Elemeno Health is raising capital through sale of preferred equity at a $20 million pre-money valuation. Going by the business’s 2020 revenue, it has a revenue multiple of around 20 times — meaning Elemeno values itself as 20 times higher than its most recent revenue. This multiple is entirely appropriate for a software-as-a-service company. However, a $20 million valuation is quite high when compared to other startups currently raising capital in the online private markets. Thus, the price score for Elemeno Health is below average.

As a tool for health professionals, Elemeno Health targets a small but growing niche. Continuing medical education, or CME, has seen increased interest as healthcare professionals across the world have sought education on COVID treatments. Trends are moving toward virtual learning experiences rather than traditional printed materials, seminars, and physician-to-physician discussion. Mobile platforms and shorter programs are also increasingly in demand. Elemeno is ideally placed near the forefront of this trend. However, this market is still developing. The US CME market is growing at an annual rate of 6.7% and should hit $11.6 billion by 2026. Due to this small size, Elemeno Health’s market score is its lowest across all five metrics.

Elemeno Health was co-founded by Ed Nanale and Dr. Arup Roy-Burman. Nanale served as the company CTO until February 2020, when he took on an advisory role. He holds a Bachelor of Science in applied physics and has decades of experience in game design. That experience culminated in nearly 13 years as a technical director and engineering manager for gaming media giant Electronic Arts. His foundational knowledge of digital media served Elemeno well in developing the base concept and getting the business through Y Combinator. After an advisory period, Nanale left the company and moved to Google as an engineering manager in September 2020. While his experience helped build a solid foundation for Elemeno, his absence is keenly noticed.

Dr. Roy-Burman serves as Elemeno’s CEO. He earned his MD at the University of California San Francisco and has been an associate professor of pediatrics there since 2000. Such an ongoing commitment may seem concerning for a startup’s sole remaining founder, but in this case, it is an asset. By remaining attached to UCSF, Dr. Roy-Burman is connected to the university’s networks and has access to its facilities. Given Elemeno’s priority of providing up-to-date best practices to physicians, this advantage is essential. Dr. Roy-Burman also has a wealth of relevant healthcare experience. He worked nine years in a pediatric hospital before becoming president of a private practice group to provide pediatric critical care. He then served as assistant medical director for an air ambulance company and as a medical director for UCSF Medical Center. He also still holds a seat on the board of directors for Global Healing and is a chair of the Northern California Pediatric Intensive Care Network. In addition to accumulating decades of relevant intensive care experience, Dr. Roy-Burman moved into the startup space through the Y Combinator launch program in 2016 alongside Nanale.

This strong pair of founders has grown Elemeno substantially since founding the company in 2016. The full team now numbers almost two dozen, with subject matter experts like COO Scott Cohen, Chief Nursing Officer Carole Klove, and Vice President of Engineering Steve Mundro. The Elemeno team’s broad range of medical and technical expertise leads to an extremely strong team score.

Elemeno Health has few potential competitors, but there are some the company doesn’t mention on its raise page. Tine Health, for instance, uses similar just-in-time training for medical professionals, though its software is primarily directed at training on medical machinery and administration rather than procedure. Relias provides education on medical solutions, but its methods focus more on the education process rather than just-in-time training. 

More generalized education software could present a threat to Elemeno as well. Qstream and MobieTrain, for example, are full-on messengers for gamified frontline employee training. Their software is being employed for all manner of businesses, not just medicine, so Elemeno does have the advantage of specific expertise. But these other players could still compete for Elemeno’s limited target market.

Comparable pricing is somewhat difficult to find, as these businesses tend to offer demos and adjust pricing as needed. However, the starting price for Relias appears to be $100 per user. For Elemeno, going by details provided on the raise page, a total subscription and onboarding offering for a 150-person staff costs $40,000 per year. That’s about $270 per user per year, which is significantly higher than Relias. However, Relias appears to have lower customer satisfaction rates. Elemeno has measured client return-on-investment of between 10 and 30 times and has published results of cutting medical errors in half. Its service has been peer reviewed in publications like the American Journal of Medical Quality and won awards from organizations such as MedTech Breakthrough. Thanks to its ever-growing database of visual and other media for its users, Elemeno is providing some level of defensibility. In all, its differentiation score is on the high end.

