How Reveleer Doubled Revenue From $25M to $51M With Acquisitions and Debt

Guys, Reveleer launched back in 2013. Are selling specifically to insurance businesses and then also doctors and folks on the front lines to say, hey, listen, when that doctor is seeing a patient, focus on the chronic heart issue, which Jay knows he can surface because of health records that he sits on using a little bit of machine learning AI room to do there, but he scaled nicely. Broke $51,000,000 of revenue last year with about 10% EBITDA margin.

The year before that, about 25,000,000. So doubled over the past eighteen months. Hoping to break a 100,000,000 this year. That's the stretch goal. We're rooting for them, funding the business in a very capital efficient way, keeping the equity new deal done with Hercules. I can't talk about Jay's specific deal, but Hercules public filings, they're usually targeting a 15.5 all in weighted yield and 11% headline rates. Sounds like they got a good deal done here as Jay

is gonna hopefully use that money to go fund future acquisitions as they look to continue to expand ACV, which they've done over the past three years, expanding ACV almost three x to 9 to $900,000 in annual revenue per average employee. Hey, folks. If we haven't met yet, my name is Nathan Latka. I launched and sold my first software company back in 2015 and went on to write a book about it, which you guys made a Wall

Street Journal bestseller purchasing over 30,000 copies. Thank you so much for that. After the book, I launched this show and one... Went on to create founderpath.com. I raised a large fund to do non dilutive deals with b to b software founders. So far, we've invested in over 400 software founders totaling a $150,000,000. Here in 2024, we're doing three to four new deals per week. So if you're looking for capital and don't wanna give up equity, go

sign up at founderpath.com for free to get your offer. Alright. Let's jump into the interview. Hey, folks. My guest today is Jay Ackerman. He's an enterprise software executive responsible for setting the vision, strategy, and objectives for Reveleer. As a leader, he's also keenly focused on shaping and stewarding the culture at the company to attract a robust collaborative team while driving an innovative mandate to accelerate value based care mission. To make this really specific, Reveleer is a

data and analytics platform for healthcare. So super specific. We're gonna jump into it today. Jay, you ready to take us to the top?

Yeah. Can't wait, Nathan. Let's go.

We were just chatting preshow. Our first chat was all the way back five years ago in 2019. You said you re listened to the episode last night. Do you get most of the predictions right?

More right than not. Yes. Yeah. What was the biggest thing? I mentioned to you, the one we didn't get right is we thought we would end 2019 with a business that was generating positive cash, and we didn't hit that point until 2023, but we're there now and really excited about how the business is performing.

So just to be clear, last year in 2023, you guys ended up EBITDA positive, cash flow positive at the end of the year. We did. Yeah. That's incredible. Congratulations. Now I have a bunch of questions in term... You're doing a very... A lot of very unique things. You've raised a large round from Hercules in a down market. You have successfully executed that I know of two acquisitions. A lot of founders love the idea of inorganic growth

via acquisitions, but then they fail with the integrations. I think you've done a really nice job. I wanna dig into that. But you've also have a really efficient capital structure, I think. But before we dig into any of that, let's talk about what we love, which is your customers. What are they buying from you? What are you selling?

Yeah, and one of there's been one major change in our customer segment since we talked in 2019. So we're selling a data and analytics platform to payers, insurance companies, and risk bearing providers, think health systems, hospitals, doctors who take risk to support value based care. And so those are our two market segments, and they're buying a software platform that helps them understand their patient's health and how well they are performing

and delivering high quality care to them.

And so help me, just to be clear, and you're selling directly to the insurance companies for the data, and then you're selling something to the doctors and hospitals, the first, the front row folks, is that right?

Yeah. Yeah, so think a doctor who's going to see a Medicare patient, when that patient walks into their office, they can pull up in their EMR

a result file from us that's gonna say, Hey, Nathan's here, and we want you to focus on these three specific medical conditions that our AI has identified from a wide set of data that we've captured, that these things might be going on with them. So it allows the doctor in that fourteen to sixteen minute visit to be more efficient, to potentially capture a condition that they may have missed, and ultimately leading to better care for the patient. So yeah, that's a new offering for us.

