Oracle Health is selling common stock at a $20 million valuation, a steep fourfold increase over its valuation in a previous raise. Given its pre-revenue stage, this increase in valuation is presumably due to its early traction in gaining FDA approval. The valuation is not unreasonable for a medical technology company but isn’t a strong point in favor of investing at this stage either.

Heart failure is an exceedingly common condition, especially in the US. As mentioned above, 6.2 million Americans are heart failure patients. The global cardiac monitoring and cardiac rhythm management market — which includes pacemakers and automated external defibrillators (AEDs) — was valued at $29.0 billion in 2019. It is projected to grow at a 6.5% CAGR through 2027. The US market is a little over one-sixth of that size (around $5 billion). Oracle Health’s leading position in development and reimbursement plans leaves the company well-situated to secure a sizable portion of the US market.

Oracle touts a team of industry experts, starting with founder and CEO Jaeson Bang. Bang holds an MBA from Northwestern University, and he has spent nearly two decades at the intersection of medicine and business, with an emphasis on the human heart. Most recently, he worked with EBR Systems Inc., a Silicon Valley startup working on a pacemaker. His experience spans global projects, but perhaps his most notable experience is with Medtronic, a leader in medical technology. He started there as a senior clinical specialist but transitioned to sales down the line, an apt line of development for the head of Oracle Health.

Doctor Dimitrios Georgakopoulos and Randy Armstrong serve as the director of science and director of technology, respectively. Georgakopoulos holds a PhD from the Johns Hopkins School of Medicine. He brings two decades of experience across the medical field, including various roles at CVRx — a medical technology firm dedicated to treating heart failure — and a two-and-a-half year stint as chief scientific officer of CHF Solutions, formerly known as Sunshine Heart, Inc. Georgakopoulos is also the founder and CSO of the small startup Barologics Inc., of which little public information exists. Randy Armstrong is a licensed professional engineer who has worked with companies developing medical technology (such as defibrillators and pacemakers) as far back as 1989. Armstrong is also currently CTO at Velentium, a Texas medical device company.

Doctor Dan Burkhoff serves as one of several medical advisors. Like Georgakopoulos, Burkhoff holds a PhD from the Johns Hopkins University School of Medicine and has nearly three decades of experience serving as medical director for various entities. He transitioned to working with startups in 2012 and currently serves as the vice president of medical science at HeartWare Inc. Doctor Kevin Heist — another medical advisor — holds a PhD from the Stanford University School of Medicine and is currently an associate professor of medicine at the prestigious Harvard Medical School. The Oracle Health team is further rounded out by a number of other medical advisors and data scientists.

Overall, the Oracle Health team comprises many medical industry experts. There is also past entrepreneurial and leadership experience in the team, which bodes well for Oracle’s future success.

When it comes to technology, differentiation of product is everything, and for a singularly-focused company like Oracle, this is especially true. Fortunately, its product is highly differentiated. The device includes multiple sensors to monitor heart and lung function and can be inserted through a simple two-minute procedure. The combination of a comprehensive monitoring package with a simple and unobtrusive installation makes for a compelling product. Furthermore, the integration of artificial intelligence analysis with its existing application is quite useful for doctors.

Patents are pending, which is important at this stage. The product is about halfway through a 6-to-12 month FDA approval process under a Class II 510K device classification. Oracle has a number of competitors, including Abbott, VitalConnect, and Sensible Medical, but such devices do not offer the same comprehensive advantages as Oracle’s. At this time, Oracle Health has successfully created a product that holds a strong competitive advantage while also answering a clear and present market need.

Oracle is pre-revenue, but the measures it has taken to secure future revenue appear promising. Once human trials and clinical testing of the product are complete, investors will be able to more accurately gauge product viability and potential revenues through such metrics.

However, its costs thus far are significant. As of 2020 Q2, the company had an accumulated deficit of $460,967. These expenses are likely to continue for at least the next couple of years as development and planning continue.

As an early-stage medical startup, Oracle faces the daunting combination of several years with high capital burn and no-to-low revenue. While there is little doubt that patients — especially in the US — will continue to be in need of cost-effective cardiac monitoring solutions, investors should remember that the product is still in development. Therefore, nothing about its effectiveness has been fully proven. If results in clinical trials demonstrate less product quality than has been advertised or Oracle fails to build a sustainable marketing initiative, it will likely struggle to gain ground in a market that, while lacking in many notable competitors, is still fierce. 

As the United States grows ever grayer and aging populations grow more comfortable with technology-based healthcare, Oracle’s product is likely to appeal to doctors and patients alike. Combining what may be a shortened development process given the expertise at hand and the assistance of medical companies through Johnson & Johnson, Oracle could very well secure a sizable portion of America’s 6.2 million heart failure patients. If Oracle can sell even a few thousand devices, it could begin seeing returns in the millions. Medical technology often has high margins on its products, which is a boon for early investors. Furthermore, Oracle has done much of the early work to distinguish its products from competitors’ and to build defensibility through pending patents. Once FDA approval is secured, the company is well-positioned to start carving out a substantial market niche for itself.

Oracle Health is a medical device startup developing a multi-sensor cardiac monitoring implant device. Its product, which is undergoing human testing, keeps track of heart and lung activity to prevent expensive and dangerous hospital visits. The tech is differentiated from its competitors’ and should provide a high-quality monitoring solution that uses AI analysis to reduce the burden on patients and doctors.

With an experienced team at the head, Oracle is rocketing through the approval process. Its valuation has increased steeply from a raise last year but remains reasonable for a medical technology company. For these reasons, Oracle Health has been rated a Deal to Watch.

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Analysis written by Benjamin Potts.