Elemeno Health has grown 300% since 2018. Elemeno’s revenue grew to a little over $1 million in 2020, up from $603,763 in 2019. Its dedication to high-quality content has paid off with growing and consistent customer traction. Elemeno has expanded across more than 20 healthcare facilities, including El Camino Hospital, Children’s Hospital of New Orleans, and Massachusetts General Hospital. Its strategy of letting clients share their results with networks of peers appears to be providing a kind of organic marketing for the company. Once one department of an institution starts using Elemeno, its good results can encourage other branches to sign on in a natural expansion process. Overall, its growth rate is consistently decent.

Elemeno has made no business partnerships or worked with distributors as of yet. It produces content through its own team and sells business-to-business. To get off the ground, however, the business has had to accrue quite a lot of capital. It has generated $4.4 million in prior investment. It’s received investments from Y Combinator, Dreamit Ventures, Global Health Impact Fund, and Launchpad Digital Health. To reach this point, the business has accrued huge liabilities in excess of $1 million. However, it now holds more than that amount in cash on hand, and its revenue growth certainly doesn’t appear to be slowing. That debt may also have translated into SAFEs from Elemeno’s raise last year. Overall, Elemeno’s performance rating is one of its highest.

Elemeno Health offers a risk profile that’s low overall. The main areas of concern are based on time and financials. Elemeno Health has a time risk due to the nature of its sales cycle. The company uses a business-to-business (B2B) model, offering its platform to hospitals on a subscription basis. B2B transactions often take longer to complete than direct sales. As a result, it could take Elemeno Health a long time to acquire new customers as it scales and expands.

From a financial perspective, Elemeno holds $1.7 million in debt. While the majority of this is in long term debt, it is still significant that the company’s recent revenue has yet to surpass its total liabilities. Elemeno will need to address this financial situation as it pursues profitability.

Elemeno Health’s biggest concern is defensibility. Without patent protection, a software like Elemeno’s needs to be defensible to prevent competitors from replicating it. But Elemeno has no proprietary processes or programs. Competitor Qstream, while targeting a more general audience, has a much larger customer base. Tine Health doesn’t provide exactly the same offerings as Elemeno, but its “just-in-time” training is quite similar. Its use of QR codes as opposed to Elemeno’s old-school search function could be more convenient for users. Finally, both Qstream and Tine Health are further along than Elemeno in terms of software features. Both products offer tracking of users’ progress, an apt motivator in gamification that Elemeno’s platform lacks.

It is also worth reflecting on Elemeno’s momentum since its raise last year. In that raise, the business projected reaching $8 million in revenue by 2022. At this point, with its clientele growing from 15 to just 21, that goal no longer seems feasible. (Though it’s not unusual for businesses to make overly ambitious growth projections.)

Elemeno Health has great traction at this point, having onboarded more than 20 organizations. While growth hasn’t been as rapid as projected, Elemeno still nearly doubled its team, grew revenue to over a million, and has secured $4.4 million in funding.

Elemeno’s team is also a point in its favor. The CEO has decades of healthcare experience. COO Scott Cohen also has years of relevant experience in the industry, serving as vice president of client development at athenahealth. During his time there, that healthcare and point-of-care mobile app provider expanded significantly.

Elemeno does have competition, but continuing medical education (CME) isn’t a fiercely competitive space overall. CME programs require a massive amount of expertise, and Elemeno’s competitors appear to be going for either more general applications or training less focused on the medical side. Elemeno also has the benefit of strong customer loyalty and user goodwill, as its users recommend Elemeno within their networks and help the company grow organically. Additionally, the COVID-19 pandemic may be receding in many parts of the world, but it is far from over. Continuing education on COVID treatment is still an absolute necessity that Elemeno can provide.

Elemeno Health is a software-as-a-service company providing a mobile-friendly medical information network for frontline healthcare providers. Elemeno has seen 300% revenue growth from 2018 to 2020, and its customers all renewed their contracts. It has expanded to 20-plus institutions and has won acclaim for its offering from peer-reviewed publications. Its CEO is a well-rounded medical expert who has built out a comprehensive team of experts to continue growing the software and business. In the wake of the COVID-19 pandemic, Elemeno is primed to further expand into the limited market of continuing medical education (CME).

However, there are some concerns for investors. Defensibility is a particular issue. Without patent protection or notable differentiation from potential competitors, Elemeno is particularly vulnerable. In addition, its valuation is moderately high with an average revenue multiple. Still, Elemeno’s traction and growth have been excellent overall. The business has a proven return on investment for its clients and promising market potential. Its mission of improving quality of care is extremely well-timed, given the rise of COVID-19 and the trend toward virtual CME. Therefore, Elemeno Health is a Deal to Watch.

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Analysis written by Benjamin Potts.