- We just got our first look at the financial results for $1.8 billion health insurer Devoted Health.
- Devoted began offering plans in Florida in 2019. For the first three months of the year, it posted a net loss of $1.5 million, according to insurance filings reviewed by Business Insider.
- Devoted has filed to be an insurer in the state of Texas, suggesting in 2020 it could have plans to expand there.
- Visit Business Insider’s homepage for more stories.
Buzzy health insurance startup Devoted Health just posted its financial results for the first time since it started signing up customers.
Devoted was founded to sell Medicare Advantage plans, or private health insurance to US seniors, a market that’s growing rapidly. Devoted in Octoberraised $300 million ahead of launching its first Medicare Advantage plans in Florida in 2019. The company was then valued at $1.8 billion, before it began covering a single customer.
For the first three months of 2019, the company posted a net loss of $1.5 million, according to state insurance filings reviewed by Business Insider. The filings also show that Devoted has registered as an insurer in Texas, suggesting the company might start offering plans there.
Devoted covered about 2,489 people at the end of March, according to the filings. The company took in $8 million in premium revenue and spent more than that, about $8.2 million, on medical care in the first quarter. Health insurers generate profits by spending less on medical care than they receive in premiums.
In a slidedeck presented to investors as Devoted sought to raise its Series B round, the company projected it would have about 5,000 members by the end of 2019, generating an estimated $52 million in revenue for the year.
Read more: We got a look at the slide deck that buzzy startup Devoted Health used to hit a $1.8 billion valuation before it signed up any customers
“While we are still in the early innings, we are very pleased with our launch and with our progress toward dramatically improving health care for seniors, and Devoted Health is on target with respect to our long-term goals,” Devoted spokesman Kenneth Baer told Business Insider. Baer declined to comment on potential expansion plans.
Devoted Health plans to take extra steps to keep its members healthy and out of the hospital.Katherine Frey/The Washington Post via Getty Images
How Devoted works
Devoted was founded in 2017 by two brothers, Ed and Todd Park. Before Devoted, Todd founded the health IT company Athenahealth and served as the US’s chief technology officer during the Obama administration. Ed, Devoted’s CEO, was the CTO and later the COO of Athenahealth. The company launched its first Medicare Advantage health plans for 2019.
When people in the US turn 65, they can choose to be part of either traditional Medicare or Medicare Advantage, which is operated through private insurers. It’s a big market for startups like Devoted, Clover Health, and Bright Health — and soon, Oscar Health — but it’s also a market with entrenched insurers like like Humana, UnitedHealth Group, and CVS Health.
Read more: Health-insurance startups like Oscar Health and Clover Health have raked in $1.3 billion in the past year. We took a look at their financials, which show how hard it is to get a foothold in the industry.
The company’s health-insurance plans might look a bit different from traditional insurance in that Devoted plans to do more than pay for visits to doctors and hospitals; it’s also hiring nurses and other employees to keep seniors healthier and out of the hospital.
Because health insurers are in charge of paying for healthcare, they tend to know what’s going on with a patient: Have they been in for a checkup, or have they had a recent trip to the emergency room? Knowing that, the insurer — in this case, Devoted — can clue in the other parts of the system so that the primary-care doctor, for example, knows when their patient has been in the hospital and can follow up.
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To do that, however, the Devoted team had to build out both its technology to process claims and its network of doctors it can work with. It’s raised a lot of money to pull that off.
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