Care Angel’s current Series A raise has a concerningly-high pre-money valuation of $45.7 million. Admittedly the company is taking in revenue and has received positive early feedback. Still, this is a very high valuation for a company still suffering large net losses and without any patient outcome data to report. Thus, Care Angel’s price score is its lowest across all five metrics.

The U.S. health care market is absolutely massive, the most expensive per capita in the world. However, Care Angel’s solution only addresses a fraction of a fraction of that market: health care management for at-risk populations. That said, the virtual health care market overall is expected to balloon to $77.4 billion in the U.S. alone by 2026. The pandemic has driven some of this market growth, as health officials urge caregivers to rely on virtual caregiving options. Fortunately for Care Angel, boomers have also been taking the opportunity to become more familiar with technology during the pandemic as well.

Given that the healthcare industry is working to cut costs, and that a graying of the population means more and more of the population relying on unprofitable (for providers) Medicare, Care Angel’s money-saving program might be just what the doctor ordered. If the company can secure ever-increasing portions of the sizable telecare market and help caregivers drive costs down, Care Angel could carve out a slender but significant slice of that multi-billion dollar industry. Still, in order to appeal to providers, it must by necessity provide its service cheaply without sacrificing quality, which will require it to acquire as much as possible of an already-limited market. Care Angel will also face increasing competition in the telehealth market, further limiting its ability to capture market share. Due to these limiting factors, the market score for Care Angel is quite low.

Founder and CEO Wolf Shlagman leads the Care Angel team — an experienced hand at telemedicine-based startups. Shlagman holds a Bachelor’s Degree in Finance, Business Administration, and Art History from the University of South Florida. More to the point, he founded a similar telemedicine company called Consult a Doctor in 2007 and successfully led the company to an acquisition by Teladoc in 2013. 

Care Angel’s CRO is Darren Hay. He is a former VP with Telus, a Canadian telecommunications company, and a former senior VP with ADT and Ideal Life, which partnered to provide remote healthcare to customers. Both these experiences are seemingly a perfect fit for his current role.

Kelly Gregorakis is Care Angel’s VP of Marketing. She brings to the team six years of leadership of the marketing team of Teladoc — the company that acquired CEO Shlagman’s Consult a Doctor in 2007. She has served in VP-level leadership roles since 2004 and seems well-credentialed for her role. Finally, Lena Nikolnikov is Care Angel’s VP of Product & Clinical Solutions. Nikolnikov served as the Director of Physician Operations for Shlagman’s Consult a Doctor, has many years of healthcare experience, and holds an MBA in Business Administration and Corporate Innovations from Post University School of Business.

All in all, this is a team with a strong level of relevant industry and entrepreneurial experience. Care Angel’s team score is accordingly high as a result.

With so many recent advances in artificial intelligence, you might assume that Care Angel is far from the only company to provide AI-based telehealth services — and you’d be right. Providers are aware of the massive advantages AI can provide to caregiving and are making investments. Many of these investments seem centered around employing AI for data analysis rather than information-gathering, but it’s not a difficult leap. As of now, Care Angel’s patent is pending, offering it a potential leg up if it can secure the required patent before healthcare companies simply come up with their own offerings. As of yet, the program has been better-received than anything else in the same niche market. However, there is little preventing a more mature and better funded healthcare provider from offering services very similar to Care Angel’s — especially as healthcare’s adoption of AI continues to increase. Therefore, Care Angel’s differentiators score is just below average.

Now in its sixth year of operation, Care Angel has been making steady progress towards profitability. Since winning the AARP Foundation’s Aging in Place $50K Challenge in early 2016, the company has begun to take in revenue. And that revenue is increasing year over year — $996,230 in 2019 from $78,144 in 2018. While this is a massive step up in revenue, Care Angel holds significant short-term and long-term debt. Additionally, the company faced net income of -$1.65 million (an improvement over -$1.88 million last year).

While the company still has a long way to go, its early results from its current members are promising. Early results indicate a tenfold increase in clinical efficiency, and $41 saved per member per month. Due to its growing revenue and encouraging early traction, Care Angel’s performance score is strong.

While there is undoubtedly a growing market for telemedicine — especially for vulnerable elder patients — Care Angel has yet to secure a path to market dominance or success. While providing its service cheaply enough to provide cost savings, the company burns through large amounts of cash to develop software and pay its expansive team. Should the company’s patent application fail, other providers could easily step up with their own AI-based telephonic systems to fill the need. Without any strong differentiators or scientifically proven improvements in patient care, Care Angel needs defensibility and positive reporting on its software to expand its customer base. From a purely investing standpoint, the company’s high valuation also limits early investors’ upside potential — especially concerning given the uncertainty of Care Angel’s success.

Where the market sees a need, it fills it, and there is a need for cost-cutting in healthcare. Providers are losing money year after year on Medicare patients, and patients are fearing they won’t be able to age at home with floundering savings and overdependence on relatives.

Care Angel can fill this need, and its system has already proven aptly scaleable. Assuming the system is shown to lead to better medical outcomes for patients, providers will be incentivised to engage the service both for financial and moral reasons. That would be a powerful argument for an industry suffering from bad PR about exploitative practices. Continued positive results and a secured patent might lead to a position of leadership in the market, or even possible acquisition — its CEO has led a previous startup to such a deal before, so such an eventuality is possible.

Care Angel is providing an AI, voice-enhanced telehealth service that regularly checks in on at-risk older patients. The system enables providers to easily monitor patients for health risks and keeps family members informed on their loved ones’ health. The service has received positive feedback, and the company is gaining more revenue year-over-year. 

There are significant challenges to Care Angel becoming a dominant market force though. The company is keeping its service price low in order to provide cost-savings to patients and providers. However, this limits the company’s ability to reach profitability. Also, potential competitors or providers employing their own AI programs could cut the startup’s knees out from under it. Lastly, the effectiveness of the system has not been fully proven — if no significant benefit can be seen from Care Angel’s usage, then adoption rates will certainly fall. Therefore, Care Angel is a Neutral Deal.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Benjamin Potts.