AposTherapy, which has developed a treatment for knee and back pain using unique individually calibrated shoes, has completed a $15 million financing round at an estimated $100 million company value, after money. Previous investors, including Pitango Venture Capital, Aviv Venture Capital, and Invus, accounted for half of amount invested in the current round, and private US investors, including David Levy, responsible for the health sector in international firm PricewaterhouseCoopers, and CD&R senior partner Richard Schnall, accounted for the other half. AposTherapy has raised $30 million to date, and has 140 employees. The company has already been marketing its services for several years, mainly in Israel and the UK, but also in Singapore, the US, and other countries. The treatment is fairly well recognized in Israel, and is subsidized by a number of health funds and private health insurance companies. There is also partial insurance reimbursement for the treatment in the UK.
AposTherapy currently treats 50,000 patients, each of whom pays several thousand dollars, so the company has posted to date at least tens of millions of dollars in revenue. AposTherapy also recently appeared at the Oppenheimer conference for promising private companies, which may signal its future intention to turn to overseas capital markets or strategic investors. In a lecture at the conference, AposTherapy CEO Elad Duschak talked about changes currently taking place in the company's business strategy.
Turning to the US market
Up until now, the company's business model was the supply of medical service and a medical device on a hybrid model. The service includes diagnosis of the problem in the walking dynamics of the patient, whose attempt to avoid the pain is liable to make it worse. The treatment includes adapting the shoes with special curvatures that force the patient to alter his walking dynamics in order to walk. The adapting and training are carried out by physiotherapists on behalf of the company. The fact that the company itself performs the service constrained its ability to develop rapidly in international markets. The company is now trying to change its model by transferring its service activity to physiotherapy institutes, while concentrating on research and development of the device and the manufacturing process.
In 2015, the company will focus on expanding its business in the US market. This year, the company is working with eight physiotherapy clinics in New York, and by 2016, it aims at having dozens of trained clinics offering the product/service. China is also knocking on the door in the company's strategic plans, Duschak said at the conference.
AposTherapy's treatment competes with pain relievers and extremely complex back and knee surgery for ending the unbearable pain, which in some cases can be stopped by using the product. The treatment also constitutes an alternative or supplementary product for physiotherapy. The patient must walk at least one hour a day using the shoes in order to obtain results, but they can also be used as ordinary shoes (a person used to the shoes can walk in the them at normal speed, and they are not conspicuous). The company's studies show that 86% of users reported less pain within five weeks.
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2014
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