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Exclusive Interview: The Motley Fool Sits Down With Citus Health CEO

The Motley Fool got a chance to chat with Melissa Kozak, RN, CRNI, and co-founder and CEO of Citus Health. Here's what she had to share about the future of digital health and how her company is tackling the home healthcare industry.

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Corinne Cardina: Hi there. I'm Corinne Cardina, Bureau Chief of Healthcare and Cannabis on Fool.com. I've got with me today, Melissa Kozak, who is not only a Nurse and a Certified Registered Nurse of infusion, but she's also Co-Founder and CEO of Citus Health. Melissa, I would love to hear the story of how you discovered the need for Citus Health and what it was like to bring this company about.

Melissa Kozak: Absolutely, Corinne and thank you to Motley Fool for having me today. It all started in about 2010 when I became a visiting nurse in visiting patients in the New York City area. I was specializing in home infusion and helping patients through complicated therapies. It was very clear to me early on that there weren't digital tools available to patients to really get access to their care providers when they had questions to connect easily about their therapies. Coupled with, as a nurse, I really wanted to be taking care of patients, but I found myself doing documentation into all hours of the night. The organizations that I worked for, were it seemed like always chasing down signatures on paper in order to bill. And we definitely had what I like to call our institutional-facing systems, which were our electronic health record systems. But what we didn't have was collaboration and communication tools outward in that last mile with the patients. So the final straw for me was I visited a patient who was just so distraught. He said to me, "Melissa, my IV pump had been beeping all night. I was trying to get through on the on-call service. I got transferred three times. It disconnected on me. My wife wanted to take me to the ER and I frankly missed my dose." It was that classic entrepreneurial moment of there had to be a better way. That was really the beginning of finding out, there really isn't these types of patients support tools out there. Through a series of introduction, I was introduced to my co-founder, a gentleman named Shahid Shah. Shahid's really a thought leader in digital health transformation. He's built and deployed multiple EHR (electronic health records) systems in his career. He was always looking for his other half, if you will, in terms of a clinical workflow expert, who had the passion to change the industry, who really knew what the problems were. He has the technical know-how to really change things on a macro level. We were a brilliant match from the beginning and set out on the mission and become what Citus is today.

Cardina: That's awesome. For people who may not know a lot about the home healthcare industry, there are a few different components, right? There's hospice, which is care for patients who are terminally ill. There's palliative care, which is for patients with chronic conditions, and then there's post-acute care, so for patients who are discharged from the hospital, whether it's from an injury or some sort of stroke. Does that cover how you see the home healthcare industry?

Kozak: Yeah. You have a great start there. We kind of think of it as post-acute care as one large umbrella. That really means care delivered, either instead of going to an acute care setting like a hospital or after an acute care setting episode. Underneath the post-acute care umbrella, like you said, Corinne, is hospice, palliative care, home healthcare, and then my specialty, which is home infusion and there's also an adjacent markets to that -- specialty pharmacy. Really anywhere where a patient is outside the four walls of a traditional acute healthcare setting and receiving their care in the home is what we would consider post-acute care.

Cardina: Awesome. So that can get pretty pricey if you need in-home care for a lot of those patient groups. It's pretty permanent. You're going to need that care for a long time. Do you think that bringing these efficiencies into the market can actually help folks save on healthcare costs?

Kozak: Yeah. Payers actually tend to prefer post-acute care largely because it is more cost-effective. It's actually the most cost-effective site of care is the home. But with the inefficiencies that really exist today because of the lack of digital tools that are, again, more of patient-facing or outreach facing, those inefficiencies are absolutely driving up the cost. So whether it's just having to bring on more staff members to take care of patients because a nurse can only see so many patients, or not being able to bill and collect cash in a timely manner because of paperwork errors or incomplete documentation, there's absolutely room to make this lowest site of care even more affordable going forward as carers just continues to move into the home setting.

Cardina: Thank you. You mentioned payers. Who are the clients for Citus's business model? Is it payers? Is it hospital systems, providers? Would love to hear about who you're selling this portfolio of services to.

