HMS Holdings. They are excellent at what they do.

The science of finding recoveries is based on computer-based algorithms that flag high-potential errors and trained technicians that then review these claims. My partner & mentor Yves Sisteron (You can get to know Yves in this YouTube video) has been active at HDI for years (as has our CFO, Dana Kibler).

2. Taking more meaningingful ownership positions
Every investor has different strategies for driving returns to its shareholders. At GRP Partners our focus has always been on having a small number of investments in the industries we know well. Our investments focus heavily on the financial services industry, digital media, mobile applications & infrastructure, SaaS / Cloud and retail innovation. These are industries in which our partners have focused for the past 15-20 years.

And we’re not restricted to territories. HDI is based in Las Vegas. Our other big wins came from Chicago (Ulta & Envestnet), Baltimore (BillMeLater), New York (DealerTrack) & LA (TrueCar). We have two big winners in France, one in the UK and a couple in San Francisco.

When we invest we tend to be very active in our companies and we look to invest enough capital to have meaningful ownership stakes. In the case of HDI, for example, we owned 30% of the company, which therefore returns a sizable portion of that fund (the company was profitable enough that it had already dividended out a 2x return on capital invested prior to the exit).

Having had several big exits like this under our belt (the largest being Ulta) is what drives the Prequin returns for our last GRP fund to be ranked at the top performing fund in the US for its vintage year. (note: some people note that Prequin is only one of several industry databases ranking companies. Whatever the outcome, our fund will be ranked in the top 5 funds or top 1% no matter how it’s sliced).

9 companies out of 33 drove our largest returns. Where we find companies that perform well, we always look to invest more capital over time, not reduce our stake. We believe in the model of investing in a few companies and spending much time with them over the years.

3. Women Entrepreneurs
I thought it was worth noting since “women in tech” is a much debated topic, that our two biggest returns of our last fund – Ulta & HDI – were run by women. Andrea Benko, the founder & CEO of HDI, is simply one of the most talented CEOs we have worked with in our portfolio and that included 15 companies that have exited north of $1 billion. Lyn Kirby ran Ulta Cosmetics from its early days through its successful IPO.

I don’t think that makes us unique or says that we did anything proactive to encourage this. I don’t want to give us any unique credit. Still, for all the discussion about there not being more female entrepreneurs it’s quite an achievement and testament to Andrea & Lyn that they were the most successful in our peer group and both built extraordinary companies.

  • http://www.alearningaday.com Rohan

    Just saw the title and thought I’d write in a BIG congratulations, Mark! :D

    Off to work now. So, will read and comment later. Congrats again! :)PS: Inspired by you, I did an interview of Joanne this weekend. Thought you’d like it..
    http://www.alearningaday.com/2011/11/joanne-wilson-interview-iv-realacad.html

  • http://bothsidesofthetable.com msuster

    Thanks, Rohan. Appreciate it.

  • http://twitter.com/steepdecline Tyler Crowley

    Awesome!  Kobe steaks for everyone at Launchpad dinner tomorrow!? ;-)

  • http://twitter.com/fanaticfactory S Marshall Eldridge

    Wow! This is awesome! Great news. Still waiting for a GRP stake in the future of television to get a big win!

  • http://twitter.com/kmamas Kostis Mamassis

    Great news. Congratulations! On to the next one.

  • http://communico.co.nz Julian A Waters

    Wow, big number. Your firm achieves all this while you are also up there as most generous with your time in blogging, TWIVC etc. An example to follow.

  • http://twitter.com/hongdquan Hong Quan

    Most excellent. Well deserved win for the Founders, the team and GRP, as it should be. Getting a 2x on dividends must be a rarity these days!

  • http://bothsidesofthetable.com msuster

    LOL. Not far off it, Tyler. Not far. 

  • http://bothsidesofthetable.com msuster

    Watch this space.

  • http://bothsidesofthetable.com msuster

    Thanks, Julian.

  • http://bothsidesofthetable.com msuster

    2x dividend PLUS 30% of $400 million ;-)

    Yes, there was more than ample profits over the past couple of years.

  • http://twitter.com/msigal Michael Sigal

    Congratulations, Mark.  Very inspiring for those of us who are
    focused on huge opportunities in healthcare.

  • francois vanuffelen

    Goal! Congratulations Mark. Wish you many like this. 

  • http://twitter.com/MassiveMessage Bigger Than Moonpig!

    Another MASSIVE congratulations from the UK. What a very virtuous circle, great company, great investment, great outcome 

  • http://www.freezecrowd.com Eric Leebow

    Awesome, never even heard of them before.  Now you know why VCs are happy to get even a smaller piece of the pie and help out entrepreneurs.  Exits such as this are the testimony and it’s an inspiration for entrepreneurs. Keep rocking!

