Employee health benefits platform company Collective Health has raked in a massive $205M Series E funding round led by mega-investor Softbank as it looks to boost its nationwide growth and build on momentum with its employer customers.
The San Francisco-based company serves around 200,000 members across more than 45 self-funded employer clients with care navigation tools and healthcare resources that make benefits easier to access and understand, stripping away administrative burden and lowering healthcare spending in the process.
A large part of the company’s value proposition in is updating and unifying the range of technology systems into one streamlined platform. The company largely functions as a third-party administrator for self-funded employers and works to effectively administer benefits and negotiate provider networks.
Collective Health was founded in 2013 and has raised a total of $435 million. Over the past year the company said it seen 85 percent membership growth.
On the employer side, Collective Health’s platform gives companies visibility into their total range of healthcare costs, which can be used to inform more efficient resource allocation and benefit offerings.
“There’s no question about the scale of the problem, we spend $1.2 trillion on healthcare and the industry still operates in the fax era of technology,” said Collective Health co-founder Rajaie Batniji.
“Softbank sees the same opportunity we do in taking healthcare payments and coverage into the modern era we need to employer employers to take control over their own healthcare spend.”
The capital injection will help the company expand its range of enterprise customers, as well as bring new healthcare partners onto its platform including new local and national medical networks and integrated digital health products.
Collective’s customer base – which includes clients like Zendesk, Pinterest and Activision Blizzard – has been largely limited to technology companies.
“One of the biggest changes we’ve been focused on is moving firmly out of the early adopter phase and into mainstream with clients in nursing, retail and CPG.” Batniji said.
“We’re really moving into a diversity of sectors because if we’re going to transform healthcare we have to prove that this is a solution that works for everybody.
Investment dollars will also go toward continuing development of the company’s tech stack with faster payment systems, faster fraud detection and machine learning-based technology that can better personalize and guide member health recommendations.
Additionally, the company is focused on growing its 500-person headcount across its San Francisco headquarters and its satellite offices in Chicago and Lehi, Utah.
“The complexity around healthcare coverage is making us sick and we see the opportunity here to make the member experience better and fundamentally improve the healthcare system. We firmly believe that this will lead to improved health outcomes and people being healthier,” Batniji said.
The investment into Collective Health represents a major healthcare bet from Softbank’s Vision Fund, which has backed companies like Slack, Uber and Nvidia.
In healthcare, Softbank has invested in a number of mainly biotech-focused companies including Relay Therapeutics, Roivant Sciences and Zymergen. Also participating in the funding round were investors including DFJ Growth, PSP Investments, Founders Fund and NEA. Softbank will be receiving a board seat as part of the deal.
“With US healthcare costs at $3.65 trillion in 2018, Collective Health is reinventing the healthcare experience for companies and their employees,” SoftBank Investment Advisers Senior Managing Partner Deep Nishar said in a statement.
“Their innovative business model and technology platform are not only helping employers understand and optimize their healthcare spend, they are also providing employees with a better healthcare experience.”
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