Kozak: Sure. Yeah. So our target customers are the care providers. That's the hospice organizations, the home infusion companies, the specialty pharmacy providers themselves. Some of them are part of a larger health system. Many large health systems will have a hospice arm, a home infusion arm. Some of our bigger clients from a health system side, UPMC, it's one of the largest health systems in Pennsylvania. Their specialty pharmacy business does over a billion dollars in revenue a year. Healix is another well-known provider. They actually are the largest provider of physician-based infusion suites in the country. They service over 150 locations. Another example is NKS. We've recently gone international. They are one of the top specialty pharmacies in Canada. They are the gold standard for specialty pharmacies up north there. Then another one I've mentioned is Soleo Healthcare. They are actually a national provider of home infusion services, they service about 20-25 locations across the country. So a mix of providers and then health system providers as well.

Cardina: That's very exciting.

Kozak: Yeah.

Cardina: When you began building your business all the way to now, what were some of the biggest challenges, and on the flip side, what would you say the most exciting development has been for you so far?

Kozak: Sure. So I would say that the biggest challenge which I think Motley Fool and others might say this is a good challenge to have, is we started growing faster than necessarily that we had processes in place to support the growth. We really hit the market. It was kind of right place, right time. We secured some partnerships that really helped accelerate our growth. So we found ourselves with a lot of customers and really with a growing team, and we had to put processes in place and people in place to help that scale. So to answer the second part of your question, I would say, what remains one of the most exciting things about Citus Health is the team that we assembled here are really clinical and operation leaders from the post-acute care market, and I'm certainly grateful and humbled by that. Literally, folks, industry experts who reached out to me saying, "Hey, we love what you're doing with Citus Health, we think that this has been needed a long time, and we want to be part of it in any way we can." So everywhere from our customer success team which is the group who helps make sure that our customers achieve the value through our software, to our sales leadership, and our engineering team, all are comprised of people who have walked a mile in our customers' shoes, and really see the opportunity to change things on a big level. So it's been absolutely thrilling to assemble such a great team.

Cardina: Great. Thank you. Since the coronavirus pandemic began so many months ago, seems like telehealth has really been one of the biggest buzzwords. We've seen Teladoc Health (NYSE: TDOC) of course, the pioneer, has been just reporting explosive growth in the number of patients that they are seeing virtually. They announced a big merger with Livongo Health (NASDAQ: LVGO) which is doing the remote patient monitoring side of things. I would love to hear your take as an industry expert on what's the difference beyond telehealth? So telehealth we know is you Zoom with your doctor but in HIPAA compliant way. Then there's remote patient monitoring where devices can play a role in communicating your biometrics back to your doctor, who's in another location. I would love to hear how you see the virtual care industry as a spectrum, and where Citus fits on that spectrum.

Kozak: Totally, and you're absolutely right. Telehealth is a buzzword and if you ask five different people, you'll get five different definitions of telehealth. Largely, those definitions are synonymous with video visits like you just said. I think one of our key differentiators and the way that we have positioned ourselves even pre-pandemic is the virtual patient support. What it really takes to provide virtual remote patient support is a lot more than just video. This idea of telehealth or video visit is certainly a key component of it, but it's just one component. So we look at really all of the cracks and crevices, if you will, around the communication gaps, between care providers and their patients, the patients' family members who might be the caregivers, the communication gaps among the care providers with each other. Certainly, a lot of teams are working from home now, and even prior to that, there are teams in the field. There are teams that are in the office. So to us, there's a lot of different areas here of remote patient support, so it's messaging. How, if a patient sends a message, how does it route to the right person at the right time, and if somebody doesn't answer, does that escalate properly? If there is a condition that needs to be closely monitored, the ability to send frequent touchpoints to that patient to remind them to take their medication, to step on a scale. And then there's really critical things that are more on that boring paperwork side but really important to start care, signatures and consents and things like that. In markets like hospice and home infusion, patients' conditions are very dynamic, they can change and often times, the physicians need to be kept up to date about what is going on with the patient so bringing them into the remote patient care mix. At Citus, we really look at all of these different points of where collaboration and communication among multiple stakeholders is needed to deliver care effectively to patients, and it is certainly beyond what we think of as traditional telehealth. I've gotten a lot of outreaches from customers recently saying, "Hey, Melissa, just like you did, telehealth is a big buzzword. What do you think about it?" I said, "You are telehealth enabled already." Just with this platform, you have what it takes to not only provide telehealth but really 360 remote patient support.

