The Boston Globe: As Tech Sector Rebounds, Definitive Healthcare CEO Sees Billion-Dollar Opportunity

The Boston Globe

Framingham data merchant Definitive Healthcare picked a smart time to go public, but it’s been a rocky ride ever since. The company, which compiles information about hospitals, physician networks, andother players in the complex web of medical care, went public last September at $27 a share. That turned out to be the waning days of a booming market for tech stocks.

Along with the rest of the sector, Definitive’s stock price started dropping in November and by May was trading below $15.

But the tech sector has been on the rebound lately. Definitive’s stock price doubled from the May low through the beginning of August, though it has since sold off a bit. The stock was trading at almost $22 at midday on Tuesday.

Evidence that inflation may have peaked, which could prompt the Federal Reserve toslow its interest rate hikes, has boosted the entire sector. Among local companies,Tripadvisor and DraftKings have gained 59 percent in the past month, Toast is up 39 percent, and HubSpot rose 37 percent. There’s still a lot of ground to make up —all fourremain deeply in the red since the start of the year.

Also like some of its peers, Definitive is operating under new leadership. Serialentrepreneur Jason Krantz, who founded the company in 2011, stepped down as chief executive on August 1, shifting to the role of executive chair of the board. Robert Musslewhite, who has run several other health data companies and joined Definitive’sboard last year, took over as CEO.

In an interview at Definitive’s headquarters just off the Mass. Pike, Musslewhite said he’strying to tune out the stock market volatility that has hit both the tech and health care sectors.

“It’s been super turbulent and ... we’ve been at the center of the universe in a lot of the disruptions, but we feel like we’re in a good place,” he said. “Coming out of this, peoplehave understood our story and our focus on the long term.”

Revenue in the second quarter increased 37 percent to $55 million and could reach $225million for the year, the company said. At the end of June, Definitive reported having almost 500 customers who are on track to spend at least $100,000 annually.

The forecast disappointed some analysts who also raised concerns that Definitive customers were taking longer to sign deals with the company.

The “key item of focus” for investors was “an elongated sales cycle which is likely tocreate some concerns on the future growth of the business,” Credit Suisse analyst Jonathan Yong noted.

Musslewhite said he is focused on reaching more potential customers for what thecompany calls its “health care commercial intelligence.”

The data comes from multiple sources. Definitive scrapes listings from health careproviders’ websites, ingests data from state and federal agencies, and does its ownresearch, making 700,000 phone calls a year. The company also buys anonymized claims data from insurers and pharmacy benefit managers.

Its customers include anyone who wants to sell something to a health care provider,ranging from construction companies eager to figure out which hospital chains might beexpanding to a drug company looking for which physicians treat a specific disease. Recently, even a coffee chain that wanted to expand into hospitals signed up.

“We’re well on our way towards towards being a billion-dollar company,” Musslewhite said. “We have a huge opportunity out there for what we’re doing.”

Article written by Aaron Pressman, Globe Staff.

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