Better Health raises $3.5M seed round to reinvent medical supply shopping through e-commerce

The home medical supply market in the U.S. is significant and growing, but the way that Americans go about getting much-needed medical supplies, particularly for those with chronic conditions, relies on outdated and clumsy sales mechanisms that often have very poor customer experiences. New startup Better Health aims to change that, with an e-commerce approach to serving customers in need of medical supplies for chronic conditions, and it has raised $3.5 million in a new seed round to pursue its goals.

Better Health estimates the total value of the home medical supplies market in the U.S., which covers all reimbursable devices and supplies needed for chronic conditions, including things like colostomy bags, catheters, mobility aids, insulin pumps and more, is around $60 billion annually. But the market is obviously a specialized one relative to other specialized goods businesses, in part because it requires working not only with customers who make the final decisions about what supplies to use, but also payers, who typically foot the bill through insurance reimbursements.

The other challenge is that individuals with chronic care needs often require a lot of guidance and support when making the decision about what equipment and supplies to select — and the choices they make can have a significant impact on quality of life. Better Health co-founder and CEO Naama Stauber Breckler explained how she came to identify the problems in the industry, and why she set out to address them.

“The first company I started was right out of school, it’s called CompactCath,” she explained in an interview. “We created a novel intermittent catheter, because we identified that there’s a gap in the existing options for people with chronic bladder issues that need to use a catheter on a day-to-day basis […] In the process of bringing it to market, I was exposed to the medical devices and supplies industry. I was just shocked when I realized how hard it is for people today to get life-saving medical supplies, and basically realized that it’s not just about inventing a better product, there’s kind of a bigger systematic problem that locks consumer choice, and also prevents innovation in the space.”

Stauber Breckler’s founding story isn’t too dissimilar from the founding story of another e-commerce pioneer: Shopify. The now-public heavyweight originally got started when founder Tobi Lütke, himself a software engineer like Stauber Breckler, found that the available options for running his online snowboard store were poorly designed and built. With Better Health, she’s created a marketplace, rather than a platform like Shopify, but the pain points and desire to address the problem at a more fundamental level are the same.

Better Health Head of Product Adam Breckler, left, and CEO Naama Stauber Breckler, right

With CompactCath, she said they ended up having to build their own direct-to-consumer marketing and sales product, and through that process, they ended up talking to thousands of customers with chronic conditions about their experiences, and what they found exposed the extend of the problems in the existing market.

“We kept hearing the same stories again, and again — it’s hard to find the right supplier, often it’s a local store, the process is extremely manual and lengthy and prone to errors, they get the surprise bills they weren’t expecting,” Stauber Breckler said. “But mostly, it’s just that there is this really sharp drop in care, from the time that you have a surgery or you were diagnosed, to when you need to now start using this device, when you’re essentially left at home and are given a general prescription.”

Unlike in the prescription drug market, where your choices essentially amount to whether you pick the brand name or the generic, and the outcome is pretty much the same regardless, in medical supplies which solution you choose can have a dramatically different effect on your experience. Customers might not be aware, for example, that something like CompactCath exists, and would instead chose a different catheter option that limits their mobility because of how frequently it needs changing and how intensive the process is. Physicians and medical professionals also might not be the best to advise them on their choice, because while they’ve obviously seen patients with these conditions, they generally haven’t lived with them themselves.

“We have talked to people who tell us, ‘I’ve had an ostomy for 19 years, and this is the first time I don’t have constant leakages’ or someone who had been using a catheter for three years and hasn’t left her house for more than two hours, because they didn’t feel comfortable with the product that they had to use it in a public restroom,” Stauber Breckler said. “So they told us things like ‘I finally went to visit my parents, they live in a town three hours away.’”

Better Health can provide this kind fo clarity to customers because it employs advisors who can talk patients through the equipment selection process with one-to-one coaching and product use education. The startup also helps with navigating the insurance side, managing paperwork, estimating costs and even arguing the case for a specific piece of equipment in case of difficulty getting the claim approved. The company leverages peers who have first-hand experience with the chronic conditions it serves to help better serve its customers.