  • http://www.alearningaday.com Rohan

    R eally cool, Mark. Congratulations again. Lots of wins here..
    @Gothamgal:disqus  would be proud. ;) 

  • http://twitter.com/DarrylAdie Darryl Adie

    Nice to see some news about a profitable company with a healthy exit, rather than yet another technology company raising dumb money. Congratulations!

  • http://arnoldwaldstein.com awaldstein

    Nice…

    When was this investment made? Curious to know how long a ride it was for GRP.

  • John Were

    Wow. Congratulations!

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  • Anonymous

    Congrats to the entire GRP team! Amazing things happening on the data side of medical.  In the last month I have seen some of the best tablet/mobile apps I’ve ever seen in any category based on medical data including one of the best HTML5 flexible platform data apps I’ve seen period. Great market.  Magical things will be happening there in next ten years.

  • http://www.wehelpyourock.com/ Mike Walsh

    Congrats Mark – well done, and great summary!

  • Christian

    Congrats Mark! Definitely a big WIN for both GRP and the healthcare focused sector! Cheers!

  • Anonymous

    Mark,

    Just out of curiosity, would you put HDI  into any of the typical investment categories that you listed?

    “financial services industry, digital media, mobile applications & infrastructure, SaaS / Cloud and retail innovation”

  • http://twitter.com/DanielSBowen Dan Bowen

    “our fund will be ranked in the top 5 funds or top 1% no matter how it’s sliced” = Occupy GRP will be up later this afternoon…

  • http://500hats.typepad.com davemc500hats

    nice one mark… congrats to both GRP & HDI :)

  • http://www.ipatient.com Dan Munro

    Congrats to Yves/GRP and HDI !!!   

    NB to all – healthcare has a propensity to spin some pretty wild math.  There’s a great list over at Quora: http://b.qr.ae/jXTqqo

  • http://twitter.com/KickLabsSF KickLabsSF

    Congrats Mark!

  • Chris Hill

    Congratulations on the win. It’s great to hear about successful investments in an area such as healthcare that have such a influence on society at large. I hope it help encourage future startups and investors as a viable space to consider.

  • Anonymous

    Congratulations to you Mark and the HDI team. Thanks for taking more meaningful ownership positions to solve bigger problems. Smart. 

  • Rishi

    Amazing exit! Congrats Mark!

  • http://twitter.com/iammzbridget Bridget

    Thank you for highlighting the woman CEOs. You’re a real champion of women entrepreneurs and I appreciate that. I’m seeing more women taking leadership positions in the Health 2.0 market. And congrats on such a big win! 

  • http://bothsidesofthetable.com msuster

    Thanks, Francois. Appreciate it. Hope you’re well.

  • http://bothsidesofthetable.com msuster

    yup. for sure.

  • http://bothsidesofthetable.com msuster

    2003.

  • http://bothsidesofthetable.com msuster

    thanks, Peter. I agree.

  • http://bothsidesofthetable.com msuster

    Financial services. It has a huge Fin Svcs component.

  • http://bothsidesofthetable.com msuster

    Doh. I meant 2%. Not 1%! ;-)

  • http://bothsidesofthetable.com msuster

    thanks, Dave. Appreciate it.

  • http://bothsidesofthetable.com msuster

    Thanks, Chris. Appreciate it.

  • http://arnoldwaldstein.com awaldstein

    Thanks.

    I’m glad for ‘both sides of the table’. Congrats. 

    Great company with a great VC partner. Good story with an outstanding ending Mark!

  • Anonymous

    Congrats on the win. A testament to the value of solving a big problem – and a problem unkown for most people. Big problems are everywhere – inspiring

  • http://bothsidesofthetable.com msuster

    Thanks, Bridget. I’d like to see more. My mom was my inspiration in entrepreneurship.

  • http://twitter.com/Lasse_Koivisto Lasse Koivisto

    Good job Mark. Seeing health companies with a disruptive innovation is very rare. I hope this event attracts more attention to the Health Market, we need it.

    Congratulations and Keep on Rocking in the Free World!

  • http://www.vegasstartups.com John

    Did someone say a Vegas Startup company exited at a nice value?  We’re going to see a lot more of that coming out of Las Vegas.  I hope we’ll see a lot more of Suster in Vegas as well.  You could start with Startup Weekend Las Vegas: http://lasvegas.startupweekend.org/

    Congrats on the big win and always good to see more done in the healthcare space to improve all the waste.

  • Dave W Baldwin

    Congratulations!  Re your not wanting to brag too much, remember that talk is cheap while doing delivers great reward… and your treasure chest has a lot of room for the future.

  • Carl Jackson

    Congrats to all at HDI and GRP. Excellent result.

  • Edward Domain

    Good on all of you- GRP for the portfolio win and even more so to the ladies with the vision and skill that pulled it off!

  • Edward Domain

    *lady that pulled it off (and her team) :)

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