Can Everyone Really Win? Deal Making with Strategics, Health Systems, and Investors | LSI USA '25

John Hart  0:00  
You. Good afternoon, everyone. How's the how's the meeting going so far for everybody? Good, good. Well, first off, we want to thank Scott and the entire LSI team for pulling this meeting together and also pulling this, this illustrious panel, together. Very fortunate that we have some, some absolutely incredible individuals to take us through the topic of deal making. Can everyone win from a strategic health system and financial investors? So this is going to be a topic that a lot of people have already reached out, asked me a lot of questions, but what we want to do is take to take a moment have the panel introduce themselves, and then we're going to dig really deep into a few great questions that we've received. And also look forward to getting some questions and answers at the very back end of this. Thanks, Lana.

Lana Caron  0:54  
Good morning everyone. It's great to be back at LSI. Beautiful data points. I'm Lana Karen, a general partner Ed solos by ventures, a venture capital fund and firm based out of Tennessee with a long history in Biopharma and med tech, and now also in healthcare AI and digital health. Previously, I was on the strategic side, but very happy to be representing today a the perspective of the traditional VC.

Biren Mehta  1:23  
Awesome. So very nice to be here, everyone. I am on the strategic side. And I started out as an engineer, worked also at an investment bank, and then in 2008 joined Johnson, and Johnson have been there ever since. Spent the first 14 years doing corporate development, M and A and three. Three years ago, I moved into our ventures arm called JDC. We are a strategic investor. Been around for 50 years. Invest, really very flexibly in all types of stages, all types of dollar amounts and even deal structures in terms of types of investment and so strategic, in the sense that everything we invest in is something that we see some potential future for, potentially usually an acquisition down the road, but that's how we're looking at potential opportunities.

Mayank Taneja  2:15  
Hey, hi everyone. I'm Mayank Taneja. I'm the VP of OSF ventures, which is a health care system based out of Central Illinois. So OSF Ventures is the corporate investment arm of the health care system. So we invest on behalf of the health care system. Care Delivery is our primary operations. But venture capital was a program that was established in 2015 for us, and then we've been operating the model since 2015 This is our third fund that we deploy out of and collectively manage 250 million in aum. We are early stage investors do med tech, digital health, tech enabled services, but mostly series A and B, with an average tech size of three and a three and a half million for initial commitment. So very much. Looking forward to the discussion.

Chris Terry  3:00  
Great and good morning, everybody. My name is Kris Terry. I've been at Stryker for, gosh, a little over 15 years. My current role, I oversee the M and A strategy function for the corporation, so looking at large target and adjacent categories that we might want to grow into or grow into to drive growth for the corporation. Had a variety of roles, and I did a little stint in commercial banking and and private equity as well before this. So looking forward to today's

John Hart  3:25  
discussion. Thanks, guys. I am John Hart. I work for a company called verenex. Verenex is the only device company out there that is able to take you through product design and development. It can take you through your regulatory it can take you through your clinical all the way through market access and strategy. So I'm sitting outside. So look forward to speaking to many of you later on. But with that in mind, I want to ask the first question to Lana, and then we're just going to go right down the road. We're going to keep it broad at first, and then we're going to dig in a little bit deeper. So what are the key challenges and opportunities that our industry has to look at today.

Lana Caron  4:02  
Wow. Great question. So on the challenges front, we are continuing to see similar challenges that we've seen over the years. We are continuing to see inefficient workflows and care pathways, continuing staff shortages and lack of qualified physicians, we are also continuing to see lack of data or lack of access to data. But on the flip side, I think there are also a lot of opportunities that we are starting to see. We believe that, especially on the digital and AI front, the tech is definitely maturing, or has matured, to address real world applications and use cases. The access to data is getting easier, and we are also starting to see a lot of providers, a lot of physicians. And health systems, as well as payers being more willing to adopt technologies, new technologies, emergent technologies, like AI and digital. So all of this combined, I think, presents, present an amazing opportunity for all of us

Biren Mehta  5:17  
during Yeah. So look, if we start to think about the challenges in our space, we could probably spend this panel and the rest of the day when you we have challenges. Of course, at a corporate level, I see challenges with my portfolio companies. I mean, there's all types of challenges, but relevant to our discussion today, I would say all of those boil down to an opportunity, and I think that opportunity is how we can bring inventors, investors and strategics together earlier to shape the development of new technologies in an efficient way, capital efficient way, time efficient way. And I think the benefit the opportunity that this can, that this would deliver on, is our ability to get these technologies out to patients sooner, and scale them much faster. So I think that's the opportunity. I'm very excited for us to talk about today.

