Tullman's Transcarent confirms $1.62B valuation with $200M series C, looks to expand into in-home care

After launching from stealth last March, Transcarent has landed $200 million in series C funding to power its premium-free approach to employer-sponsored healthcare.

The infusion of capital bumps the company’s valuation to $1.62 billion, boosting Transcarent to the ranks of digital health unicorns, the startup confirmed to Fierce Healthcare.

The company’s accelerated growth reveals an excitement among investors about the transformative potential of Transcarent’s service model, CEO Glen Tullman said in an interview.

“Nobody trusts the payers today. You have the largest, fastest-growing market in our entire economy, trillions of dollars, and yet nobody’s figured this out,” he said. “Investors look at this and say, 'If someone did figure this out, imagine.' The size of the opportunity is enormous.”

Transcarent capitalizes on that opportunity, the former Livongo CEO said, with a fully at-risk model, paying providers upfront and partnering with employers without charging them monthly per-employee fees.

That's a big win for employers, which often pay exorbitant fees for employee benefits. The average per-employee insurance cost rose 6.3% in 2021.

RELATED: Employer insurance costs jumped in 2021—and the future is murky

Through Transcarent’s app, employees can connect with providers 24 hours a day, and they pay no premiums or co-insurance, enabling them to receive care when they need it instead of deferring services due to high costs.

“Getting it wrong costs so much money. Trying to save money on that is just not smart,” Tullman said. “Somebody has to lead the way and create this new vision.”

While keeping people healthy produces lower costs overall, Transcarent still gets paid, taking a percentage of the amount it saves its patients in providing them a service.

Some prominent investors are buying into Tullman’s vision for the future of healthcare. Kinnevik and Human Capital led the series C round, with participation from Ally Bridge Group as well as previous investors including General Catalyst, GreatPoint Ventures, Threshold Ventures, and Merck Global Health Innovation Fund.

Major health systems like Northwell Health, Intermountain Healthcare and Rush University Medical Center also contributed to the round, pursuing a new payer model where providers don’t have to fight claims denials—"and we could’ve had a lot more invest, too, we just didn’t have room,” Tullman said.

RELATED: Livongo founder launches new venture to shake up employer-sponsored benefits space

Tullman served as CEO of diabetes management company Livongo from 2014 through 2018, before Teladoc acquired the company in 2020 for $18.5 billion.

After demonstrating the quality and cost benefits of digital health through Livongo, he said investors asked him whether he could enact those changes for the rest of healthcare.

“For years, we’ve been anxiously waiting for more wide-ranging reform towards value in the healthcare industry and felt it has never been fully addressed—mostly because no one entity was willing to build a better end-to-end health and care experience from the ground up,” said Christian Scherrer, investment manager for Kinnevik, in a statement. “We see Transcarent as the first company to address the challenge head-on in a new and different way that is focused, first and foremost, on the consumer.”

The new unicorn made waves in the market when it announced a partnership with Walmart in October, marking the retail giant’s first collaboration to allow employers access to its prices for pharmaceuticals and healthcare services.

As Tullman put it, “When large self-insured employers want Walmart’s buying power, they say, 'Talk to Transcarent.'”

RELATED: Walmart unveils employer market team-up with Transcarent

The startup also acquired surgical care provider BridgeHealth last October. Tullman hinted that there may be more deals on the horizon, noting Transcarent plans to cover 90% of the average person’s needs, which include in-home care as well as complex care for conditions like cancer and behavioral health issues.

“Within each of those buckets, we make a decision: do we build it, do we partner or do we buy it? That’s a constant discussion,” he said.

The startup’s primary goal remains offering a high-quality, low-cost experience that makes it easier for patients to stay healthy, a prospect Tullman said Transcarent is uniquely positioned to provide.

“Nobody else can do it,” he said. “There’s plenty of point solutions, and there’s plenty of bigger solutions that don’t work well. We’re the first one to bring together all the key stakeholders.”