Once a high-flying 'unicorn,' Olive AI sells two key businesses, winds down operations

Healthcare startup Olive saw a meteoric rise in 2020 and 2021, spurred by the digital health funding boom and the need for automation during the COVID-19 pandemic.

The company pulled in $225 million in December 2020 at a valuation of $1.5 billion. Seven months later, it banked a hefty $400 million funding round that propelled its valuation to a reported $4 billion.

The company raised $832 million in funding just since March 2020 backed by big-name investors like General Catalyst, Ascension Ventures, Oak HC/FT and SVB Capital. 

In 2021, Olive executives said the company's enterprise AI was in place at more than 900 hospitals in over 40 U.S. states, including more than 20 of the top 100 U.S. health systems. 

But, Olive AI has seen an equally dramatic fall as its business operations have been shrinking since last year. 

The Columbus, Ohio-based company is now selling off its remaining assets and shutting down operations, Olive announced Tuesday.

The company sold its clearinghouse and patient access business units to Waystar and its prior authorization business unit to Humata Health.

"These products represent the heart of Olive’s business and we believe this decision will provide important stability and a bright future for these customers. With the sale of our core business units, Olive will wind down the remainder of its business," the company posted on its website.

CEO Sean Lane and his team first deployed Olive in 2017 with the idea to tackle the high-volume, repetitive and manual tasks healthcare workers do every day but faster and more accurately. The company tackled issues like prior authorization through the acquisition of AI software provider Verata Health.

The company grew rapidly starting in 2020 and raised a total of $902 million.

Last year, Olive entered the operating room with the acquisition of Empiric Health, an AI-powered clinical analytics and service company that focuses on identifying unwarranted clinical variation—starting in surgery. Through that acquisition, Olive expanded its capabilities for supply chain and clinical analysis for surgeries.

In July 2022, amid an economic downturn, Olive laid off 450 employees as the CEO cited tough economic conditions as well as "missteps" in the company's strategy.

Olive experienced many of the same headwinds as other organizations—including shifts in the industry landscape, evolving customer expectations and challenging market conditions, Lane said in a message to employees posted on Olive's website 15 months ago.

"Our fast-paced growth and lack of focus strained our product and engineering resources and prevented us from executing quickly on key initiatives. I take responsibility for this," he wrote.

Olive then began selling off some segments of its business. Axios reported that Olive AI planned to sell a significant portion of its products and services to sibling company Rotera. The company laid off another 215 employees in February.

This past April, health tech solution company Availity scooped up Olive's artificial-intelligence-enabled utilization management solution for payers that automates prior authorization approvals.

Olive now joins several other health tech "unicorns" that have shut down this year. Digital primary care provider Babylon Health sold most of its assets to U.S.-based eMed Healthcare through a bankruptcy process and Pear Therapeutics, a once high-flying digital therapeutics startup, was sold for parts. Its assets were sold in an auction for just over $6 million, Fierce Medtech reported.