Oura Buys Counsel for $625M, But Will Payers and Consumers Get on Board?

Oura has delayed its IPO, citing market uncertainty, but the consumer wearables company is not exactly sitting around twiddling its thumbs.

On Tuesday, the San Francisco company announced it is forking over $625 million in cash to buy Counsel Health, which offers AI-powered, chatbot-driven medical advice to consumers as well as to payer members and employees. Counsel, based in Boston, also connects people directly to in-house primary care physicians virtually, acting as a digital front door to care. The transaction is expected to close by the end of the year. The two companies have been working together since earlier this year.

Integrating Oura and Counsel will mean that an insight gleaned from the Oura Ring can lead a user to ping Counsel’s medical AI chatbot and ultimately be seen virtually by a Counsel Health doctor delivering care—all within the Oura app. Oura claims to help millions of users track sleep, activity, stress, readiness, women’s health, metabolic health, and heart health. It has 5.7 million paid members.

Due to the acquisition, Counsel’s AI- supported medical guidance is available for Oura members via an introductory 30-day free trial,” an Oura spokesperson said. “After the trial, unlimited clinical care is available through the $159/year Counsel plan. Participation is optional.”

For consumers, Oura Rings cost anywhere between $349 and $499 and come with a $5.99 monthly or $69.99 annual subscription.

In some ways, the transaction represents the oldest story in the healthcare playbook. A company squarely focused on the consumer decides to look for a wider, longer runway to not only gain new end users but also provide existing users with expanded health services.

“The industrial logic for Oura to move from a consumer-centric offering to be much more of a clinically prescribed offering makes a lot of sense and should support more longitudinal customer relationships,” said Michael Greeley, general partner at Flare Capital Partners, in response to an email query.

To be successful, Oura will need to convince payer customers of Counsel or payers in general that the integrated product, including the ring, will be valuable to their members and employees.

“We know this can work because it’s already happening. Oura is a covered benefit for eligible members of Essence Healthcare, a Medicare Advantage plan,” said an Oura spokesman in response to questions. “That partnership shows how wearable data can support proactive care for older adults. That’s a real-world example of a health plan choosing to make a consumer wearable available to members, including older adults. It shows that Oura can have a place in payer-sponsored benefits, not just employer wellness programs.”

The spokesperson declined to address how, if at all, the acquisition would impact Oura’s desire to be public.

The integration and expansion of services — in the way Oura and Counsel Health – are envisioning also echoes a broader trend in the industry, Greeley of Flare said.

“We are seeing an aggregation of offerings to create broader solution sets around specific touch points – either directly with individuals or employers.”

The desire to provide a broader set of solutions was also seen in a recent deal, Greeley said, pointing to Hinge Health buying Cylinder, albeit for a more modest sum: $105 million. But that deal seems to be more in response to point-solution fatigue among employer customers and the desire by Hinge to have a multi-solution approach. Not unlike how Omada Health started in prediabetes, before moving to hypertension, behavioral health, and other conditions.

The Oura-Counsel deal seems to be betting on the notion that consumers are not satisfied with just health tracking or monitoring or asking questions of ChatGPT Health, but may also want to take the next step of accessing actual care quickly. In which case, connecting a popular wearable device to an AI care platform, but with physicians in the loop, seems to make sense.

But whether its worth it for $625 million is a question that only time will tell.

For now, Greeley believes the high price tag for Counsel Health is an “exciting development” for the AI-enabled care sector, especially if you compare it to how much Counsel Health reportedly raised in two rounds of financing. It raised $36 million in a seed and Series A round, according to news reports and the company’s own founder and CEO.

“Counsel is considered a very attractive company operating at a high level,” Greeley said. “Should not be lost that the 17x multiple on invested capital is very compelling, too,”

Which means Counsel’s investors at a16z Bio + Health, GV, Asymmetric Capital Partners, Floodgate Fund and Pear VC must be patting themselves on the back.

When asked why the company shelled out $625 million for Counsel, the Oura spokesman responded: “We’re seeing strong interest in medical AI with clinicians in the loop, and believe Counsel can help connect health insight to care for Oura’s more than 6 million members while extending that model through enterprise partners. The price reflects our long-term conviction in that opportunity.”

Now, Oura is betting that the future of safe and trustworthy clinical AI is bright. But why does it make sense for Counsel Health to be joining a wearable health company? For that, let’s turn to Founder and CEO Muthu Alagappan, who is a physician and AI researcher. Before founding Counsel Health and becoming its CEO, he was chief medical officer at Notable Health. In a LinkedIn post on Tuesday, he explained the rationale for the deal.

Over the past three years, our team of physicians, AI researchers, engineers, and operators has brought this vision to life, building a new model of AI-enabled, physician-led care and partnering with some of the world’s leading healthcare organizations to improve care quality and reduce healthcare costs.

Along the way, we observed another profound shift. Consumers were collecting more health data than ever before, yet this information remained largely disconnected from the medical care they received.

We came to believe that reshaping healthcare requires bringing these two worlds together. Primary care that is not only accessible, but deeply personalized. Autonomous care that is guided by health foundation models trained on billions of hours of human physiology. Hardware and software that works seamlessly together to compress the time from data to diagnosis, and from treatment to measurement.

Fair enough, but what about varying company cultures? Many acquisitions sound great on paper but the devil is in the execution. The Oura spokesperson said that the two companies have been working together for the past year, so the acquisition is “a next step in an existing partnership, rather than the beginning of an entirely new relationship.” In fact, from that partnership, Oura has learned that Oura Ring customers value Counsel Health’s services.

“Members using Counsel through the Oura App can choose to share relevant Oura data with Counsel clinicians,” the spokesperson said. Member feedback shows the value of that connection: more than 90% of surveyed members who used Counsel said their Oura data helped them get better care, and members who saw a Counsel physician rated their experience 4.6 out of 5.”

The high satisfaction the company reports might be key in Oura members’ decision on whether to pay the $159 per year subscription fee to access Counsel’s AI-driven medical advice and virtual care services. Already, there has been user criticism of $5.99 monthly mandatory subscription fees the company charges on top of the initial cost of the ring to access the data and insights.

Photo: maxsattana, Getty Images