A General Catalyst-backed startup is mass-buying virtual care tech from big players like Walmart. Here's why Fabric is still betting on telehealth.

• GV-backed healthtech startup Fabric just made its fourth acquisition in 18 months.
• The startup bought more virtual care tech, this time from giant physician practice TeamHealth.
• Here's why Fabric is doubling down on its M&A spree as others ditch their telehealth investments.

Healthtech startup Fabric launched out of stealth in March 2023 to help patients get care faster and automate administrative work for providers.

Since then, it's been on a dealmaking spree. In June, Fabric bought Walmart's virtual care business, MeMD, after the retailer announced it would shutter its 51 health clinics .

MeMD was Fabric's third acquisition — the startup previously bought asynchronous virtual care platform Zipnosis from Bright Health, as well as generative AI startup Gyant.

Now, Fabric is pushing even further into telehealth with yet another buy. The startup has acquired TeamHealth VirtualCare, the virtual care business inside giant physician practice group TeamHealth, Business Insider has learned exclusively.

Fabric's four acquisitions have been powered by handfuls of cash from top investors such as Google Ventures, Thrive Capital, and Salesforce Ventures. The startup has raised $80 million to date, including a $60 million Series A round in February led by General Catalyst.

Fabric is leaning into telehealth at a time when many others are leaning out. While virtual care saw a tsunami of VC interest during the pandemic, investors and healthcare companies alike are now pulling back. UnitedHealth Group's Optum also shut down its virtual care business earlier this year, and telehealth companies Amwell and Teladoc have seen their stocks plummet from pandemic highs.

But Fabric's founder and CEO Aniq Rahman is still bullish on virtual care's future.

"There are a lot of people that are a little gun-shy about doubling down on their convictions. For us, virtual care is not going away," Rahman said. "We want to go deeper in virtual care, and there are some amazing teams and technologies we've been able to amass as a result."

Getting care anywhere

While Fabric's M&A-heavy strategy is unusual for an early-stage startup, it isn't unfamiliar to General Catalyst's portfolio.

Commure, the $6 billion startup cofounded by General Catalyst CEO Hemant Taneja, has made six acquisitions in the four years since its launch and has relied on those acquisitions to drive its growth , a September BI investigation found.

Where Commure has stumbled in developing tech in-house, though, Fabric maintains its buys are building on top of its own products.

Fabric, formerly known as Florence, launched last year with software for emergency rooms to help manage patients before, during, and after their visits. But emergency rooms are frequently overcrowded , including with patients with nonemergent medical conditions who might be better off seeking care elsewhere, Rahman said.

By buying Zipnosis from Bright Health, Fabric could offer telehealth capabilities to those patients.

"That really accelerated our business, and we had such a good experience with the Zipnosis deal that we've just been on an acquisition spree," Rahman said.

Next, Fabric acquired Gyant , a generative AI platform that automates patient scheduling and directs patients to the right type of care.

Rahman said the startup continues to build and improve its products that speed up patient intake in the ER, automatically record health data in the hospital's electronic medical record, and follow up with patients after their visits.

By buying MeMD from Walmart earlier this year, Fabric acquired the retailer's virtual care technology platform and expanded into contracting with payers, employers, and providers.

Now, in combination with the TeamHealth acquisition, Fabric has a 50-state network of clinicians and access to over 100 million lives in managed care contracts with payers.

The startup says it serves 30,000 employers, payers, and healthcare organizations, including large health insurer Highmark and health system Intermountain.

Signs of life in the M&A market

Rahman said Fabric's position as an early-stage startup has been surprisingly beneficial for dealmaking.

"It's allowed us to be very nimble and agile. We've been able to guarantee speed and certainty to the sellers, and we've also been able to construct very creative deals that have allowed us to align interests for the teams and the shareholders," he said.

The strategy is new for Rahman, a long-time entrepreneur and investor at Vast Ventures. The last company he led, an advertising analytics company called Moat, sold to Oracle in 2017 for $850 million .

In the years before the sale, Rahman said Moat "flirted" with the idea of M&A, but it was never a priority for the company.

Now, Fabric is looking at bigger and bigger acquisition targets, Rahman said, across the spectrum of private equity-backed and venture-backed startups as well as public companies. And with the IPO window still closed, many startups looking for liquidity have come knocking.

"A lot of the companies that are struggling to go raise capital right now, or some of these larger businesses that are reevaluating their position in the market, are creating opportunities for us as well," Rahman said. "Pretty much every week, there's inbound coming in from investors that are like, we have assets in our portfolio that may be accretive to what you're doing with Fabric."