John Hart  6:08  
Mayank,

Mayank Taneja  6:10  
yeah, I'll give you a provider lens and so, you know, again, we struggle, as Lana mentioned, with the workforce shortage. So you know, it's not just clinicians and nurses that you hear about. You pick, you know, any role that you may think of on a clinical front, and that person, you know, you can see the job being posted over there on a healthcare system website, whether it is our MOA, our Rad Tech, ultrasound tech. So like, you know, the sign up bonuses have just gone through the roof. You know, if you compare to what it was five years ago and what it is now. So workforce short is number one. From provider perspective, payer mix is something that we keep on struggling with. How much of a commercial base do we have, versus CMS versus, you know, uninsured. So depending on the geography that you're serving, I think it becomes really important as to how you deal with that payer mix. And lastly, I'll just point out that, you know, again, it is very important for us to increase access, right? So that access, we are a suburban, rural kind of a healthcare system which has to serve, you know, hospitals which are 50 beds in size versus, you know, hospitals, which are 500 beds in size. So how do you solve for access issues? Is another challenge, but also an opportunity, and with the advent of some, you know, technologies, with the good thing is that we know that it is CHF that continues to be a big drain on the system. It is COPD that continues to be a big drain on the system. It is sepsis that continues to be the number one sort of cause of morbidity and mortality. So these are our opportunity areas as well when we look at any investment from a lens of a healthcare system.

Chris Terry  7:55  
Chris, yeah, maybe I'll try to riff a little bit on some of the things you guys mentioned. I mean, from a challenging standpoint, our portfolio at Stryker is quite broad, so we're dealing with a lot of the same things that I imagine many of the other big multinationals and strategics are, but certainly from a regulatory environment where we sell our products, it's a really complex labyrinth of different regulatory bodies that we have to navigate with. Again, it's not a bad thing, but it adds cost and time as we try to make our products available to the masses around the world. I'd also say, I mean, supply chains continue to be a big focus for us, notwithstanding some of the recent threats around tariffs, we've got lots of teams that we've put together to try to analyze that, how we can maybe mitigate that in the event that those become a bit of a reality. And Lana, to your point, around the data and everything on that front, we spent a lot of time thinking about data privacy, cybersecurity, with the advent of all the digital applications, as well, as, you know, some of the the AI advancements that have been made. But to me, that's also a bit of an opportunity, because despite us having to put forward a lot of effort, we think it will help with the the shortage of caregivers that you're, you're, you're talking about, as it puts more efficiency and time back into our caregivers days to do what they do best, and that's take care of patients that decided to better where it might be to the comment around the ecosystem and on the prior panel, one of the opportunities, I think that's out there is we're not withstanding. The last couple of weeks, we've started to see some, at least some openness in the IPO market, and that's been a really nice, a nice Advent, because we hadn't seen that really over the last. Call it 15 years or so, with a couple of windows. But it was nice to see kestra Beta Bionics and and Sarah Bell get out. And I think for all of us in the room, that's a great sign that the ecosystem is coming back to life, and it provides yet another exit opportunity for for all those early stage companies. Excellent,

John Hart  9:41  
Aaron, when you think about J and J's corporate strategy, how does that align to your investment strategy overall?

