Dealmaker Q&A: Edison Partners’ Kelly Ford Buckley on Investing in NPHub

As the United States faces a critical nursing shortage, a bespoke solution that assists nurse practitioners (NPs) with their clinical rotations and job placements could be a valuable investment in the future of healthcare. Edison Partners certainly agrees—the firm has invested $20 million in growth equity in NPHub, a digital platform that offers just that. Middle Market Growth spoke to Kelly Ford Buckley, general partner with Edison, about the investment, the challenges facing NPHub, and her growth strategies for the platform.

Middle Market Growth: When sourcing the NPHub deal, what was Edison Partners looking for in a target, and how did NPHub fulfill those requirements?

Kelly Ford Buckley: Generally, we look for high-growth tech companies that have reached $10 million to $30 million in revenue, with capital-efficient growth, that solve a big problem in the market, and have a strong competitive moat and market leadership potential. With NPHub, I can’t say I or our healthcare IT investment team were specifically looking for a solution to America’s nursing shortage problem. But we’ve been tracking the company more or less since its founding, and when I met Krish [Chopra, co-founder of NPHub] and learned more about the business directly from him, what really struck me was how data-driven he was. I was drawn to him and his mastery of the problem and what he’s been doing to serve this NP audience with his platform, but also, he’s such an advocate for this group. His passion and his mission struck me. His data-driven dialogue around how he’s built this business and all of the marks that they’ve hit, really strong core unit economics in the business, like growing their gross margin, which in a lot of cases, healthcare services businesses have a really hard time becoming true technology companies. This is a technology company first that is providing a service to this audience.

So, I was struck by the business performance, certainly, and that hit all our marks in terms of our criteria for an investment. I loved the mission and learning about the problem with nursing and NP shortage and physician assistant (PA) shortage. There’s an expanding role of NPs in healthcare and increased demand for NPs and PAs to fill provider gaps, and there’s an increasing need for clinical teaching in order to provide this supply of nurses to address this issue in our healthcare system. I saw the opportunity for NPHub to be driving this greater supply of NPs, and then also to expand eventually to PAs, and be a platform that can serve these audiences through all stages of their career life cycle. So that’s a true platform play from our perspective—to have multiple use cases and solutions for one or more audiences like this was really what was behind our thesis and what we found compelling about the opportunity.

That’s a true platform play from our perspective—to have multiple use cases and solutions for one or more audiences like this was really what was behind our thesis and what we found compelling about the opportunity.

MMG: When you look at the healthcare tech space more broadly, what opportunities are you seeing there? And how does working within that space fit within Edison Partners’ broader investment strategy?

KFB: So, Edison’s been around for 39 years. We’re investing out of our 11th fund, and just as a quick background side point, we were a venture firm, investing in earlier stage companies for the first seven funds, and then, since fund eight, we evolved to growth equity, so more mature businesses and bigger checks, bigger funds. But we’ve been investing in healthcare tech and tech-enabled healthcare businesses since the founding of the firm. As far as our thesis, currently, we’ve really homed in on secular growth opportunities and healthcare IT across three core themes. One is around healthcare data and analytics that can inform efficiency and efficacy of care. Two is patient engagement and chronic care management solutions that drive improvement of care. And then three is around non-clinical cost optimization, so what affects anything below the medical loss ratio line, whether it’s offerings that support the healthcare supply chain or insurance or self-insured employers, that sort of thing. Those three key themes have been consistent for us for a few years now, and we’ve made a bunch of investments that serve those. The first and second themes, both healthcare data and analytics and patient engagement for improved care, NPHub plays right into both of those. NPHub being this tech-driven, data-centric business and focused on the improvement of care in terms of driving the supply of more and qualified NPs across all key practice areas and then helping them not only find jobs, but continue their education over time, over the course of their career as well. Something I learned and certainly I think we’ve all experienced as patients is I rarely see a doctor; it’s always an NP or a PA, and it’s partly because the medical industry is not turning out doctors for primary care or basic internal medicine. And these two constituents, both NPs and PAs, are as qualified for that typical clinic visit or doctor’s visit as a doctor. So, I was excited about those dynamics. I’d say further, we have a thesis broadly at Edison around digitizing America’s critical infrastructure. And certainly, our healthcare system is that, so NPHub fit in nicely there as well.

MMG: Now, let’s turn to the headwinds—what are some of the challenges you’re watching in the space and how do you expect to address those?

KFB: It’s interesting because the headwinds for the healthcare industry are creating the tailwinds for NPHub. There’s an NP shortage, and the majority of the nursing schools don’t offer the clinical instruction nor the clinical rotation placements required for these folks to graduate and land their first jobs. NPHub is ensuring the students can meet their clinical requirements and helping them find jobs post-graduation. But when we’re working to continue to grow the ecosystem around this platform and create a flywheel effect with this network-driven model, the challenge for the company is, how do you continually stay in touch and have something of relevance and value for the NPs outside their instances of need? There’s a stretch of time between each clinical rotation, between graduating and getting your first job, and then between being in a job and needing your credentialing again. So, what we think a lot about is how can we stay relevant in this career lifecycle and always have something of value to these audiences outside the most obvious and critical junctures. I think that’s probably the greatest challenge for the business in terms of the market dynamics with this audience.

MMG: This is NPHub’s first influx of institutional capital. Can you share some of the growth strategies you plan to target in the near term and the longer term?

KFB: In the near term, I think it’s mostly organic growth and there are multiple value creation initiatives where the capital is being used. One is piloting student payment plans—it’s roughly $2,400 per clinical rotation and you have to do four to five of them to graduate. That’s a lot, so offering student payment plans and also bundled offerings at an attractive price that can be financed, that’s a big offering that’s imminent. NPHub has been offering this in a smaller way but needed the capital to really promote it and deliver it and remove the friction from the process. That’s a huge gross margin driver, and we think the take rate on that will be very high.

Another real value driver for the business is selling long-term contracts—subscriptions, essentially—to universities. NPHub has already started to do this, but we needed a team behind this. This was a key item in our 180-day value creation plan. We needed a chief commercial officer, and we’ve hired someone who is just now getting onboarded. There’s a real need on the team to sell B2B, because they’ve been so B2C-focused with the individual nurses. So now we’re building B2B muscle selling to universities, turnkey placement program for clinical rotations, and then also selling to employers to capture as much of their NP hiring needs as possible through our platform. We need to bring more people who have the experience working at this stage of company and building a B2B motion into a company that’s largely been individually focused, more transactional and more volume rather than higher value and lower volume, so that’s a muscle to build internally. Diversifying the revenue stream is really exciting for this business, and we think a multiple expander, certainly.

Earlier, I mentioned PAs. Today, NPHub doesn’t have clinical rotation offering for PAs, but we’re set up for it, and it’ll be a very easy thing to turn on and to adapt the platform to support that audience. Typically, most PA schools do offer clinical placement services the way medical schools ensure the clinical experience of their med students, but it’s still a flawed and fairly disjointed and manual process. So, even though they may have connectivity in certain geographies around where the school is located, the demand still exists in the ease, in the quality of the matching, and being able to assure those PA students, as we do with the NPs, that you will have your rotations and the right matching based on the interests of the student.

This interview has been edited and condensed for clarity.

Hilary Collins is ACG’s Associate Editor.

Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.