I mean, Jay, I go to my primary care doctor once a year, and they don't remember the stuff I told them twelve months ago. How do you sit on enough data to be able to tell the doctor, focus on these three things about Nathan, because we learned about these four years ago from this other dataset we sit on?

Yeah. Well, so the thing that... You know, and you've probably experienced this,

something pops up for you and you'll go to an urgent care setting. You might have a prescription filled from CVS, you might have it fulfilled from a local small pharmacy. You may then go see a doctor out of network and you have a lab done. And so that data is not consolidated in an easy format. We're able to sweep, we identify like a geography based upon where you are, how many miles we're gonna sweep, all the

care settings that exist, pull that data in, we're really successful. We can capture incremental data on 90% of the patients that kind of run through our platform. But the challenge is when you get all that data, you better be really good at mining it, because you can have thousands of pages of data. And so we take that thousands of pages of data and we synthesize it down to the top two or three things. And if a

doctor is curious and doesn't understand what we're suggesting, they can click in and go exactly to the precise spot in one of those records where we're drawing that conclusion.

Okay, so let's just use me as an example real quick. So like, I'm making this up, right? But it's for the sake of the example. Last year I had strep throat. I went to urgent care. I didn't go to my PCP because she was too slow, right? They were too slow to I see went to urgent care. It's only four miles from the PCP. It's 12 miles away. What public data set are you able to use to know that I purchased cough drops or nasal spray at CVS because the urgent care prescribed something?

Yeah. Well, we're connected into a couple of the major lab systems, pharmacy data companies. So when we put your name and we can pull what data they have on your prescriptions that have been fulfilled.

What are those big ones? Can you name the top three?

You know, there's... You'll see a lot tied to diabetes. Like, you know, in our our target segment in health care, patients and Medicaid patients, those are our two biggest segments. So Medicare, you're gonna see people with diabetes, chronic heart condition, kidney disease. And so that, those are examples of the, let's call it, top conditions that stand out, obesity, morbid obesity.

So you'll scrape data sets related to those things, not like strep throat from a guy like Nathan at the CVS?

No. No. I see. I see. Yeah. More chronic, you know, things that are gonna carry, you know, kind of year to year.

Okay. I think our audience now clearly understands sort of what you're providing customers. That was extremely helpful. Help me understand how how you've priced this. So what does an insurance company pay you and what would the doctor or the hospital pay you?

Yeah, so our pricing model has shifted from our last discussion predominantly to a per member per month model. So that health plan, that provider, they'll pay us a set dollar amount for every number, every one of the patients in their care, and, you know, we bill we bill them portably on that. And they run their businesses under those models. So that's a well understood model and running a health plan. It's a well understood

model and running a large health system.

Yep. Yep. Okay. So yeah, that makes sense. And then when you're selling to an insurance company, what does that package look like?

Same thing. It's a per member per month.

Ah, okay. Okay. So both. So it's two different segments, but it's the same sort of pricing model per member per month quarterly.

Yeah.

Okay. And what what did you... I forget. Pardon me. Where what did you switch from? What were you were you doing?

We were predominantly in a, like, sort of like a cell phone cellular plan model where you would pre purchase units on our platform. So you would pre purchase, if you had, if a health plan had 100,000 members that they were caring for, they would pre purchase, they might look at 25,000 of their patients, so they would pre purchase the units, and if they went over that, would bill them incremental overages.

I see, I see.

And it's harder for them to model that, it's harder for them to manage kind of those overages that, you know, would often show up.

Yep. And I remember back in 2019, you told me that you were serving at that point about 30. I don't know what were they, if the concentration was insurance companies or doctors or hospitals, but it was 30 of that group combined. Where are you, and can you give an update on that number today?

