Medicare Advantage. Value-based care. Positive earnings. Aledade is hitting all the right themes with the announcement for the close of its $123M Series E funding round.
The raise lifted the value-based care enabler’s private valuation to $3.1B, and it intends to push its advantage at a time when many health tech startups are cutting back due to frothy-at-best market conditions.
Aledade partners with independent practices and health centers to establish tech-enabled accountable care organizations. It uses data analytics and guided workflows to help better manage high risk patients, then shares in the success of its partners’ value-based contracts.
- The company currently works with over 1k independent primary care practices to generate more than $300M in annual revenue, and it ranks among the coveted digital health startups consistently turning a profit.
- Aledade’s nearly 150 value-based care contracts collectively cover over 1.7M lives, including 220k Medicare Advantage patients. At this scale, Aledade says that a 1% increase in the savings rate attained by its risk-bearing partners would generate an additional $100M in revenue.
The fresh funding will help Aledade expand deeper into the Medicare Advantage market, while also enabling it to deliver more services directly to patients under its new Aledade Care Solutions branch formed during the January acquisition of Iris Healthcare.
- Aledade Care Solutions provides wraparound services like Iris’ advanced care planning solutions to Aledade’s partner practices.
- The business unit lets Aledade leverage its existing data platform to identify and deliver care to the patients that would benefit the most from additional services, and Aledade CEO Dr. Farzad Mostashari lists kidney care and behavioral health as possible expansion areas.
The Takeaway
Aledade’s software-led model for enabling risk-based arrangements is highly scalable, allowing it to be more capital efficient than competitors focused on building value-based primary care clinics from the ground up. Although these efficiencies have led to two years of positive earnings that probably indicate Aledade could have held off on a funding round, the difficult conditions of the current market have created the perfect moment for Aledade to take on new capital and gain ground in key areas like Medicare Advantage while its competitors are on their heels.