Already, Better Health is a Medicare-licensed provider in 48 states, and it has partnerships in place with commercial providers like Humana and Oscar Health. This funding round was led by 8VC, a firm with plenty of expertise in the healthcare industry and an investor in Stauber Breckler’s prior ventures, and includes participation from Caffeinated Capital, Anorak Ventures, and angels Robert Hurley and Scott Flanders of remote health pioneer eHealth.

#8vc, #advisors, #caffeinated-capital, #health, #healthcare-industry, #humana, #medicare, #medicine, #oscar, #oscar-health, #pain, #port, #robert-hurley, #shopify, #software-engineer, #surgery, #tc, #united-states

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SoftBank makes mountains of cash off of human laziness

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. It was yet another crazy week, but did our best to get through as much of it as we could. Here’s the rundown, in case you are reading along with us!

  • Square is buying Tidal in a deal that some are skeptical of, but one about which we found quite a lot to like.
  • How capital-as-a-service can get you your first check in 2021, and a nod to Indie.VC, a pioneer in alternative financing for startups that announced it is shutting down net new investments this year.
  • Oscar Health priced its IPO above its raised range, which was good for it in terms of fundraising. However, since its debut the company has lost pricing altitude. Its declines mimic those of other public neo-insurance proivders in what could be a new trend.
  • And sticking to the insurtech beat, Hippo is going public via a SPAC. Because everyone else is?
  • Compass filed its S-1, which triggered a debate on how its different than OpenDoor.
  • Coupang’s IPO is also coming, replete with huge growth, an improving profitability picture, and a massive valuation. This is one to watch.
  • There was also a whole global news circuit around grocery delivery startups, with Instacart raising at a $39 billion valuation.
  • And we wrapped with the Surreal seed round that we found to be more than a little spicy. As it turns out, commercialized deepfakes are not merely on the way; they are here.

And with that we are back on Monday. Have a rocking weekend!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#clearbanc, #compass, #coupang, #equity, #equity-podcast, #fundings-exits, #grocery-delivery, #hippo, #indie-vc, #instacart, #insurtech, #opendoor, #oscar, #oscar-health, #square, #startups, #surreal, #tidal

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Oscar Health prices IPO at $39 and secures a $9.5B valuation

Late last night Oscar Health, a tech-enabled medical insurance provider, priced its IPO at $39 per share. The final price came in $1 per share above its raised IPO guidance; Oscar Health had originally targeted a $32-$34 per-share IPO price.

Some 37,041,026 shares were sold at $39, including 36,391,946 offered by the company itself. Not counting shares reserved for the company’s underwriters — more on those here — Oscar Health found at least $1.44 billion worth of demand for its equity at $39 apiece. More than 98% of the funds from the aggregate share sale went to the company’s accounts.

For backers Thrive Capital, Founders Fund, Formation 8, CapitalG, Fidelity, Alphabet, Coatue, Tiger Global and others, the day is a financial coup.

But just how well did the company’s private backers do? To know that, we have to calculate what the company is worth at $39 per share. Oscar sold more shares in its debut than its final S-1/A filing expected, making its ensuing share count slightly tedious to calculate. However, the company’s simple IPO valuation appears to be just over $7.92 billion at its IPO price. IPO investing group Renaissance Capital calculates the company’s fully-diluted valuation, a figure that counts some additional shares, including that have been earned through options that have yet to be exercised, for example, at $9.5 billion.

Oscar Health’s IPO has been a success from several perspectives. From a fundraising viewpoint, the company raised more than it may have initially expected to, comparing its final price point against its initial range. From a valuation perspective, the company is now worth a multiple of its last-known private valuation, some $3.2 billion set during its 2018 Series G, per PitchBook data. The company did raise more private capital between that round and its IPO, but we lack valuation figures for those deals.

The company will begin trading this morning in a notable test for insurtech, and the sub-niche of medical insurtech. TechCrunch’s prior notes on the company’s IPO valuation aside, the bidding public have repriced Oscar Health. Now let’s see what the company will manage once it truly begins to float.

#exit, #fundings-exits, #insurtech, #ipo, #oscar-health, #public-offering, #startups, #tc, #unicorn, #vc

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Oscar Health’s initial IPO price is so high, it makes me want to swear

Amidst all the hype that Lemonade (IPO), Root (IPO), Metromile (SPAC-led debut) and other insurtech players have generated in the last year, it’s been easy to forget about Oscar Health. But now that the company founded in 2012 is approaching the public markets, one of the early tech-themed insurance companies is catching up on the attention front.