Yeah, sure. So we're approximately 80, Yeah, 80 customers from 30. And our average contract values continued to grow to where we're approaching 900,000 annual contract value per customer.

We have to dive into this. So guys, do not stop listening to this, and I'll tell you why. Jay's ACV back in 2019 was about 274,000. So he's more than... He's not only tripled, he almost tripled his customer base from 30 to 80. He's also tripled his ACV. So I wanna dive deeper here now, Jay, how on you've done that. Was it was it inside product development with your engineering team, or do these two acquisitions that I read about come into play here?

Yeah. Both. So, yes, we continue to build product internally. We've had some phenomenal innovations using AI in our product. But both acquisitions, Dynamic Healthcare, which we acquired in beginning of early 'twenty two, and MDPortals, we acquired in 'twenty three, are allowing us to sell a more complete solution and are giving us an opportunity to go back and expand our footprint, you know, as we've proven ourselves inside of the customer segments that we've been talking about.

One of the traps founders fall into is they go say, Yeah, if I just have more money, I could go buy these three companies. And they put together a beautiful Excel model, and they say, yeah, once the acquisition's done, we're gonna cross sell and ARPU's gonna expand, and the teams are gonna have no cultural issues at all, and the tech stacks are gonna match. It's gonna be perfect. How do you model an M and A process before doing it to try and derisk the operational integration that has to happen afterwards?

Yeah. Yeah. It's simple, right? Like the 80% of acquisitions fail.

That's true.

Yeah. I mean, a couple of things for us. Our acquisition strategy is centered around identifying product that rounds out the solutions that we're offering today. So when we do that, we're effectively expanding what we can offer to the same buyer. So we're not asking our sales team to go learn kind of the buying pattern of a new executive inside of a health system that has nothing to do with the people that we're currently talking with. So

that's kind of number one. We did, in our first acquisition, acquired a more dated tech stack, and we took traditional kind of data center hosted tech stack, we've migrated it to AWS, and...

Which company was that? Dynamic Healthcare?

So we moved it into AWS, we've modernized the tech stack, now the same single brand, so the experience for the customer is they're seeing one company, the data flows across both applications. Culture culture is is a bit... Is important. Dynamic was a slower moving company when we acquired it.

They had 38, about 30, 38 on the team when you bought it?

Yeah. Probably actually a little smaller than that. And And we, in the first twelve months of owning them, we sold more new business than they had sold in the prior five years. And the reason I call that out is because all of a sudden we were asking everybody to run a lot faster, to move a lot quicker, and how we were standing up new customers, operationalizing it. And for some, weren't, you know, they weren't used to

that. Some didn't really wanna do that. We had some people who self selected out, who didn't wanna move at that pace. We're really excited about the way the team has contributed and some of the talent that has risen up. But yeah, that wasn't for everybody. MD Portal's the second acquisition, much more culturally aligned in the way we operate and the way we move. In fact, they probably have challenged us to move a little faster.

How many people on their team when you bought them?

Yeah. I mean, there was a smaller team. It was a team of sub 15.

Okay. Okay. So I mean, both these companies, it looks like we're bootstrapped in under $34,000,000 in revenue when you bought them. Is that a fair statement?

Fair for acquisition number two. Acquisition one was a cash generating business of about $78,000,000 of ARR. Like it was Oh, wow. It been a business for a long time.

That's impressive though, because if they were under 30 FTEs when you bought them at '28, generating 7 to $8,000,000 of revenue, that's a cash machine. I mean, the revenue per employees through the roof, that's like record numbers, but they were bootstrapped. Right?

Friends and family backed. Yeah.

You weren't dealing though in your negotiation with some VC that said, Jay, I want a 100 x return. It's a billion dollars for the M and A deal or bust.

No. No.