Cardina: That's great. I'm thinking that probably improves patient outcomes as well as you get to hear from your doctor right away, but having all of those important things in place 24/7, it's got to result in a better outcome for the patients as well.

Kozak: Yeah, it definitely does. We're showing improved adherence to care plans, when you have that really close digital touchpoint the way that we do at Citus Health, and we really provide our platform and here's a fancy buzzword for you, in an omnichannel way. What that means is the patient can use any device from anywhere, with an app, without an app, it really doesn't matter but we have this really close touchpoint. So if you can, again, remind them it is time to take your medication or something of that effect, yes, you are improving adherence, you're improving outcomes, not to mention things like CATs scores and patient satisfaction in general.

Cardina: Very true. So are there any specific insights you've taken away from how home care has been impacted by the pandemic? Have the past seven to eight months proved out your mission? Like yes, uninterrupted communication between care teams, not just between care teams and their patients but their families, through technology, that's the only way forward.

Kozak: I completely agree that it really has proved out our mission. It's been really exciting in six to seven months to see these care providers advance technologically like a decade, more than they have in a decade rather. And really it started with so many of the care teams going remote, and this concern of how do we operate from a 50% workforce remote environment or 100% remote workforce environment which Citus Health has been from day one pre-pandemic. So showing how technology tools can make sure that information among the care team is not lost so any changes or any needs of the patient can be communicated among the care team. And then this idea with the quarantine orders that had been in place, and family caregivers not being able to be in the home with their parent or whatever it is, but being able to send a quick message to the nurse or to the physician to find out about the changing needs. Checking in on where the equipment is, when is the medication coming, we have seen that these digital tools because people are dispersed, families are dispersed, care teams are dispersed, that you add in these digital tools and you can still have this continuous care. I think that there was also a bit of a worry that care couldn't be intimate if it is delivered virtually. I think that people are discovering that it absolutely can be, that if you substitute an in-person consultation with a video visit, for example, a nurse can still be extremely connected to you and compassionate about your care. So one thing that has been positive to come out of COVID is certainly the embracing of technology by the healthcare industry.

Cardina: Yeah, absolutely. I think we've all learned how well interpersonal relationships can really translate probably better than we ever imagined over the Zoom waves.

Kozak: Absolutely.

Cardina: Great. Citus has made the CareConnect platform available to all sorts of providers during the pandemic. How did you come to that decision, and how do you think it's going to impact your strategy down the road?

Kozak: I think the decision was really made, I'm based in New York City, and so we were hit the hardest and the earliest. Watching my fellow nurse colleagues, that I'm still friends with even though I don't practice nursing in the traditional way anymore, not having enough PPE (personal protective equipment) to go into home safely, and seeing family members really be in the dark about what is going on at these critical times is what drove the urgency around the CareConnect platform, and this idea of let's just get something stood up quickly for our customers. Secure communication so that family members can be informed, and really, safety. There's a lot of care that you cannot replace with a video visit. I'll take an example on a home infusion site. A video visit cannot do a lab draw, a video visit cannot infuse a medication into somebody's arm, but troubleshooting a piece of equipment, assessing a wound dressing or a rash, these things can be done remotely. When you're talking about a global pandemic where patients don't want the care provider in their home, the care provider doesn't want to possibly endanger a high-risk person. We really wanted to get these tools available and just help in any small way because it did feel very helpless early on in the COVID days.

Cardina: That's amazing that you were able to do that.

Kozak: Yes, and the team really, again, being that I have this team of former care providers themselves, the passion there to just do it, and working at whatever hours and around the clock to get it stood up was very heartening to see all around.

