Health insurance technology startup Devoted Health has raised a whopping $1.15 billion in a Series D funding round. After the round closed, the company’s valuation reached $12.6 billion, a person with knowledge of the deal told MedCity News.
Waltham, Massachusetts-based Devoted Health will close on $80 million in additional funding at a later date to accommodate a current investor, which will bring the total amount of Series D funds raised to $1.23 billion. This will raise the company’s valuation to $12.7 billion, according to the person with knowledge of the deal.
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The TSX Venture Exchange has a strong history of helping early-stage health and life sciences companies raise patient capital for research and development.
Led by Uprising and SoftBank Vision Fund 2, the round included participation from returning investors, including GIC, Andreessen Horowitz and NextView Ventures. New investors participating in the round included ICONIQ Growth, General Catalyst and Emerson Collective.
Launched in 2017 by brothers Todd and Ed Park — who are athenahealth alums —Devoted Health offers a Medicare Advantage insurance product. It also partners with providers to connect patients to care and operates Devoted Medical, a virtual and in-home care provider. Orinoco, the company’s data and technology system supports its operations, enabling it to leverage technology while working toward its stated goal of “dramatically improv[ing] the health and well-being of older Americans.”
Further, Devoted Health provides members with guides, who help them navigate their care options and provide emotional support.
To date, the company has raised about $2 billion.
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As of June 30, Devoted Health served nearly 40,000 members across markets in Florida, Texas, Ohio and Arizona, up from 18,000 in June 2020. With the recently raised funds, the company plans to accelerate its expansion into new markets nationwide.
This expansion has already begun, with the company announcing last week that it is increasing its footprint in its existing states and beginning operations in Chicago on Jan. 1, 2022.
“The product goal of Devoted Health, quite simply, is to be the world’s first virtual ‘blue zone‘ — analogous to areas like Okinawa [in Japan] and Loma Linda, California, where people enjoy much longer, healthier lives than average,” wrote CEO Ed Park in a piece about what the funding means for the company published on its website.
Investor interest in the insurtech market is skyrocketing, with these companies raising $7.4 billion in the first half of 2021, surpassing the $7.1 billion raised for all of 2020, according to a Willis Towers Watson report.
As a result, Devoted Health faces fierce competition in the insurtech market, with larger companies like Oscar Health, Clover Health and Bright Health all jostling to acquire pieces of the profitable pie.
But Devoted Health appears to be among the smallest contenders in the space. Bright Health serves approximately 662,825 consumers, while Oscar Health’s membership totals 563,114 — well above Devoted Health’s 40,000. It is important to note, however, that Oscar and Bright offer commercial plans in addition to MA products.
Clover Health, on the other hand, is focused on the MA market, and while smaller than Oscar and Bright, still has a much larger membership base than Devoted, boasting 129,000 members by the end of the second quarter of 2021.
In addition, Oscar, Bright and Clover all went public this year.
Devoted Health generated $247.3 million in revenues during the first six months of 2021, a 128% jump over the same period in 2020. But its revenues are still dwarfed by those of Bright Health, which earned $1.9 billion in the first six months of the year, as well as Oscar Health’s $898 million and Clover Health’s $612 million in revenues reported in the same period.
Despite Devoted Health being significantly smaller than its rivals, the company’s Series D fundraise puts it ahead of the above companies in terms of total money raised, according to the latest figures from Crunchbase.
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