Biren Mehta  9:48  
Yeah, so great question, because I'm sure a lot of people probably wonder like, how does J and J keep track of so many different things going on? It's such a large organization spread across so many different areas to put in. Perspective, our med tech business is about a $30 billion business. It's spread across four major areas, cardiovascular, orthopedics, surgery and vision. And, you know, surprisingly, or maybe amazingly, we're actually quite organized, and the teams work quite collaboratively together, and I'll explain a little bit about how that works. So each of these four franchises I mentioned, they have their dedicated leadership, they have their dedicated business development folks, and they develop their own strategies, both for their core business as well as what adjacencies they want to prioritize. And so we as the ventures team, we understand that very well. And so as we get incoming opportunities, there is a daily interaction between the ventures team and the business units, and so we are scrutinizing opportunities with them. They, many times, the business will bring an opportunity forward and say, this could be a good candidate for an investment, maybe too early for acquisition. So there's a very nice rhythm that we have with all the business units, and then in terms of how how the partnership works, is in order for us to put an investment in a particular company, we actually have two parallel tracks that that have to happen in order for that investment to get done. And one of them is on the business unit side. So the business unit side will recognize that this is something that's important for them, a strategic priority, and they will evaluate things like strategic fit, market opportunity, technical, clinical merit, all of those things, because they're the experts in those areas. In parallel, the ventures team is looking at it from a traditional investment perspective, looking at, you know, the finance, the legal, the management team, all of those pieces. And so we both sides have their internal process, their own approval process, and only when those converge is when we move forward with an investment, and so it's a very disciplined approach of how we how we get into our investments.

John Hart  12:07  
Thank you. Kris, Stryker has been very active recently. When you think about it, when you look at the corporate business development team, how does that align to their mission, to, like, improve healthcare, and what specific examples do you have?

Chris Terry  12:20  
Sure? Yeah, at Stryker, our mission is together with our customers, we're driven to make healthcare better, and I would absolutely tell you that our M and A strategy lines up right behind that mission. On a daily basis, we spend a ton of time each and every day with our KOLs, our advisory boards. What have you to review whether it's organic or inorganic opportunities that could come down the pipe. Specifically, to answer your question, though, John, a couple of deals that we've done where it's really, in our opinion, driven to make healthcare better. You go to the recent deal that we just announced with an Ari, I mean that you're talking about life saving technology and limb saving technology in certain circumstances, and that's that's Making Healthcare Better. And addition, mean, with the acquisition of physio control all those years ago, and now that product, those products are used to resuscitate patients and and then, you know, bring them back to life and hopefully restore their life, that's certainly Making Healthcare Better. And a lot of the lens that we look through is from a global standpoint. Can we take these products that maybe have a US centric bend and or European centric bend, and can we bring them to the US or vice versa? It's not necessarily globalization for the sake of globalization, but we want to get our world class products into the hands as many caregivers as we can so that they can have that positive impact on patients and drive those great, great outcomes,

John Hart  13:38  
awesome as we look at the digital space currently, Lana, when you think of your current strategy from an investment perspective and looking at digital perspective directly, what are the hurdles? What are the opportunities that you see?

Lana Caron  13:58  
Well, the role of AI and digital tech is going to continue and to evolve and continue to increase we are seeing, I would say when, when you look at our pipeline, more than half of the opportunities that are coming to source have some sort of AI and digital components. I think that's only going to continue increase and accelerate, as I mentioned that. You know, access to data is improving, the technologies are maturing. So the role, again, of this stack in in our investment strategy is going to continue to play a huge role. Awesome.

John Hart  14:43  
Mayank, how does OSF, from an investment strategy, align to its mission to improve patient outcomes and reduce cost?

Mayank Taneja  14:54  
Yeah, no, it's a good question. I mean, we, up until now, have always reported through strategies. We remain very close to our like like, as does any CVC, you know, remain close to our strategic, sort of, you know, priorities for the next five years or so, I would say So historically, if you look at the growth of virtual care or trying a new model, like hospital at home, you know, the ventures team has been the one which has been the outside in, sort of vehicle to look at startups in particular and help with that build by partner, sort of mentality that the healthmaker or the decision maker within the healthcare system might have. So you know, for the next five years, again, we are looking to, you know, become a destination center in central Illinois, around three service lines, which are cardiology, neurology and oncology. And so how can we fill in the gaps? Right? I mean, we have those clinicians today, we have devices that we use today, but there are still some gaps. So, you know, our job, along with, you know, clinical and operational leaders, would be to fill in those gaps. Look at the market. What can be, you know, implemented if we have to become a destination center so that we don't lose patience to a Chicago, a Northwestern Chicago, or a bonds Jewish in St Louis. So that'll be our key. Again, all of our investments come with a strategic alignment and and understanding that these solutions have to make a difference in the lives of our patients and our providers.

