Medical grade meal replacement producer Kate Farms announced today it has closed a $51 million Series B funding round led by Goldman Sachs and Kaiser Permanente Ventures.
The round marks the second set of financing raised by Kate Farms this year, following a $23 million Series A-1 round which was closed in April. This new round brings the company’s total fundraising to $99 million.
As part of the deal, Allison Berardo, a vice president in Goldman Sachs’ equity program GS Growth, will join Kate Farms’ board of directors.
“We are excited to be backing the Kate Farms team as they continue to pave the way for plant-based nutrition in healthcare,” Berardo said in a press release. “Kate Farms’ differentiated product, strong community support from both patients and providers, and widespread distribution make them a true category leader within the overall liquid nutrition industry.”
Kate Farms produces plant-based, organic meal replacement drinks available in RTD formats — which are sold to both hospitals and direct-to-consumer — as well as formulas for tube feeding. While the brand’s Nutrition Shake line can be consumed anytime, it also offers Standard and Peptide formulas in adult and pediatric varieties. Earlier this year, Kate Farms’ launched a line of formulas intended for cancer patients which can help offset weight loss.
Speaking to BevNET today, Kate Farms CEO Brett Matthews said the company is aiming to use the additional capital to continue scaling the brand and develop new innovations. He said the extra capital will also help maintain Kate Farms’ current growth plans amidst economic and social uncertainty both for businesses and consumers.
“We’re not sure what the market is going to be like over the next 12 months,” Matthews said. “We’ve raised capital to give us a long run, to make sure that we can continue to provide our products and services, reduce redundancy in our supply chain, and really deliver as COVID puts pressure on being able to deliver products and services in lots of capacities, particularly in a healthcare setting.”
The new financing comes as the company has rapidly grown its presence in the medical channel, with both product lines now available in roughly 95% of U.S. hospitals. Many of these accounts, Matthews said, have signed multi-year exclusive and semi-exclusive contracts with Kate Farms.
The company has also signed a five-year contract with the U.S. Department of Veterans Affairs (VA) to provide its shakes, a deal that Matthews said places the brand in many of the top rated hospitals in the country.
“Our veterans deserve the best options for their care,” he said. “We’re pleased that the VA has recognized that plant-based nutrition can really help the veterans. After an extensive search and review of the available options in the market, they chose Kate Farms to help provide to them not only in the hospital, but when they’re at home. So we’re thrilled to be able to support our veterans and think they deserve the best.”
Looking ahead, Matthews said Kate Farms has a “robust” innovation pipeline planned for the next three years. Though the company has gone deep in the medical channel, he said there are currently no plans to branch out into retail and will instead seek to go deeper within existing accounts as well as expanding with homecare providers.
Kate Farms has also partnered with charitable organizations such as Meals on Wheels, the Lebron James Family Foundation and various local food banks among others to provide meal shakes to those in need during the pandemic.
“I know we’re not the only brand who’s done this and I’m grateful to all the companies out there who are pitching in and giving what they can to help people need,” he said. “Because COVID is going to be around for a while and we’re going to make sure we’re looking out for all people.”