Elemeno Health Investment Memo

By: SJF Ventures, investing $2,000,000 in this round and $5,000,000 previously.

When considering a new investment opportunity, SJF Ventures typically generates for internal purposes memos that are greater than 25 pages in length. It would be unusual for SJF to share such memos with external parties. We are providing below, however, some excerpts (with light editing) from prior Elemeno memo content to illustrate the type of diligence that is performed on companies. These excerpts are not intended to provide a full view of Elemeno and should not be relied on for diligence. Instead, they are intended to illustrate process. Readers should also develop their own views of other organizations in this and adjacent industries. The comments in this memo reflect our opinions based on our understanding.

MARKET SIZE AND DYNAMICS

Elemeno’s use case may be best suited for emergency departments (EDs), intensive care units (ICUs), neonatal intensive care units (NICUs), and operating room departments (ORs), as these tend to be high acuity, multi-specialty hospital departments where Elemeno has the strongest value proposition today. Based on Elemeno’s current pricing of $X per month per department, the TAM for these four specific departments is approximately $570M according to our own calculations and work.

That said, Elemeno has already successfully sold to departments outside of this core group of four, including maternity units, burn units, and cardiac ICUs, plus some hospital-wide contracts. Nearly all our calls supported the idea that the product should be valuable across departments.

Accordingly, we view the true TAM for Elemeno’s core business as being significantly higher than the $570M mentioned above for just the target units today. This is even further supported by layering on current macro market dynamics, where nurse retention is becoming increasingly important – leading to greater willingness by key decision makers to bring in resources that help to support those clinicians.

Combining all this information, we view the true TAM for Elemeno’s core business encompassing all hospital departments, and not just the core four target departments today. If we were to look at the TAM as all US hospitals, based on Elemeno’s current hospital-wide pricing today of $X, the total TAM increases to approximately $900M.

In addition to this expansion opportunity into hospital-wide deployments, we see several other upside opportunities for Elemeno. These include:

Expansion into Urgent Care – Urgent care is a clear adjacency for Elemeno given that these centers closely mimic hospital EDs and are often sta`ed by ED clinicians who work in urgent care part-time for additional compensation. There are about 9,600 urgent care centers in the US today, which would imply a $X TAM opportunity for Elemeno.
Expansion into Outpatient Surgical Centers – Ambulatory surgery centers (ASCs) are outpatient facilities that o`er an alternative to hospitals for patients undergoing relatively routine surgical procedures. Similar to urgent care, ASCs are a close adjacency to Elemeno’s core focus today but tend to be lower intensity than EDs or urgent care. There are about 9,300 outpatient ASCs today, implying an $X TAM opportunity for Elemeno.
Partnerships with Content Publishers – Elemeno could potentially benefit from expanding its library of high-quality content by partnering with clinical content publishers such as XXXXXXXXXXX or XXXX. The general concept would call for Elemeno charging these publishers a fee to include and feature their content on the Elemeno platform, such that these publishers could get their content in front of a broader audience and in a more streamlined and digestible manner. For example, a national best practice publisher like Lippincott could pay Elemeno to include, feature, and “Elemeno-ize” the latest national guidelines from the American Association of Critical Care Nurses to make them more digestible and useable for their target audience. Elemeno, in turn, benefits from growing its content library, thereby increasing the value of the platform.
Partnerships with Medical Device Companies – Elemeno could also partner with medical device companies to include and feature their product content on the platform. For example, if the hospital recently bought a batch of new implantable pacemakers from XXXXXX for the ICU and OR, XXXXXX could pay Elemeno to feature their instructional and training content for those new pacemakers, such that clinicians are best equipped to utilize the new devices and there is a lower chance of errors that may jeopardize XXXXXX from selling more of those pacemakers.
Partnerships with Pharma – Similar to the above, pharma companies may also want to partner with Elemeno, particularly with respect to clinical trials. For example, if Pfizer is running a large, national, multi-hospital clinical trial, a key focal point for them would be to ensure that standard processes are being followed across all participating hospitals. This is especially true in clinical trials involving complex new drugs. If there are meaningful protocol deviations, that could cost XXXXXX significant money in lost patients and potentially compromise the integrity of the overall clinical trial results. By partnering with Elemeno, pharma companies like XXXXXX could better ensure that all standard procedures are being disseminated to the necessary hospital staff.
Patient-Facing Tool – Over the course of our due diligence calls, one idea that was mentioned by a couple of individuals was to create a patient-facing version of the Elemeno platform, with the aim of supporting and educating patients and their families. Given that many patients are faced with a variety of new medical concepts (e.g., new medical condition diagnosis) over the course of a hospital visit, an Elemeno-like platform that could deliver simple digestible content could have significant value to patients. For example, if two parents were told in the ER that their young child that just su`ered from anaphylactic shock happens to have a very significant food allergy, Elemeno could be valuable in helping explain to that family what they need to know (i.e., how food allergies can lead to anaphylaxis, how to use an EpiPen, etc.).

