Falls Church’s CMT Solutions Inc. has raised $10 million in debt and equity funding.
The prior authorization startup said Thursday it closed the Series A round, co-led by New York venture fund Lytical Ventures and Houston-based early stage VC firm Mercury Fund. New York’s Signature Bank provided the debt.
The company started fundraising in April 2020 after early conversations with those investors, though “the pandemic did cause some disruption” to original plans to open a round early in the year, said Rachelle Galant, CMT’s vice president of marketing, in an email Thursday. CMT raised $6.7 million prior to this round.
The company, which secures prior authorizations for labs and doctors ordering diagnostic tests for their patients, plans to use the capital to continue developing its technology. That includes launching a new product to help the health care community answer pricing and health plan coverage questions that tend to create barriers to diagnostic testing, Galant said.
“We have heard from the market and our customers that this is a common problem in health care,” she said. “There is a certain amount of ambiguity in health care when you go to the doctor, or have a test or procedure performed, as to ‘what is this going to cost me?’ We are hoping to help answer that question sooner rather than later and avoid a patient receiving a surprise bill.”
The pandemic caused an initial decline in business for CMT when physicians’ offices shut down and patients stopped going in-person. But starting in September, “our volume has been more normalized and we have returned to the growth trajectory we were seeing pre-pandemic,” Galant said, though she declined to disclose company revenue.
CMT, previously known as CoverMyTest, was part of Inova Health System’s now-defunct accelerator and continued executing growth plans following the program’s closure. The Northern Virginia business, originally born in Cabin John, moved across the Potomac River to its 3,200-square-foot headquarters at 7600 Leesburg Pike in September 2019. CMT also has an operations hub in Orlando, Florida.
The company says it performs more than 20,000 laboratory diagnostic prior authorizations each month. It already works with about 25 laboratory partners including industry leaders Quest Diagnostics Inc. and LabCorp. And in late 2019, CMT expanded its therapeutic areas to include not just obstetrics and gynecology, but also oncology, endocrinology and mental health.
CMT CEO Andrew Mignatti, who has experience running laboratories, started the company in November 2017 with Chief Business Officer Perry Dimas, who has a background in molecular diagnostic billing services. As molecular diagnostics become more prevalent in women’s health and cancer, insurance companies require prior authorizations from labs and doctors to process and pay for that testing — and they saw that as an opportunity, Mignatti told us in April 2019.
“The industry in general, from a lab and a diagnostics standpoint, had never really dealt with prior authorizations like pharmaceutical companies,” he told us previously. That shift “created an entry into the market where there really wasn’t anyone servicing this space.”
