DFJ leads $8.5 million investment in Xealth’s digital prescription service

Xealth, a health care startup that allows doctors to prescribe digital services like apps and devices, today announced a seed round of $8.5 million, led by DFJ.

The company aggregates and filters a range of information in a care provider’s existing electronic medical record (EMR) workflow to determine what to prescribe patients. “We algorithmically surface the relevant digital service against the patient’s clinical data, medical history, appointment schedules, and payer and employer eligibility,” wrote Xealth cofounder and CEO Mike McSherry, in an email to VentureBeat.

Digital services include articles, videos, surveys, apps to help patients manage their diabetes, programs for cancer care survivorship, and medical devices like glucometers and sleep apnea machines.

“Clinicians can then discuss these digital health tools with their patients during appointments, track usage, and schedule reminders to ensure patients use them,” wrote McSherry. Patients can access these digital health prescriptions from their health system’s online patient portal.

In terms of monetization, Xealth charges hospitals licensing and volume usage fees for patients and providers. The Seattle-based startup announced four customers — Providence Health & Services, UPMC, Hennepin Health, and Froedtert & the Medical College of Wisconsin — who all joined as investors in today’s seed round.

Xealth was incubated at Providence’s digital innovation program for a year and a half before spinning out in January. Prior to exploring the health care sector, McSherry cofounded and sold Swype — a predictive text technology — to Nuance in 2011. Bill Bryant, the DFJ partner that led today’s round, was an angel investor in Swype.

The fresh capital will be used to develop the company’s product, increase sales and marketing, and grow its team of 12. Xealth is also looking to integrate with more EHR platforms, as it only supports Epic at this time.