John Hart  16:26  
Awesome. Kris, earlier today, you and I talked a lot about integration and the integration of new technologies. How is Stryker handling that now from the integration of these new innovations and technologies into their current portfolio, this is

Chris Terry  16:39  
an area where we've actually spent quite a lot of time in investment dollars, quite frankly, over the last decade. When I joined the company, it was still a very decentralized company, but we didn't have a central integration team. Today, we actually have an integration center by excellence, and that's run by a woman that's a pure mind at the corporate M and A office. But we, because we're so decentralized, we try to partner and marry that group at the center up with each one of our business units or divisions, whoever might be sponsoring the acquisition that we're doing. So quite often the you know, the business unit is going to have to live with the decisions for quite a long time. So we want them to really weigh in on some of the commercial aspects of that, whether that's sales force compensation, the structure of the sales force. Go to market strategies, whatever it might be, that's what the commercial teams are driving. But that integration center, if you will, at the corporate office, is really meant to bring kind of the multitude of lessons learned that we've had over all of the transaction experiences that we've had in our history. When you think about being able to go really fast and extract some synergies, that team at the center can really bring a lot of a lot of horsepower behind systems integration, benefit integration, you know, order to cash whatever it might be. But then that also really allows our teams on the street to be able to free up. I take an example, John Wood. When we acquired Vocera back in 2022 we were able to extract a lot of public company costs out of that, the public filing fees, all the audit fees, et cetera. And that really allowed our R and D teams be maniacally focused on bringing those two portfolios together. So in a very short period after close we had the the R D teams together, and we took the Smart Hands Free badges and smart software applications from oceran, we got that on the same pipeline and platform as our bed and stretcher portfolio, and that culminated in the launch of the world's first ever wireless stretcher last year, which I think is a great example of that.

John Hart  18:35  
So Bryan, if you think about the companies that you currently invest in, how do you, how do you work in the support the development of those organizations? How do you, how do you guys integrate that within the organization?

Biren Mehta  18:46  
Yeah, so, so J JDC has about almost 200 active investments. And so when we put an investment in a company, there's kind of a, call it a base package, like things that we do for all of our portfolio companies, and there may be some more customized things. So, you know, the basic things are, when we have an investment, we have a member of the ventures team that is focused on that investment, represents our interest in that investment. They're the lead investor on that investment. So, and it could be that, if we have a board seat, you know, they take the board seat and whatnot. And with that comes like, obviously, we become an advocate and a supporter of the company, but we also be that becomes the conduit into j and j so things like accessing J and J expertise, you know, things like regulatory expertise, commercial Hema, those types of things, it can be access to leadership. And so once you're a portfolio company, you know it makes sense that on a regular cadence, you are getting a chance to share updates with the leadership for the business unit that is relevant in in J and J and and then it could be access to like events, like we may have some internal events sometimes where we gather. Are very influential other organizations, and we bring them together for internal purposes, but sometimes we extend that to some of our portfolio companies. So that's kind of what we try to do for all of our investments. And then some of the stuff that we that makes sense on certain investments depends on maybe if there are some strategic rights involved, or if there's an opportunity to collaborate in a deeper way. So, for example, co development, maybe it makes sense to integrate a portfolio company's technology with our technology, do a prototype and see if we can create more value. That's something that we will apply resources to. It could be some type of distribution collaboration where we, you know, we have footprints all over the world. So we utilize that to bring products to market and learn access to KOLs. Obviously, we have strong relationships in the fields that we play in. So depending on what makes sense and every company is different, we also can apply these types of benefits, I think, to a portfolio company.

