Startup Sidecar Health, which reached "unicorn" status two years ago, clinched $165 million in series D financing to turbocharger its growth into new markets.
Founded in 2018, the company's model is based around offering upfront pricing to its members, which allows them to compare pricing and shop around for care. The member is provided a Sidecar Health VISA card that they can use to pay for care, reducing administrative paperwork and paying providers more quickly. Sidecar says its transparent pricing model allows patients to see any doctor.
While companies frequently face significant annual rate increases, Sidecar Health claims it provides comprehensive major medical insurance that is 20% more affordable than traditional plans while delivering superior coverage.
Sidecar Health currently serves employers headquartered in Ohio and Georgia and will now expand its offering into Florida, according to a press release.
Florida is a ripe market for the insurtech as there are 1.4 million people covered by large employers, according to the company. And, Florida's competitive provider market has been faster to adopt consumer-driven healthcare trends like direct pay which aligns with Sidecar Health's approach.
The startup says the series D round represents the largest private investment in employer health benefits this year. Koch Disruptive Technologies led the series D financing round, joined by new and existing investors, including GreatPoint Ventures, BOND, Cathay Innovation, Drive Capital, Duke University, Menlo Ventures and Morpheus.
In addition to the investment, Koch Industries, which has subsidiaries like Georgia Pacific and provides health insurance coverage for over 100,000 employees, has chosen major medical insurance coverage from Sidecar Health to be available to a segment of its workforce in 2025.
As Sidecar Health eyes expansion into the "jumbo" employer market, the startup chose Koch Industries to be the design partner for insurance coverage specifically tailored to these employers.
Sidecar Health claims that it provides employer-sponsored major medical coverage that eliminates the need for prior authorizations, referrals and removes restrictive formularies.
The company's model enables members to know exactly how much their plan pays prior to getting care. And, when members choose to see providers who charge less than what the plan pays, Sidecar Health shares the savings with their members. Sidecar members can access healthcare benefits from any licensed medical provider, eliminating traditional network restrictions. The startup's instant, direct-pay model means members pay for care at the time of service with their VISA benefit card, facilitating immediate payment to providers.
"With half of all Americans receiving insurance through their employers, we have prioritized expanding our employer offerings," said Patrick Quigley, co-founder and CEO at Sidecar Health in a statement. "This strategy allows us to improve care for the largest number of people in the quickest way possible, maximizing our ability to fulfill our mission. With this new capital, we will extend our reach into new regions and markets while further reshaping the healthcare landscape."
Quigley said the diversity of investors in the series D round reflects a "wide endorsement" of the Sidecar Health mission to "overhaul the flawed and unsustainable cost drivers of the U.S. healthcare system" with a more consumer-centric insurance model.
"The antiquated U.S. health insurance system is one of the main culprits in creating bottlenecks and hurdles to quality care," David Mauney, managing director of Koch Disruptive Technologies said in a statement. "Sidecar Health is transforming the system with a model that offers a first-of-its-kind free market approach to healthcare that puts the consumer, not the insurance company in control of their care decisions with never-before-seen tools and transparency paired with fewer restrictions. We look forward to working with Sidecar Health to accelerate commercial expansion in 2024 and beyond."