Flatiron District startup raises $65M to expand home care services to new states
Flatiron District startup raises $65M to expand home care services to new states Amanda D'Ambrosio
Flatiron District-based home care startup Vesta Healthcare raised money from investors this week to serve people in more states.
Vesta Healthcare, a virtual home care navigation provider, announced Wednesday that it raised $65 million in a Series C funding round, bringing its total funding to $130 million. The company was founded in 2018 to connect home care aides – who spend the most time of any provider with homebound patients – with doctors and health plans in an effort to improve care coordination and outcomes. It also provides technology to monitor patients’ health care information remotely and track improvement over time.
The company’s new capital consists of a 50-50 split between equity and debt, which CEO Randy Klein said will allow Vesta Healthcare to grow its reach to other states while refinancing existing debts. The startup currently provides services to 50,000 patients in 12 U.S. states including New York, but it’s in the process of expanding its patient population to nearly two dozen additional states, Klein said.
RA Capital Management, an investment firm based in Boston, led the equity fundraising round, with participation from other investors, including Midtown-based Deerfield Management, Kaiser Permanente Ventures and CareCentrix, a home health company owned by Walgreens. The debt financing was provided by Horizon Technology Finance Corp.
The new funding comes as New York state officials keep a close eye on the growing local home care industry. The state’s population is aging at a rapid rate, creating a demand for health care services outside of traditional facilities like hospitals and nursing homes. But exponential growth in one home care sector known as the Consumer-Directed Personal Assistance Program – which allows individuals to hire and train their own caregivers, who can be family members – has strained the state’s Medicaid budget, spurring Gov. Kathy Hochul to make controversial cuts to the program.
Klein said the demand for home care creates opportunities for companies to improve how services are delivered, and ultimately save state and federal governments money on acute care.
“Home care, when combined with clinical care – which is what we do – actually reduces the costs of hospitalization, reduces acuity,” Klein said. “I would just say if the state looks for savings, it should look at health improvement as a source of savings too.”