John Hart  20:58  
Awesome, great insights. Now, Maya, I want you to take that same question and apply that to OSF, and how you do it from a health systems venture group, yeah,

Mayank Taneja  21:10  
for us, John, I would say there's no one size sort of fits all approach when it comes to, you know, providing value for our startups that we've invested into. I mean, it depends on, like, what that company needs, the stage of that company, what are the requirements? What are they looking for? So, like, it's about that mutual conversation that we need to have, you know, even before we invest and then after the investment, there are ways where we can, you know, be the pivotal trial site. For example, if the company is going through a pivotal trial, we've been that for endotronics, which was one of our portfolio companies that got acquired last year, another one was a first in human sort of use case at our hospital post FDA clearance. So you know, the company had been through the FDA pathway without human data. Now they are directly in to be used in humans, but we were the first ones to be using it. You know, we can be a pilot site. We can be a simple customer of the company. And so it just depends on what you are looking for as an investor. And you know what the startup is looking for from a startup point of view. So it's just about that mutual collaboration that we are open to have a lot of our digital health companies have had the chance to pilot at OSF, learn from what they've seen from a workflow perspective, modified, and help them to get a better product market fit. So we can be that early adopter as well. In some cases, I would say

John Hart  22:38  
excellent. Lana, as you think about the digital health, it's been a hot topic. A lot of conversations going on at this meeting. If you think of Solis is investment structure. Give us an example of a couple investments you've done in digital

Lana Caron  22:54  
health. Sure, as I mentioned earlier, Solis is now investing in the health Ki and digital health, we have been very active in evaluating opportunities in the space, and a couple of recent investments have been that's worth mentioning. Back to medical and Urology. I urology, both spaces are very, very familiar and well known to Solus, because Solus has made a number of investments in cardiovascular and also urology space. So that was definitely one of the reasons why we decided to go into these investments. But aside from that, you know, if you look at both vector medical and IO urology, they are going after huge unmet needs, and we've got a number of clinicians and physicians, practicing physicians on the team who help us evaluate product, market fit, problem, solution fit. So it was very, very clear from the early introductions that we that these companies are going after a clear unmet need. They had a clear value proposition. The if you look at care pathways, workflows in these spaces, they are very long. There are a lot of bottle lungs, there are a lot of touch points and traditional technologies. Traditional medical devices are just not in a position to solve these challenges. So you've got to have AI, you have to have digital technology to help automate and personalize diagnosis and treatment. So that's exactly what vector medical and urology do. They use AI and digital tech to automate workflows, to personalize diagnosis and treatment. They take data, they collect and take data, and they essentially turn that into actionable insights to to speed up the process of diagnosis and treatment, but also a. Um, improve outcomes, right? Because we all want and, you know, Solus was founded by clinicians, so we are patient first, but obviously we are also a financial VC, so the return matters, but ultimately, it's all about delivering better patient outcomes at a lower cost. And so that's that's exactly what medical and IO world you do. In addition, I think some of panelists, I think, on the previous panel, mentioned that there is definitely this shift, especially in the digital tech and AI world, towards later stage investments or additional improvements in order to establish this product market fit. And so this is, if you look at many of the investments that Solus has done, they were a lot earlier stage. Solis is very comfortable with taking on clinical and regulatory risk, given the skill set and the team that we've got. Having said that, with AI and digital tech, we have made a very conscious choice to go later stage, where you've got clinical validation, you've got technology validation, you have regulatory approvals, and you even have early commercial traction and proof points, and that's exactly what these companies had, in addition to fascinating or amazing Talents on a management team. So all of that combined made us to write a check, and we are the biggest cheerleaders of those companies, and a very, very excited to to see what they've been able to achieve over the past few months since we deployed capital.

John Hart  26:58  
Awesome. So there's a ton of innovators out here right now. They're all sitting there saying, Well, how do I get time with you? How do you how do I get your attention to look at what I'm doing? So we'll start with with Lana, and we'll work our way down. But yeah, if you wouldn't mind just they're all out here. They're trying to find a way to get access to you and show their wares.

Lana Caron  27:19  
Well, first and foremost, I would say, start building relationships early. Just like when it comes to customers and partners, it's really important to build your relationship with investors before you actually need funding. We all know that it takes time to raise around so I would say, start early. That's That's first and foremost. Also, like I mentioned about vector and urology, you've got to solve a real problem. There has to be a, ideally, a large market. We are looking at 1 billion plus opportunities that really make a difference, and clinical validation, technology validation, all of that matters. We are also looking, obviously at the team and the skill set, and you know, whether you work together in the past or not. I also think that the attitude that the team has matters, the transparency and willingness to share not only the wins, but also the struggles. Because, you know, once we join the round, we want to be part of the team. We want to be able to help you solve challenges, and that willingness to solve things together and collaborate matters, not only, you know, for us, but also as we look at the entire innovation ecosystem, working with Byron, you know, J and J, or other strategics or health systems, I Think that's what, at the end of the day, will help us deliver on the mission that we're all after, right, to transform health care and improve lives,

