About 25% of healthcare spending goes towards administrative costs, largely due to issues with fragmented systems.
This is what Yuzu Health, a third-party administrator, aims to solve, announcing on Monday that it secured $35 million in Series A funding.
The startup “powers the infrastructure behind health insurance plans,” according to Max Kauderer, co-founder of Yuzu Health. Its customers include brokerages, direct primary care providers, health systems and HR platforms. The company handles the necessary administrative tasks for running a health plan like claims processing, payments, eligibility, reporting and member administration all on one platform.
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“The biggest issue we’re tackling is that health insurance hasn’t meaningfully evolved in decades, largely because of the infrastructure behind it,” Kauderer said. “Healthcare costs continue to rise, and there’s strong demand for more flexible, cost-aligned plans. But the legacy TPAs that actually power insurance are fragmented, manual, and difficult to change. As a result, innovation in plan design is often too expensive to implement widely. … We’re focused on fixing that underlying layer so plans can operate more efficiently and so innovation in plan design can actually happen.”
Yuzu’s $35 million round was led by General Catalyst and Chemistry, with participation from Anthropic’s Anthology Fund, Bain Future Back Ventures, Timeless Ventures, Lachy Groom and Neo. In total, Yuzu Health has raised $40 million.
“While most health plan infrastructure providers rely on a bevy of fragmented vendors, the team at Yuzu have accomplished a rare feat by building an operating system that owns every piece of software in-house. We believe this makes Yuzu not only the partner of choice for today’s health plan innovators, but also a long-term beneficiary of the advances we are currently seeing in AI, which requires context that only a unified operating system can provide,” said Alex Tran, managing director at General Catalyst, in a statement.
With the financing, Yuzu Health will expand its engineering team and scale the platform nationally, according to Kauderer. In addition, it will invest in automating “historically manual workflows” like claims adjudication, stop-loss submissions, reconciliation and bookkeeping and downstream reporting.
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The company’s main competitors are traditional TPAs, Kauderer noted. Examples include UMR, a TPA under UnitedHealthcare, and Meritain Health, which is owned by Aetna. According to Kauderer, traditional TPAs were built decades ago and have been “layered together over time.” Yuzu, meanwhile, rebuilt its infrastructure from scratch, he said.
“Health insurance has become increasingly complex and opaque over time, which has eroded trust in the system. We think the way to fix that isn’t by adding more point solutions, but by rebuilding the foundation so plans can operate with greater transparency, flexibility, and alignment with the people they serve,” he added.
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