Yeah. Interesting. And by

way, Ben, on the acquisition front, both of them were companies we had established partnerships with. So Mhmm. We we understood one another. We knew how our products were gonna together, we were already out selling them in the market, and it made a lot of sense to just go quicker and move to acquisition.

Yeah, this makes a lot of sense. How did you make sure, I mean, do you have a history at other companies of doing M and A? How did you make sure to get that first one right? Are there any sort of pieces of advice you give our audience, consultants you use, things like that?

I I have done M and A in the past. I wouldn't say... I mean, I've done I was a seller, I sold a business, I was a part of buying two, three other companies in the past. So a number of experiences, but not, you know, not double digits. But I think what's most important is the product. You gotta have product fit. You can't do it for financial engineering purposes. If you go down that path, yeah, your

numbers might look nice for a little while, but it's gonna break down.

So, and we had to have the resources internally that could support the integration work. So the one thing we did, we brought a consulting firm in to work with our team to build the playbook with Dynamic that we could use in acquisition too, and then whatever comes in the future, expect to do more acquisitions, which is why we did that raise with Hercules that you noted. Yeah. But we built a playbook to manage Who did you...

Can I ask, Jay, who you used? Which consultant?

Yeah. Use we use a consulting firm. I think they're headquartered in Tennessee called Ancora.

Ancora. They specifically helped you build sort of, hey, after you buy the company, do this on day one, do this on day two, do this on day three, that kind of thing?

Yeah. And build the tooling so that we could then manage a broad set of work streams. You know, we would have the sales, you know, marketing integration work stream, right? We had the back office work stream on how we were integrating. Like day one, finance and HR were integrated. Sales and marketing was the next stream to integrate. Then we had kind of a slower roll around product and technology. So they helped us kind of align that,

create the playbooks that we could execute, create the methodology in which we would manage a steering committee and track the synergies that we were expecting, whether it's cost synergies or revenue synergies.

Yeah. And this is just to be clear, I wanna make sure I give the right resource to my audience. It's ankura.com, Ankura.

Yeah. Yeah. You got it right Okay.

Yeah. Interesting. That makes a lot of sense. Okay. So those were the two m and a deals. Look, I'm obviously running the numbers in my head trying to guess your revenue. You also seem to be pretty transparent. Are you comfortable sharing where you guys were at last year where you finished at? Yeah. Sure. Yeah. And I

think I've shared them in some other settings. So in 2022, we were 25,000,000 of revenue. 2023, we were 51, almost 52. So we doubled from '22 to '23. Wow. And if our team executes well, we'll deliver like numbers in '24.

You think you can double again this year? You can break a 100,000,000 this year in run rate by December?

It's our our target. Yeah. Yeah.

It's a good It's

not it's not it's not our board it's not our board plan. It's not our board plan, But Yeah.

Hopefully, board plan is 30% under that. Right?

Yeah. There's there's there's some cushion. There's some cushion. Talk to

me about Hercules because when most people think about Hercules, they think about debt. Was the 65,000,000 pure equity?

No, actually it was debt.

It was all debt.

It was all debt. Now that our business is generating cash, and we have really good understanding of the unit economics of our business, We wanted to raise a debt facility to support M and A. And so Hercules is, we actually had great deal of interest from a number of parties to back

this vision that we have for building a broad based, value based care platform and operating system for value based care. And so that 65,000,000 is effectively aligned based on ARR at really attractive curves.

Yeah. No. This makes a lot of sense. I mean, so so one of the things that I like to do at the end of every quarter is I go study all the 10 q's and and and 10 k's from the publicly traded BDCs. Thankfully, Hercules is one of those, we can see all their deals. For example, they gave Sisense a $34,300,000 loan at 11% headline interest rate. Now, obviously, Sisense has raised $270,000,000 of equity with estimated

revenues about your same size, 72,000,000. They also gave a couple other lines to others, but this this deal will eventually show in their 10 q. I'm wondering if you're able to share with us, like, the high level rate you got on that facility.