John Hart  29:10  
eradicating disease and changing lives. I love it. Baron,

Biren Mehta  29:13  
yeah, so I have a suggestion for people, because we get a lot of incoming, right, and our job is to get that incoming and figure out, you know, yes or no, and if it's a yes, how urgent is it, and who do I send it to? Because, let's face it, like there's a lot of spaces I've never worked in the orthopedic space, I have orthopedics colleagues who I depend on to help figure out if something is interesting, should it be a priority. So we're not all experts in every space that we cover. So my suggestion, really, and I've seen a lot of people do this, and it really does help, is when you reach out to a strategic think about it from their lens, to help them understand why this matters and look. I'm this is, I'm not trying to say this in a cliche way, but if, if you know ja, and I'm giving orthopedics as an example, because I'm not in I'm not well versed in that space. But if you understand the landscape of orthopedics and how your solution fits in, and that J and J has a gap there. And by the way, you've talked to so and so at J and J already, and you can put that into your intro email to me and say, Hey, you guys are right now losing market share in this category because of this new product that's come in from a competitor. We have something that can really help you. I've already spoken to so and so at De pew synthes, and they seemed very interested. You know, can we get together at this meeting? If you can provide me that level of background, I'm going to quickly understand why this may be important for me, because I'll give you an example for this. LSI meeting, you know, well, over 100 kind of invitations of like, Can we meet? And so can't do them all, so we got to figure out which ones are the right ones for the business. But also, we don't want to waste everyone else's time. So for you know, it doesn't make sense if we don't understand what you have and whether it's a good fit. So to the extent that you can provide that in your introduction, I think it just helps the process move along much more efficiently.

John Hart  31:08  
Awesome. Mayonk,

Mayank Taneja  31:10  
yeah, no. I mean, I think Lana and Bryan covered it pretty well. So like, know the fund that you're reaching out to, know the investor that you're reaching out to, and again, start early, like Lana said, and at times, you know, like we might say no at a certain stage, but that doesn't mean no forever. So like, I think your job would be, or should be, to to keep us posted as to how things are evolving over a course of time. And so like, you know, we, for example, OSF doesn't come in before first in, human data is made available. So you know, again, like, if you reached out before that, you know, it'll be a straight No. But that doesn't mean that we will not evaluate that opportunity later on. So I think it's just about, you know, trying to know your sort of, you know, base that you're reaching out to, I think, is very important. And, you know, trying to get a better understanding of their priorities. You know, in the next year or two or so, like short term, I would say, would be very important Kris,

Chris Terry  32:06  
yeah, I'd echo everything that the panelists have already said. And maybe the additional thing, we are a very decentralized company at Stryker as well some other beer. And if you have an idea, bring it forward to us. Any of us, there's probably half a dozen of my colleagues floating around the conference this week, bring it to us. We'll make sure to us. We'll make sure to get it to the right spot. So it may take us a little bit to figure out where it goes, but make sure to bring it. And I would agree, not only have you know, you know the why it's important to us, but have bring some of those tangible facts, whether it's clinical evidence, ROIs, you know, somewhat of a repeatable, defendable business case where you actually have top line revenue that's maybe beyond some early investors or customers that are friends and family of the business, if you will, everything that you can provide to us as we start to get our internal champions to start moving it through our internal stakeholder group, just makes that process go that much smoother. If we've got some of that stuff out of the way,

John Hart  32:56  
awesome. Well, we're at time. Everybody here, as far as the panelists, they're going to go into the other room and take some questions, but I really want to thank them for taking the time today in the dedication that they put in to working on the questions and thinking what's going to be most important for you. So the true improving of healthcare, improving lives. Everybody up on this panel has been dedicated to that. So take the time ask them questions. You know what their key points are. Again, want to thank LSI Scott and the team. This was a great panel. Great opportunity to learn a ton from from phenomenal individuals. Thanks guys. You.