It is important to note that we have not fully flushed out these various additional upside opportunities for Elemeno, but we find them directionally intriguing in showcasing that there are several ways in which Elemeno could grow into a large business over time. Our big picture view is that Elemeno is a one-stop-shop for nurses. Other companies (whether that be med device, pharma, publishers, or others) will want to be able to reach and message nurses through this platform if a lot of nurses end up using it. Given many of these groups interested in reaching nurses via Elemeno have deep pockets, this creates both financial and strategic value for the company.

COMPETITION AND SUSTAINABLE COMPETITIVE ADVANTAGES

Elemeno is a relatively rare company in that we don’t see meaningful direct competition. In our diligence calls to date, nearly all individuals have remarked that Elemeno represents a unique o`ering and that they have not seen another company with such a platform. This is driven partly by the fact that Elemeno is in an amalgamation of several o`erings, including a point-of-care reference guide, a learning management system, and a content creation tool - thereby allowing Elemeno to be a versatile solution that can solve multiple pain points for customers.

Although we don’t consider them direct competitors, some areas of comparison/competition are represented by (1) learning management systems, (2) point-of-care reference guides, and (3) content publishers.

LMS – Learning management systems (or “LMS”) are software applications for the administration, documentation, tracking, reporting, automation, and delivery of (a) educational courses, (b) training programs, or (c) learning and development programs. These are used often as continuing education tools, whereby clinicians complete assigned training modules on a semi-regular cadence (e.g., quarterly and/or annually). Similar to Elemeno, LMS content can be both general (e.g., fraud or sexual harassment training) or custom to the hospital or health system (e.g., NYU-specific COVID protocols for the ER).

With the respect to the customization, hospital educators have the ability to create new LMS content as needed, which is also similar to Elemeno, although customized content is not provided cost e`ectively and LMS vendors often have an upcharge for this service. As of today, the two most notable healthcare LMS companies are HealthStream and Relias Learning. HealthStream, is the current incumbent with ~XX% penetration of US health systems.

Although there are several commonalities between Elemeno and LMS vendors, there are two notable shortfalls of LMS: (1) LMS is more of a long-form classroom-like tool and thus is not designed to be accessed and consumed at the bedside and/or as bite-sized content during orientation and onboarding; and (2) LMS employs a top-down and compliance-focused methodology, where hospital administrators are seeking to influence the actions of the entire hospital workforce instead of specifically addressing the needs of front-line clinicians in particular units of hospitals. In speaking with experts and customers, we found nearly everyone appreciated the clear di`erence between an LMS and Elemeno.

Point-of-Care Reference Guides – Point-of-care (POC) reference guides are clinical decision support tools that are based on real world, evidence-based content. The aim of these solutions is to provide clinicians with the established clinical guidelines or best practices for a vast number of di`erent medical conditions. For example, a sample use case would call for looking up the latest American Heart Association protocol for diagnosing, treating and managing a stroke patient. Similarly, a clinician may want to quickly look up the latest suggested drug treatment for a particular condition and verify that none of the suggested drugs have interaction warnings with a patient’s existing medication regimen.

Three of the more notable companies in this space today are Uptodate, Epocrates, and Dynamed, although there are many hospitals today that still largely use paper-based binder systems. UpToDate is the current incumbent with very high penetration across US health systems. Similar to Elemeno, these POC reference guides are meant to support clinicians at the bedside and/or in a moment of crisis with key information that could reduce medical errors and result in better patient outcomes.

That said, there are three notable shortfalls of these POC reference guides: (1) they are largely aimed towards physicians instead of nurses or other clinical sta`, (2) they tend to provide only established clinical best practices, not hospital or health-system-specific content, and (3) the content tends to be dense (e.g., 20 page overview on a given medical condition) and thus is not easily digestible. In speaking with experts and customers, we found nearly everyone appreciated the clear di`erence between these POC solutions and Elemeno

Content Publishers - The other category of competition that we would flag is content publishers. These could be thought of in two sub-buckets: (1) national best practice publishers and (2) clinician education publishers. The former bucket (e.g., best practice publishers such as Lippincott Solutions) provides step-by-step guides to thousands of evidenced-based procedures and skills across medical specialties. Similar to the POC companies, best practice publishers are largely geared towards physicians and focus on general, national-level guidelines on clinical care - not hospital-specific content.