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There is some naughty language in The Exchange today. It is necessary. We’ll get back to PG-ifying this column tomorrow. — Alex

So this morning we’re digging into Oscar Health’s first IPO pricing interval, hoping to understand how the market is valuing its unprofitable health-insurance enterprise.

Recall that Oscar Health was valued at around $3.2 billion in March of 2018. That datapoint, via PitchBook, is dated. Oscar Health raised hundreds of millions since (per several venture-capital tracking databases, including Crunchbase) but we lack a final private valuation for the company.

Regardless, with Oscar Health now targeting a $32 to $34 per-share IPO range, we can get our hands dirty.

Let’s get some valuation numbers and then decide if Oscar Health feels cheap or expensive at that price.

Billion-dollar IPO

Oscar Health is looking to reap as much as $1.21 billion in its IPO, a huge sum. The company is selling 30,350,920 shares, with 4,650,000 additional shares reserved for its underwriters. Existing shareholders are selling another 649,080 shares.

This means that after the IPO, Oscar Health will have 197,037,445 Class A and B shares in circulation, or 201,687,445 after counting shares reserved for its underwriters.

Using the company’s $32 to $34 per-share range, we can calculate a valuation minimum of $6.31 billion for the company (lower share count, low-end of price range) and $6.86 billion (higher share count, high-end of price range). That’s the company’s simple IPO valuation.

Oscar Health may also sell up to $375 million of its shares at its IPO price to three different funds. The company advises that the “indication of interest is not a binding agreement or commitment to purchase,” so we can ignore it for now.

#fundings-exits, #oscar-health, #startups, #the-exchange, #the-techcrunch-exchange

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Equity Monday: Everyone is going public so what’s wrong with your startup?

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and be sure to check out our last main ep, in which Natasha coins a slogan for a16z that I both hate, and became the headline of the show!

But enough of all of that, we have a lot to get through this morning. Here’s what we talked about:

  • The Weekend: Coinbase at $100 billion? More on that to come. Toast is going public! Probably! Wait Toast the company that laid off staff last year? Yep that Toast! It’s not toast! And new rules on online lending in China.
  • This Morning: Oscar Health put together an IPO price range that is interesting, and Apex Clearing is going public via a SPAC.
  • Funding Rounds: Gophr raises money! Ageras Group raises money! Promise raises money! It was hard to pick just three, but each of those rounds has something notable about it. Enjoy!
  • Deeper Dive/Riff: If the public markets will float even the most leaden of startup via a SPAC-balloon, any late-stage startup that doesn’t take the ride out of the private markets must either be perfect or too heavy to lift. And if it’s the second, we can write it off? Maybe?

And, finally, this is precisely what I feel like this Monday morning. Chat soon and stay safe!

Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

#ageras-group, #coinbase, #equity, #equity-monday, #fundings-exits, #gophr, #oscar-health, #promise, #startups, #toast

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Oscar Health’s IPO filing will test the venture-backed insurance model

Late Friday, Oscar Health filed to go public, adding another company to today’s burgeoning IPO market. The New York-based health insurance unicorn has raised well north of $1 billion during its life, making its public debut a critical event for a host of investors.

Oscar Health lists a placeholder raise value of $100 million in its IPO filing, providing only directional guidance that its public offering will raise nine figures of capital.

Both Oscar and the high-profile SPAC for Clover Medical will prove to be a test for the venture capital industry’s faith in their ability to disrupt traditional healthcare companies.

The eight-year-old company, launched to capitalize on the sweeping health insurance reforms passed under the administration of President Barack Obama offers insurance products to individuals, families and small businesses. The company claimed 529,000 “members” as of January 31, 2021. Oscar Health touts that number as indicative of its success, with its growth since January 31 2017 “representing a compound annual growth rate, or CAGR, of 59%.”

However, while Oscar has shown a strong ability to raise private funds and scale the revenues of its neoinsurance business, like many insurance-focused startups that TechCrunch has covered in recent years, it’s a deeply unprofitable enterprise.