Well, you know, I'm... I I can't I can't disclose the actual rate, but let's call it... It's in the range of what you just called out.

Okay. Yeah. One of the things... One of the hits that Hercules gets... Maybe you can defend them here if your experience has been great, is they charge pretty substantial exit fees. They specifically charge scisense. I wanna make sure I get this right. Right? A a 2.55% exit fee on one deal, and then a three and then point 45% exit fee on their deal they did with Suzy, another SaaS company. How did you think about exit fees, and was that a big deal? Was that a big deal negotiation point for you?

It certainly was a big deal because we were thinking about what our next financing step is, and when another investor might enter. And if another investor entered in the near term horizon, would we pay that down, and what might that rate look like on a blended basis? So first off, like what was most important to us is the total interest expense that we're going to pay with front end fees, back end fees,

carrying fees, and straight borrowing costs. That's number one. Yes, we were focused on the exit fee, and we were able to lock in at a rate that we felt comfortable with.

Across

the total borrowing, very healthy for the environment that we're in.

According to Hercules last 10 Q, which would have been the twenty twenty three Q3 number, they had approximately 3,300,000,000 of AUM, of which 25.4% of that exposure was to B2B SaaS, representing about $840,000,000 of exposure. This is a significant position for them. This deal they just did with you, in a sense, sort of own the bank. That must feel pretty good. They also say, he's smiling. They also say that their target weighted average yield is about

15.5%. So to your point, if you're looking at a headline rate of 11, 12%, they're gonna get their fees somewhere around that 15 over time. Did you sort of see that when you ran the all in cost of capital, you're sort of in that same range?

Our our all in is, I think, in the lower end of the range.

Yeah. You're a better risk company than most in their portfolios. You're saying that in a nice way.

Yeah. Look, I mean, if you peel the top off and look into our economics, like we are running a good business. We've been efficient stewards of capital that shows up. I think our risk profile is really interesting, and not... There are not a lot of companies right now that are growing, doubling, increasing And so doing both of them puts us in a position where we can, you know, ask for more favorable terms.

I can totally agree with you. Absolutely. When you do 51,000,000 last year, what was your EBITDA margin? Are you talking like five, 10% or barely profitable?

We were just below 10.

I mean, that... That's that's amaze... Did you knew you know you were gonna go to market with a debt deal, so you wanna make sure you could tell that that profitability story there?

You know, actually, the debt... No. Actually, that wasn't the plan. We... I would say q three, kind of felt really good about the way we were running the business, and we went to our board and our two primary financial sponsors, Upfront Ventures and Oak HCFT, and said, Hey, we'd like to raise a debt round to support move in a little faster on the M and A front, and they got behind it. So it wasn't it wasn't part of the plan at the beginning of the year.

Yep. Were you refinancing out any other debt, or is this your first debt exposure at the company?

We had we had, like, sub $2,000,000 of debt. That's a good question.

Nothing. Yeah.

Yeah.

So how does it feel? I mean, a lot of founders, they read about VC in the paper and the billion dollar deals. And I'm like, folks never calculate the cost of getting up all that equity. It's like, man, if you can use debt and keep it, you're gonna... It's gonna be way better. But I'm biased. I run a fund that does this. Let them hear it from you.

Yeah. Look, I'm I'm a shareholder. I've... I was really excited to bring Oak in in 2021. They've been a transformative partner, but they stepped in with a big equity position. All of sudden, I took a look. I'm like, Wow, my... You know, my state's gone down quite a bit. And, yeah, look, I mean, as you build, you want to make sure that...

You know, you can think about both. The equity, you

know, equity is expensive, but it allows you to sleep better at night. And so you've been on the debt road, you've got to make sure you understand it. And yeah, we feel great about what we're building, how we're trying to use equity and debt. And yeah, we're excited to go from, you know, we're looking at the next kind of milestone of 200, 200 plus million.