Cardina: That's great. A little bright spot in a very dreary time.

Kozak: Yes.

Cardina: Great. How do you envision the future of Citus Health, and what would you say your strategy is right now?

Kozak: Well, yeah, absolutely. The future is really bright for Citus Health. We started in the home infusion industry, which is a little-known big dollar industry because it was my niche. We scaled there, we were right place, right time. But what we soon found out is, as you move across these verticals within post-acute care, whether it's specialty pharmacy, hospice, home health, HME (home medical equipment), there are similar challenges across all of these verticals. Namely, a patient is remote from their care team. Things like coordination of deliveries, supply, medication, paperwork. Families need to know what's going on. Physicians need to know what's going on. These are similar challenges. What we see and what we've already seen is we are easily able to move across these verticals of post-acute care, which we are doing absolutely from a direct sales perspective. You had asked previously about who our clients are. But another strategy that's really central to what we do, our partnerships with the EHR vendors. We talked before about how the systems of record of the EHR vendors have been in place, but really the systems of engagement like Citus Health, that's a whole platform previously hasn't been in place. So what we're doing is we're partnering with those large EHR vendors who have gaps in their product roadmaps. We did it with WellSky, who is a very large EHR provider. In both acute and post-acute care, they are one of the leading providers. They now distribute our solution to various areas, including hospice, home infusion, specialty pharmacy. What that does is it enables us to get a much larger footprint because their great big sales team is out doing that work, and we're really the tech behind enabling it. We've also done it with another partner, Brightree, who is a market leader in the HME space in about 60% market share. Again, they saw functionalities that we're doing that they knew that they needed to offer to their customer base. These partnerships, and there's going to be a couple of exciting announcements forthcoming as well. These EHR organizations are so focused on their core product, their regulatory changes. So they don't really have the time or the bandwidth to be innovative and iterative the way that we do. What do I see for us? I see us, yes, absolutely being the virtual patient support platform across post-acute care, and also being the innovation partner to these larger software companies who don't have the bandwidth to do it themselves. So really we can just reach so many more patients and care providers than we would be able to do on our own.

Cardina: There is so much optionality there. That's great.

Kozak: Yeah, exciting times.

Cardina: Wonderful. Final question. I would love to hear, what is one thing you think investors should know about the digital health space? I know obviously Citus is a private company. It's a start-up. Fool.com, there's a lot of investors interested in the healthcare space. I'm sure there's something we can glean from you about the larger industry.

Kozak: Sure. Well, hey investors. You've heard the new normal. We believe it's here to stay. We are really looking in so many other areas of a consumer's life. Digital transformation is there, from booking airline tickets, to ordering a car service, to getting your groceries delivered. It's right there in the palm of our hands, but healthcare has been behind, particularly post-acute care. We think healthcare is catching up with these other consumer categories. We think that family caregivers who are now of the generation where they grew up with technology, they want that instant gratification. They are used to this in their lives, and they want to communicate in ways as consumers that they prefer to communicate. So there is no going back. The other thing to really understand is that care is just going to continue moving into the home. We're seeing that now with COVID and we'll continue to see that, that this idea of post-acute care, meaning after an acute care episode, may mean entirely instead of an acute care episode. So digital health is going to be, and continue to grow in importance to be able to deliver and collaborate that care when you are not standing actually next to a patient physically. This is a really bright time, and you mentioned some public acquisitions that have been in the news lately, and we expect more of those to come.

Cardina: Great. Well, thank you so much, Melissa. We are sure excited to see what's next for Citus, and we will definitely keep in touch.

Kozak: That is great. Corinne, thank you so much, and thanks to The Motley Fool team for allowing me to come on today.

Cardina: Of course. Have a great afternoon.

Kozak: Thank you. You too.

Corinne Cardina owns shares of Teladoc Health and Zoom Video Communications. The Motley Fool owns shares of and recommends Livongo Health Inc, Teladoc Health, and Zoom Video Communications. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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