Billion-dollar physical-therapy startup Sword Health shares the strategies it’s using to drive growth ahead of a potential IPO
- Sword Health wants to be profitable before an IPO, and it’s aiming to hit that milestone in 2024.
- CEO Virgilio Bento said Sword was still growing rapidly without compromising that timeline.
- The company wants to triple its AI team and is considering more acquisitions along the way, he said.
Virgilio Bento founded Sword Health in 2015 to provide virtual physical therapy to patients all over the world. The company is now rapidly expanding, and an IPO could be on the horizon.
Bento isn’t interested in taking Sword public until the company is profitable, which he expects to be next year.
“What I’m looking at is whether we’re mature enough in terms of forecasting our business.” “You don’t want to go public while you’re still trying to solve a lot of internal problems,” he explained. “And I don’t want to be a publicly traded company that isn’t profitable because that puts us in a difficult position.”
Bento was named to Insider’s 2023 list of the 30 people under 40 who are transforming healthcare in August. He claimed that Sword, which has raised $316 million in venture capital and is expected to reach a $2 billion valuation in November 2021, had not slowed its growth during the economic downturn. The company now provides virtual physical therapy to employees at over 2,500 companies worldwide, up from 1,400 a year ago, and is actively seeking new partnerships. It’s also releasing products, such as an artificial-intelligence-powered technology released in March to help patients predict pain and avoid surgeries.
Bento stated that he is now focused on investing in Sword’s growth while keeping the company on track to profitability. Sword is working on a few strategies to that end, including increasing its AI efforts, gaining more employer contracts, and looking for potential acquisitions, he said.
Tripling Sword’s AI team
Sword has already integrated artificial intelligence into some of its products, including predictive AI technology. Bento stated that he wanted to invest more in artificial intelligence, including generative AI, to help Sword’s clinicians.
“What we’re looking to do internally is have AI as one master expert, but at the same time, everything gets vetted and validated by a human person,” he explained.
Sword’s providers, for example, could use generative AI to pull data from the last 5,000 clinical research papers on a given topic in musculoskeletal care to provide clinicians with the best information to assist patients, he said.
Sword’s clinicians will still verify and consolidate that information, ensuring that patients receive medical advice from another human, not AI.
Bento stated that Sword was hiring to more than triple the company’s AI team.
Landing more contracts with employers
Sword surpassed $100 million in recurring revenue from annual contracts with employers earlier this year, the company told Insider in July.
The company stated that it expects to earn $200 million from these contracts by the end of 2023.
Bento attributed Sword’s rapid growth, even during a downturn, to the massive market for musculoskeletal conditions, as well as Sword’s ability to reduce total healthcare costs for employers. According to Bento, Sword guarantees in its contracts with employers that they will save a certain amount of money for every dollar spent on the program.
“Instead of having low-back-pain surgery, you can do Sword, which will get you better clinical outcomes and save your company money,” Bento explained.
Still open to acquisitions
Bento told in September 2022 that Sword wanted to accelerate its growth by looking for merger and acquisition opportunities. After nearly a year, the company has made no new acquisitions.
He stated in July that Sword was considering acquiring several companies. He stated that Sword was still looking for deals and was looking for a startup with a business line or partnership that could help Sword scale faster, such as partnerships with health plans that did not already work with Sword.
Bento stated that he was approached by more companies than usual in the first half of this year that wanted to be acquired by Sword as an alternative to fundraising. He claimed that some of the companies told him they only had about a month of cash left and needed to be acquired to stay afloat.
“Smart companies get that conversation started much faster,” he says.