Well, we're rooting for you. I apologize. I got so into this. I lost track of time. I wanna be respectful of your your end So time let's wrap up with the famous five j. Number one, your favorite business book.

Well, I'll I'll use it. I'm not gonna say favorite book, but I'm gonna share a book that I recently read called Breathe. Yeah. Which is great read about

Brene Brown. Right?

Yeah. No. No. Breathe. Not not Brene Brown, but the book Breathe, which is really about the art of how you breathe. So it's a worth... It's a worthwhile read. Oh, James Nestor. Yeah. It's great. It's fantastic.

Yellow cover.

Yep.

Okay. Very good. Number... Yeah. Go ahead. Do you have another one?

No. No. Go.

I'm ready. He's he's got his things prepared. I love it. Number two is No.

I see. Yeah. Good.

Is there a CEO you're following or studying?

Yeah. Look, I... Yes. I'm focused heavily right now on ServiceNow. Mhmm. And I think what they're doing is fantastic. And you also look at how AI has played a part there. And when Bill McDermott left SAP to go to ServiceNow, I kind of shook my head and I said, didn't get the move. And I love paying attention to what they're doing and how he's leading that company.

Mhmm. Number three, what's your favorite online tool for building the business?

Favorite online tool? I gotta tell you, I'm pretty obsessed with ChatGPT as my, like, go to app on my phone right now. So it's helping me be a more efficient CEO.

Yep. Everyone says they're using AI now in their stuff. You are sitting on a lot of data, so I do believe you do have some sophisticated stuff on the back end. But do you feel like, like, if you're... If if a 100% is you're using AI to its full potential at the company already, it's fully installed, it's cranking, like, percentage what do you think you're on the way there?

Oh, I think we're... As proud as I am of what we're doing, I think we're 30% of the way there, 25% of the way there.

Yeah. It's

a long way to go.

Yep. Number four, It how many seems

like it keeps me up at night because I think there are small companies who can get birthed overnight and very quickly make claims that they can do things that we're doing or things beyond what we're doing.

The nice thing about what you built though is I imagine the big part of the moat that you sit on is getting access just to the data to train these systems is difficult. You already, because your size, have access to unique and proprietary data sets in the space for Medicare, Medicaid, diabetes, chronic heart, etc. A startup wouldn't be able to necessarily tap that as easily as you.

It's harder to tap that. And the other moat we have is it is very difficult to win business with health systems and insurers. And so to have 70 of them under contract, that gives us a pretty wide mode.

Yeah. Yeah. All right. Number four, how many hours of sleep do you get every night?

Six and a half, not a lot.

Situation, married, single, kids?

Married, two boys, 14 and 20.

Oh, busy guy. And how old are you?

56.

56 years young. Take us back last question. Something you wish knew when you wish you knew when you were 20.

What do I wish I knew when I was 20?

I think what I wish I knew when I was 20, the value of being in a company with great talent that'll push you to be better at what you do.

Guys, Reveleer launched back in 2013. Are selling specifically to insurance businesses and then also doctors and folks on the front lines to say, Hey, listen, when that doctor's seeing a patient, focus on the chronic heart issue, which Jay knows he can surface because of health records that he sits on using a little bit of machine learning AI room to do there, but he scaled nicely. Broke $51,000,000 of revenue last year with about 10% EBITDA margin. The

year before that, about 25,000,000. So doubled over the past eighteen months. Hoping to break a 100,000,000 this year. That's the stretch goal. We're rooting for them. Funding the business in a very capital efficient way, keeping equity. A new deal done with Hercules. I can't talk about Jay's specific deal, but Hercules public filings, they're usually targeting a 15.5% all in weighted yield and 11% headline rates. Sounds like they got a good deal done here as Jay is

gonna hopefully use that money to go fund future acquisitions as they look to continue to expand ACV, which they've done over the past three years, expanding ACV almost three x to 9 to $900,000 in annual revenue per average employee... Per per average customer. Jay, thanks for taking us to the top.