As digital health unicorns are pressured to do more with less, Transcarent gets a fresh $126M
As digital health unicorns are pressured to do more with less, Transcarent gets a fresh $126M Lydia Ramsey Pflanzer
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Transcarent’s $126 million Series D round, which in May bumped its valuation to $2.2 billion, stands apart from most growth-stage, high-valuation startups that haven’t raised capital in the past few years.
Glen Tullman
While many digital health unicorns have cut staff and shifted tactics to focus on profit, not growth, Transcarent had $100 million in cash on hand going into the round and plans to use the new money to grow its business, especially through acquisitions, CEO Glen Tullman told Endpoints News.
“The rest of the market, including would-be competitors, are having trouble raising, they’re raising at lower valuations,” Tullman said. “We had the opposite. We had a higher valuation, an easy raise and as much as we wanted.”
Holly Maloney, managing director at General Catalyst — which co-led the round with 7wireVentures — said that because Transcarent is building a new market, there’s an understanding from investors that it’ll require more funding.
“The reality is when you are creating a new market, a new way of delivering, experiencing care as an example, it can take some time,” Maloney said. “It’s a journey, it’s not something that is just going to flip on its head overnight, and therefore the phase of intense investment is robust.”
Launched in 2020, the startup connects employees with healthcare services on behalf of self-insured employers. Often, companies serving in that function are called “navigators” for their work helping people navigate their health benefits. Tullman, the digital health industry veteran behind chronic condition management company Livongo, avoids that word, suggesting that traditional navigators have missed an opportunity to stay connected with patients throughout their care journey.
“The market has concluded that the traditional navigation companies are not being effective,” Tullman said. “Everybody’s looking for what’s coming next.”
Tullman hinted at a coming announcement in the next few weeks, and said Transcarent plans to use the funds to fuel acquisitions, take on more customers, and to continue developing AI tools it’s building to handle administrative tasks related to its virtual care services.
Transcarent has a history of acquisitions, starting out by buying a surgery center program, and in 2023 buying startup 98point6’s virtual care business.
“It positions the company well to have a meaningfully sized checkbook to look at some of the targets that the team has identified and see if we can take advantage of some of the dislocation values in the market,” 7wireVentures managing partner Lee Shapiro said.
Tullman said Transcarent is looking to buy companies that could help it grow the number of employer customers it works with, rather than a company with a specific product. Most of the time, those deals can be accomplished with stock, but often require $25 million to $50 million in cash. The new funding can help finance that.
“I wanted to make sure we had no constraints on our growth,” Tullman said.