Artificial-intelligence startup PathAI on Monday said it acquired Poplar, the management service arm of pathology laboratory Poplar Healthcare.
PathAI, a Boston-based startup that develops AI software for pathologists, is one of the most well-funded clinical AI startups. The acquisition marks PathAI's step into traditional clinical diagnostics; Poplar Healthcare, which is based in Memphis, Tenn., provides testing services for gastroenterologists, dermatologists, oncologists, urologists and gynecologists.
Poplar, which will become PathAI's diagnostics division, will be able to use PathAI's machine learning—a type of AI—tools to analyze pathology images.
The acquisition will also support PathAI's research and development work, which involves building AI products for patient care and drug development.
Most of PathAI's services today are geared toward life sciences companies and researchers, who can use the company's tools to identify biomarkers and flag patients that could be a good fit for clinical trials. PathAI is also working on developing AI tools that help pathologists more quickly and accurately diagnose patients.
"PathAI's investments in digital pathology and artificial intelligence will further enhance Poplar's value proposition to providers across the United States," said Dr. Andy Beck, co-founder and CEO of PathAI and a trained pathologist, in a statement.
As part of the deal, Poplar's facilities, management team and 350 employees will become part of PathAI's diagnostics division. The diagnostics division will remain in Memphis.
PathAI did not disclose financial details of the acquisition in its announcement Monday.
AI used for clinical decision-support, particularly in imaging-heavy fields like pathology, has been a hot area for digital health investment.
PathAI, which is privately held, in the spring announced a $165 million Series C funding round led by Oakland, Calif.-based Kaiser Permanente and investment firm D1 Capital Partners, with additional investments from General Catalyst, Bristol Myers Squibb, Merck Global Health Innovation Fund and Labcorp. It's raised $255.2 million to date.
Paige, a New York City-based startup that uses AI to analyze digitized pathology slides, has raised $220 million to date. It's latest funding round, a Series C, was announced in January, co-led by Johnson & Johnson's venture-capital arm and investment firm Casdin Capital. In May, Paige struck a deal with Quest Diagnostics to try to identify biomarkers and develop new products.
Software companies that build and sell clinical decision-support tools scooped up $434 million in 2021's second quarter, according to data from market research firm Mercom Capital Group. Digital health companies as a whole raised $7.7 billion in funding for the quarter, marking a new quarterly funding record for the sector.