The latter bucket (i.e., clinician education publishers such as Osmosis, OnlineMedEd, and Knowledge to Practice) provides large medical video libraries designed to aid clinicians. In contrast to the videos incorporated within Elemeno, these videos are more focused on broad educational concepts (e.g., what is the anatomy of the abdominal wall) instead of actual clinical practice protocols. These solutions also tend to be more focused on medical students and clinicians-in- training (and their associated educators) and for the most part are not intended for full-time front- line clinical sta`. Although there is some overlap between these two sets of content publishers and Elemeno, our view is that they represent much more of an upside partnership opportunity for Elemeno as opposed to being a competitive threat. Elemeno would potentially benefit by expanding its library of high-quality content via these publishers. These publishers would then benefit from getting their content in front of a broader audience and in a streamlined and digestible manner.

In summary, we have a relatively strong degree of comfort around the competitive landscape for Elemeno. Diligence calls and our own research have found that Elemeno’s solution is quite novel to the market and unifies elements of several categories of competition. In addition, we have heard multiple individuals, including Elemeno customers, say that Elemeno is actually a great complement to their existing LMS and/or POC solutions, supporting the notion that Elemeno is a unique o`ering that it isn’t directly competitive with anything that exists in the market today.

Based on our diligence and assessment of the competitive landscape, we view Elemeno as having multiple sustainable competitive advantages, including:

Nurse-centric solution – Elemeno was developed by clinicians for clinicians and is sta`ed by a lot of individuals who have empathy for the day-to-day experiences of nurses. Other players in the market often focus on physicians (which is a more lucrative area) or focus on compliance (a top-down approach on making nurses do certain things). Elemeno has a di`erent mindset than others in the market – one that focuses on helping nurses.
Inclusive of both generic content and hospital-specific content - Other players in the market are focused on providing generic information from the top down. They are not focused on working collaboratively with individual hospitals to get content customized to the experience in a particular hospital. Therefore, unlike Elemeno, they are challenged to o`er both generic and hospital-specific content.
Unique content production engine – It also takes a very di`erent type of content machinery engine to gather information from individual hospitals e`iciently, transform it into easily digestible information, and make it customized to that hospital. Developing a content production engine similar to the one Elemeno has generated is not easy. Furthermore, this is not a typical competency or a priority for large LMS or POC competitors that have built their brands on top-down, universally-consumed content.
First mover advantage/network eLects: First mover benefits can a`ord Elemeno with a meaningful sustainable competitive advantage. As the catalog of potential content grows there will be an improvement in the customer experience and “time to value” for the N+1 account. Elemeno has thousands of pieces of content. As the number of customers grows, Elemeno develops a broader and richer catalog of content areas. Accordingly, when yet more customer prospects come along, Elemeno is able to serve their needs with an increasingly broad and deep understanding of content that is useful to them. It can produce a better starter kit of materials, more relevant templates, a more robust search result when XYZ topic is queried and can be tagged in more nuanced ways. The company has already launched XX NICUs and has said it is already seeing e`iciencies when it launches new NICUs. It would be very hard for competitors to catch up with Elemeno without building out this knowledge organically.
Digestible content – Elemeno’s content is intentionally designed to be consumed in just a few minutes across a range of modalities (e.g., mobile app, desktop portal, iPad), which can be critical in certain high-pressure medical settings like the ER or ICU, where rapid decision making is essential and improper decisions can have serious consequences for both the patient and the hospital. As of today, neither LMS nor POC solutions have such digestibility.

ACQUIRER LANDSCAPE

Given that Elemeno is a relatively unique product o`ering combining elements of educational training (like an LMS), point-of-care reference content (like UpToDate), and staff communication, our conclusion is that there are multiple categories of potential acquirers of Elemeno, but LMS companies (e.g., HealthStream, Relias Learning) and Content Publishers (e.g., Elsevier, Wolters Kluwer) seem to be the highest likelihood candidates given (1) they have been highly acquisitive in recent years of companies that are similar to Elemeno (i.e., decision support tools, nurse education tools, staff communication tools, etc.), (2) they could use Elemeno to more deeply integrate within their existing hospital footprint by o`ering a nurse-centric solution that has both generic and customized content, (3) leverage Elemeno to strengthen their point-of-care presence and capabilities, and (4) potentially derive content production and/or content management synergies.