Devices & Diagnostics, Hospitals, Startups

Armed with new acquisition, $43M VC money, startup aims to be the only choice for GI docs

Alpharetta, Georgia-based EndoChoice has taken note of the new world order in healthcare in which […]

Alpharetta, Georgia-based EndoChoice has taken note of the new world order in healthcare in which quality, not volume, is rewarded.

As such it is aiming to be the single provider of all the services required by specialists who treat an array of gastrointestinal diseases. Billing itself as a “platform technology company,” EndoChoice offers devices, diagnostics and infection control for GI specialists. And recently it brought Israeli company Peer Medical into its fold that gives it a new U.S. Food and Drug Administration-cleared imaging technology that EndoChoice’s CEO describes as a “full spectrum endoscope” far superior to traditional endoscopes.

Instead of having to go to a myriad 0f vendors to fulfill their needs for device, imaging, diagnostics and infection control, now GI specialists can simply turn to EndoChoice. That is the hope of the firm’s founder and CEO Mark Gilreath.

“GI is a very fragmented marketplace and the GI provider goes crazy as they are dealing with 23 different vendors when they should really be dealing with five: devices, pathology, equipment, scope repair and infection control,” Gilreath said in an interview outside the J.P. Morgan Healthcare Conference in San Francisco on Wednesday.

This is where EndoChoice comes in. Through the Peer Medical acquisition, EndoChoice can now offer a video endoscope in addition to all these other products and services needed by GI specialists. What’s more, the Full Spectrum Endoscope has a larger range — offering a 330-degree view during a colonoscopy — compared with a traditional endoscope that has only  a limited, 170-degree view, Gilreath said.

And because of the limited view, roughly 25 percent of polyps are missed in colorectal screenings, Gilreath declared. As such, makers of these traditional endoscopes — Japanese camera companies like Olympus, Pentax and Fuji — are adding to the economic costs of healthcare. Early detection is not possible and according to standard medical guidelines, a clean screening means that a patient will not be checked for another decade. But by this time, the GI disease may have gotten worse.

“This is a huge cost to the system,” Gilreath explained.

This is where he hopes Peer Medical’s Full Spectrum Endoscope will be a breakthrough product. But Gilreath is not satisfied by bringing in what he believes is revolutionary. He is also leveraging financial might collected from a $43 million financing round led by respected venture capital firm Sequoia Capital.

The money has already helped buy the German manufacturer of the Full Spectrum Endoscope, which Peer Medical outsourced. But more importantly, it will help to “aggressively ramp manufacturing” in 2013. EndoChoice has 250 employees and has been named multiple times to Inc. magazine’s list of 500 fastest-growing private companies. Its annualized revenue is about $40 million, Gilreath said, and that is garnered from a customer base of 2,500 hospitals and surgery centers.

A brochure created by the company notes Sequoia Capital’s Scott Carter commenting, “The combination of EndoChoice and Peer represents a rare opportunity to create the next leading company in GI, a market desperate for innovation and ripe for disruption.”

And Gilreath for one is ready for the challenge.

“I want to disrupt the Japanese camera companies in the GI market,” Gilreath said, and he noted that no other U.S. company provides imaging in endoscopy besides EndoChoice.

Game on.

 [Photo Credit: Target from BigStock Photo]

 

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