For so many businesses, the pandemic has meant reinvention. For Inovalon Holdings Inc. (NASDAQ: INOV), it’s been a game of acceleration.
That’s because the Bowie company, whose cloud software tracks quality and cost data for health care providers, has seen rising demand in 2020 as those providers need to provide more care at lower costs.
It follows an already strong 2019 with 22% revenue growth compared with the prior year. So, Inovalon opened the curtain on 2020 “with all of that momentum and growth philosophy,” said Dr. Keith Dunleavy, CEO of Inovalon. The first quarter of this year saw more than 13% growth in its cloud platform business — which accounted for 83% of 2019 revenue — and the second quarter mirrored that trend.
“So that really supported not only proof to the marketplace, but how strong the business model was,” Dunleavy said.
Inovalon reported $316.4 million in revenue for the first half of 2020, up 5% from $302.5 million for the first half of 2019, according to Securities and Exchange Commission filings. It said it gained $34.1 million in new revenue from new clients, though that was offset by an $20.2 million drop in sales to existing clients due to the pandemic. It closed the second quarter with $95.6 million in cash and cash equivalents, having repaid $99 million it had drawn down in mid-March from a revolving loan to keep a cushion when Covid hit.
The company said it saw strong revenue from its pharmacy and health plan business lines this year, while its life sciences work saw some softness before recovering “rapidly,” Dunleavy said. Its health provider clients — including hospitals and physician practices — felt the greatest sting, as acute-care facilities focused on patient care during the spring surge and doctors saw declining patient volumes.
“We would’ve had even more strengths if not for the pandemic,” he said. “But we’ve had good strength throughout the period.”
Indeed, as the demand for health data increases, the company has been working to offer more services on its platform, including these
Here’s what Inovalon has been working on — and what is still to come:
- Telehealth: Back in March, the business launched a telehealth component of its platform that has since become integral to its offering by improving patient access, decreasing costs and, of course, limiting in-person contact during Covid-19. The company started developing the telehealth component in mid-2019 and accelerated it as the pandemic hit.
- Consumer Health Gateway: In May, the company went live with an application program interface, or API, that helps certain health plans comply with a pending July 2021 requirement to support access to patient-level data. The tool also provides consumers real-time access to their own health care data. With that, Inovalon is also building a software development platform for organizations that want to access health care data on behalf of consumers — similar to how Apple’s iTunes platform functions as a marketplace for artists and music consumers.
- Direct-to-consumer service: The company is now looking to sell directly to consumers, testing in several markets an offering that Dunleavy declined to elaborate on. It comes as patients increasingly use data to select their doctors and health plans, and track their own health.
“Increasingly what the pandemic has done is help organizations appreciate how important the data is, and how important access to the data is,” Dunleavy said. “So the pandemic has sort of accelerated Inovalon’s visibility to those participants.”
Inovalon has grown its revenue 47% since 2015, when it held its initial public offering, and more than doubled its revenue from 2013. Its top line got a boost in 2018 with its acquisition of health IT company Ability Network Inc., a move that added doctors’ offices and hospital networks to its client roster. A few months after that, the company entered the specialty pharmacy market with a partnership with Orlando, Florida-based AllianceRx Walgreens Prime, a joint home delivery and specialty pharmacy from Walgreens and pharmacy benefit manager Prime Therapeutics LLC. It also recently added Walmart and Cardinal Health to its client list.
“For us to land customers as large and as important in the ecosystem as Walmart, and the size and caliber of these organizations that we’re very fortunate to work with has ratcheted up quite dramatically over the last six months,” Dunleavy said.
