Transcarent, a digital health and benefits management startup, is acquiring parts of virtual primary care company 98point6 in a deal worth up to $100 million, the companies said today. Monday.
Transcarent is purchasing 98point6’s virtual care platform and clinical customer base of 3.5 million through cash, equity, and performance incentives. The sale price will reach $100 million if 98point’s customer-relevant targets are met.
Under the agreement, Transcaren will invest exclusively in 98point6’s streamlined technology business while 98point6 will take a percentage of future shares disclosed in Transcarent.
Not a Modern Healthcare subscriber? Sign up today.
The acquisition will double Transcaren’s user base, which includes consumers and business customers. Before the deal, Transcaren had about 1 million members. The company connects patients to a text conversation with a provider in less than 60 seconds.
Transcaren CEO Glen Tullman expressed confidence that the 98point6 user experience will improve with this deal. He said 98point6 is the best front-end messaging clinical app the company has researched during the purchase process, and the addition of Transcarent capabilities could take service to the next level.
“Myself [have] met most [98point6’s] major clients have met face-to-face,” says Tullman. “All [98point6] can do it [right now] is to throw everyone back to the existing broken system. With us, all of their customers will now be provided with our full suite of software without having to make any changes.”
Tullman and 98point6 CEO Jay Burrell are both pleased with the deal.
“When you do good deals, both parties feel good about it, and I think that’s where we ended up,” Tullman said. “If we only pay cash then I think you can earn [the] confirm [Transcarent received a better deal]but the reality is [98point6 is] Be about to [a] partners and they’re taking stock, we think our stock is very expensive.”
Tullman was the former founder and CEO of Livongo before selling it to Teladoc for $18.5 billion. Prior to Livongo, he was the CEO of the electronic health record company Allscripts.
In addition to text-based conversations for primary care, Transcaren also provides pharmacy, behavioral health, surgery scheduling, and more complex care management and in-home care services. through a group of doctors who treat only Transcaren members.
According to Tullman, less than 5% of all telehealth appointments require an in-person consultation. If an office visit is required, Transcaren will take members to nearby providers.
“At that point, we’ll be working with local partners in the market because we’re not competing with health systems,” Tullman said. “We will take care of them directly.”
What’s next for 98point6?
After the deal closes, 98point6 will maintain a business where it licenses its technology platform software to third-party medical systems. It helps health systems scale virtual care with software, professional services, and support. The implementation also includes a customer-branded application and support for configuring the platform.
The acquisition of the patient care business comes at a tumultuous time for 98point6. The company came under fire last year after it raised a Series E round of more than $100 million in late 2020. CEO Jay Burrell acknowledged the capital market has changed, but said the idea of selling The virtual care platform business is not desperate.
“It became extremely difficult for us to think about how to be incredibly successful in patient care and succeed beyond imagination and retain that market advantage,” says Burrell. thanks to technology. It was just a very difficult calculation.”
Burrell said it was the right time to sell the virtual care business to Transcarent.
“I would say it’s a 100 per cent chance,” Burrell said. “If we don’t have this conversation with Glen [Tullman]We will keep moving forward with where we are going [building both portions of the business].”
In January 2022, Transcaren raised $200 million from venture capital firms Kinnevik and Human Capital. ring included support from prominent digital health investors General Catalyst and 7wireVentures, along with a list of health system investors including Northwell Health, Intermountain Healthcare and Rush University Medical Center.
This story first appeared in Digital Health Business & Technology.
