Kindbody banks $100M to fuel more acquisitions, growth of fertility clinic network

More investors are banking on women's health, and Kindbody is reaping the benefits. The fertility-focused startup banked $100 million in fresh capital, raising its valuation to $1.8 billion.

The company, which operates fertility clinics and provides family-building benefits for employers, hit unicorn status last February when it acquired Vios Fertility Institute, a deal that propelled it to a $1.15 billion valuation, according to Kindbody executives.

Life sciences investment firm Perceptive Advisors provided the fresh funds, pushing Kindbody's total equity and debt funding to more than $290 million.

The startup banked the hefty round despite the challenges in the current fundraising market. After a wild ride in the past two years, digital health startups are adjusting to a new reality faced with difficult economic changes and investor pullback. In the third and fourth quarters of 2022, digital health startups pulled in $2.2 billion and $2.7 billion, respectively, down considerably from the same periods in 2021 and 2020 and more on par with the end of 2019, according to Rock Health data.

"Today's fundraising environment is very different than it was 12 months ago, and definitely materially different than 18 to 24 months ago," Gina Bartasi, Kindbody founder and chairwoman, said in an interview. 

As investors focus on more profitability, Kindbody is well positioned to thrive, she noted. In public comments last year, Bartasi signaled the company's plans to go public when the markets open back up.

"Our focus remains on profitable growth and achieving both EBITDA positive and cash flow positive this year. In this market, we believe both are required prior to a successful IPO," she said.

Founded in late 2018, Kindbody takes a tech-driven approach to fertility care. The company aims to make fertility and family-building care more accessible by serving people wherever they are—virtually through telehealth, in person at clinics, in the workplace or at home. The company grew rapidly in 2022 and now operates 31 clinics across the country.

Kindbody is now the fertility benefits provider for 112 employers, covering more than 2.4 million lives. Last year, the company added 42 large employer clients, including Walmart.

The company plans to use the funding to fuel its continued nationwide expansion by adding 10 new clinics, with a specific focus on underserved markets, Bartasi said.

"There is plenty of fertility access in the major metropolitan areas like New York, San Francisco and Los Angeles where we started. But our mission is to increase accessibility to care and democratize care. For far too long, IVF has been for the wealthy 1%," she said.

The company's real estate team evaluates the competitive landscape and identifies markets where a lack of competition drives up the costs for fertility care and causes long wait times for patients, she said.

"Seattle, for example, is a large metropolitan area, but there are only two or three fertility clinics there. We would refer to Seattle as an underserved market because of the wait times and the artificially-inflated prices due to the lack of competition," Bartasi said.

The company also has its eye on more M&A in 2023. Kindbody, which was named one of Fierce Healthcare's Fierce 15 of 2022, made three strategic acquisitions last year to build out its capabilities: Vios Fertility Institute, more than doubling its national clinic footprint, genomics company Phosphorus Labs to bring genetic testing and carrier screening in-house and a gestational surrogacy agency.

Prior to Kindbody, Bartasi was a founder and chief executive at fertility benefits management company Progyny, where the entrepreneur says she learned a key lesson about working with employers.

"Employers really want to contract directly with doctors and remove all the waste and inefficiency that exists in healthcare today," she said in an interview. That lesson, and a desire to "fix" fertility healthcare in the U.S., which is fragmented, inequitable, expensive and inaccessible to most, motivated her to launch Kindbody.

The only way to decrease cost, improve the patient experience and deliver better outcomes in fertility healthcare is to start a company that directly provides clinical care services, she noted. "The biggest difference between Progyny and Kindbody is we're in the doctor business. We have 31 locations, we have 34 reproductive endocrinologists, 52 embryologists, we have a team of providers around the country serving our employers," she said.

The company claims that by owning and operating fertility clinics it can save employers 25% to 30% by contracting directly with them to provide virtual and in-person care to their employees.

Kindbody built its design-forward retail fertility and women’s healthcare clinics with an eye toward providing a better patient experience. Its clinics were perceived as radical when they first launched because they more closely resemble a spa than a medical clinic, Bartasi told Fierce Healthcare last year.

"We preach and teach hospitality and kindness. We don't call our waiting room a waiting room because we don't want you to wait. We call it our lobby and we want you to feel at home and warmed and welcomed," she said. "We want to disrupt the hierarchical nature that has long existed in healthcare where the patient is subordinate to the doctor. The way you disrupt that is you have doctors that look like patients and you have doctors that don't wear white coats."

Bartasi says 90% of Kindbody's physicians are women ,and 50% are Black, Indigenous and people of color.

The company also developed a proprietary electronic medical record system (KindEMR) and patient portal, giving patients full access to their clinical team and medical records.