Inside Oscar Health

To understand Oscar Health we have to dig a bit into insurance terminology, but it’ll be as painless as we can manage. So, how did the company perform in 2020? Here are its 2020 metrics, and their 2019 comps:

  • Total premiums earned: $1.67 billion (+61% from $1.04 billion).
  • Premiums ceded to reinsurers: $1.22 billion (+113%, from $572.3 million).
  • Net premium earned: $455 million (-3% from $468.9 million).
  • Total revenue: $462.8 million (-5% from $488.2 million).
  • Total insurance costs: $525.9 million (-8.7% from $576.1 million).
  • Total operating expenses: $865.1 million (+16% from $747.6 million).
  • Operating loss: $402.3 million (+56% from $259.4 million).

Let’s walk through the numbers together. Oscar Health did a great job raising its total premium volume in 2020, or, in simpler terms, it sold way more insurance last year than it did in 2019. But it also ceded a lot more premium to reinsurance companies in 2020 than it did in 2019. So what? Ceding premiums is contra-revenue, but can serve to boost overall insurance margins.

As we can see in the net premium earned line, Oscar’s totals fell in 2020 compared to 2019 thanks to greatly expanded premium ceding. Indeed, its total revenue fell in 2020 compared to 2019 thanks to that effort. But the premium ceding seems to be working for the company, as its total insurance costs (our addition of its claims line item and “other insurance costs” category) fell from 2020 to 2019, despite selling far more insurance last year.

Sadly, all that work did not mean that the company’s total operating expenses fell. They did not, rising 16% or so in 2020 compared to 2019. And as we all know, more operating costs and fewer revenues mean that operating losses rose, and they did.

Oscar Health’s net losses track closely to its operating losses, so we spared you more data. Now to better understand the basic economics of Oscar Health’s insurance business, let’s get our hands dirty.

#ec-consumer-health, #fundings-exits, #health-insurance, #insurance, #oscar-health, #startups, #tc

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Oscar’s health insurance platform nabs another $225 million

The direct-to-consumer health insurer Oscar has raised another $225 million in its latest, late-stage round of funding as its vision of tech-enabled health care services to drive down consumer costs becomes more and more of a reality.

In an effort to prevent a patient’s potential exposure to the novel coronavirus, COVID-19, most healthcare practices are seeing patients remotely via virtual consultations, and more patients are embracing digital health services voluntarily, which reduces costs for insurers and potentially provide better access to basic healthcare needs. Indeed, Oscar now has a $2 billion revenue base to point to and now a fresh pile of cash to draw from.

“Transforming the health insurance experience requires the creation of personalized, affordable experiences at scale,” said Mario Schlosser, the co-founder and chief executive of Oscar.

Oscar’s insurance customers have the distinction of being among the most active users of telemedicine among all insurance providers in the US, according to the company. Around 30 percent of patients with insurance plans from the company have used telemedical services, versus only 10 percent of the country as a whole.

The new late-stage funding for Oscar includes new investors Baillie Gifford and Coatue, two late-stage investor that typically come in before a public offering. Other previous investors including Alphabet, General Catalyst, Khosla Ventures, Lakestar and Thrive Capital also participated in the round.

With the new funding, Oscar was able to shrug off the latest criticisms and controversies that swirled around the company and its relationship with White House official Jared Kushner as the President prepared its response to the COVID-19 epidemic.

As the Atlantic reported, engineers at Oscar spent days building a stand-alone website that would ask Americans to self report their symptoms and, if at risk, direct them to a COVID-19 test location. The project was scrapped within days of its creation, according to the same report.

The company now offers its services in 15 states and 29 U.S. cities, with over 420,000 members in individual, Medicare Advantage, and small group products, the company said.

As Oscar gets more ballast on its balance sheet, it may be readying itself for a public offering. The insurer wouldn’t be the first new startup to test public investor appetite for new listings. Lemonade, which provides personal and home insurance, has already filed to go public.

Oscar’s investors and executives may be watching closely to see how that listing performs. Despite its anemic target, the public market response could signal that more startups in the insurance space could make lemonade from frothy market conditions — even as employment numbers and the broader national economy continue to suffer from pandemic-induced economic shocks.

#fundings-exits, #general-catalyst, #health, #ipo-market, #lemonade, #oscar-health, #startups, #tc

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