A new startup unicorn has emerged: insurance technology company Sidecar Health.
The El Segundo, California-based company announced Tuesday that it raised $125 million in its series C funding round at a valuation of $1 billion.
The company uses a “cash price” model that enables members to pay lower prices to their healthcare providers as compared with the rates negotiated by traditional insurance companies, Patrick Quigley, co-founder and CEO of Sidecar Health, said via email.
Sidecar Health’s insurance product allows members to shop for health services. Members pay for care directly using the Sidecar Health Visa card, which takes the payment from their plan’s claims account. As a result, members can take advantage of providers’ discounted “self-pay” or “cash” rates.
“Our mission is to make health insurance affordable and make care accessible for everyone in the U.S.,” Quigley said. “We believe people should be in complete control of their healthcare and understand all costs associated with their care upfront.”
With the new funds, Sidecar Health plans to increase its geographic footprint. The company’s product is available in 16 states, making it accessible to 140 million people. According to Quigley, Sidecar’s aim is to be available to 200 million people by the end of the year.
In addition, Sidecar Health plans to launch new insurance products. The first of these will be an Affordable Care Act offering for 2022, followed by a product for the self-funded employer market, Quigley said.
The latest funding round was led by Drive Capital. It included new investors Bond, Tiger Global and Menlo Ventures, along with existing investors Cathay Innovation and GreatPoint Ventures.
“The extraordinary level of transparency Sidecar Health brings to the marketplace has the potential to fundamentally change how millions of Americans shop for healthcare,” said Molly Bonakdarpour, partner at Drive Capital, in a news release. “We think Sidecar Health’s team of consumer, technology and healthcare veterans is well-positioned to capitalize on the large healthcare insurtech opportunity.”
Competition in the insurtech market is fierce, with several healthcare-focused companies — like Oscar and Bright Health — jostling for a piece of the pie. In the third quarter of 2020, insurtechs raised $2.5 billion across 104 deals, according to a report by CB Insights.
But Sidecar Health sets itself apart by providing a fully transparent product. Its app and payment technology allows members to see their benefit amounts for more than 170,000 medical services and prescription drugs. Members can also see what providers have charged other Sidecar Health members for services.
“We provide [our members] with the money they need to purchase care and the information to make great decisions,” Quigley said. “By doing so, we are turning patients into purchasers of healthcare.”
Photo: TAW4, Getty Images