Kareo bags $10M for cloud-based medical billing

The company is backed by Greenspring Associates and Western Technology Investments

In one of the strangest ironies you’ll wrap your head around this morning, the number of insured Americans is at an all-time low and continually dropping, but the healthcare IT industry is booming and expected to grow by more than 24% annually between 2012 and 2014.  (?)  EHR and other healthcare software companies are making out big as physicians switch over to electronic records and cloud-based billing platforms.  One such company, Kareo—a cloud-based medical software company—is among them.  Kareo announced Thursday that it has secured $10 million in an equity round led by Greenspring Associates, with help from OpenView Venture Partners, Western Technology Investments, and angel investor Travis Kalanick.

"Greenspring Associates is a very experienced and well-connected growth stage investor," Kareo CEO Dan Rodrigues tells me.  "They make fund investments, as a Limited Partner, in top-tier venture funds, including Kleiner Perkins, Benchmark Capital, Accel, August Capital, the Founders Fund, and others, so they have excellent relationships should Kareo ever need to raise additional capital."

Founded in 2004, Kareo offers cloud-based medical billing software that allows physicians to streamline the financial hoopla that always seems to bog down offices, including patient billing, insurance billing, online payments, scheduling financial reporting, storing documents, and so on.  Physicians can also get financial analytics and integrate electronic health records.

The company has been doing pretty well for itself over the last three years, during which it has grown 100% annually and is generating “double-digit millions” in annual recurring revenue.  The Irvine, CA-based company could not be reached for comment due to the early hour, so no word on the number of physicians currently in its network. 

But the company says in its announcement that it plans to increase its staff of 71 employees to over 100 by the end of the year.  Kareo says it will use the capital to expand sales, marketing, support, and product teams at its Irvine and Indianapolis offices.

"Kareo is achieving impressive revenue growth and offers a solution that hits the sweet spot for small practices,” said Jim Lim of Greenspring Associates in a statement.  “Physicians need simple, elegant solutions that will help them get paid more, reduce administrative costs, and adapt to industry changes in the years ahead, including 5010, ICD-10, increased patient responsibility, and new insurance payment models. We believe Kareo is well positioned to benefit from these changes and capture a significant share of the small practice segment."

Kareo raised $9.5 million in funding from OpenView Venture Partners in September 2010.  This round brings its total funds raised to $20 million.