The news: Seattle-based health benefits platform Accolade will pay up to $450 million to acquire PlushCare, a Bay Area-based startup that offers virtual primary care. It follows the company’s $460 million deal to acquire another telemedicine startup, 2nd.MD, in March.
Why it matters: The deal will add primary care to Accolade’s suite of services, which help employees of its customers understand their health plans and benefits. Accolade said it expands its total addressable market nearly fivefold to more than $200 billion.
Accolade CEO Raj Singh said the company will combine its existing deep data on individuals — every doctor they’ve seen for the past year; medication they’ve taken; a company’s benefits program; etc. — with a tested and proven primary care service.
“Primary care is the most important element of the healthcare journey,” Singh told GeekWire. “By adding primary care to what we do, we’re going to make costs go down even further and we’re going to make clinical outcomes get better.”
The deal is also another move by Accolade into the consumer market, in addition to the 2nd.MD acquisition. Accolade will continue to build out PlushCare’s direct-to-consumer business. Singh noted that there are 160 million people in the U.S. that have healthcare not covered by an employer.
“Those people are making individual choices,” he said. “The idea of reaching them has always been a part of our strategy and we think PlushCare only further enables that strategy.”
Accolade CEO Raj Singh. (Accolade Photo)
PlushCare background: Founded in 2015 by Ryan McQuaid and Dr. James Wantuck, PlushCare offers same-day virtual appointments with primary care doctors that have an average of 15 years of experience. It charges co-pay or $99 per visit. The 150-person company has served more than 400,000 patients to date and last year posted $35 million in revenue. It raised more than $30 million from private investors, including a $23 million round in June.
Telemedicine trends: Interest in virtual healthcare is on the rise amid the pandemic as people look for medical advice without going to a physical doctor’s office. New regulations have also driven increased usage of telemedicine. The past year “changed the pace at which we might have been able to pursue a transaction like this,” Singh said.
The deal: The transaction includes $40 million in cash, $340 million in Accolade common stock, and up to an additional $70 million in revenue milestones. It is expected to close in June.
Accolade’s business: The company, which went public in July, reported revenue of $38.4 million (up 30%) for its fiscal third quarter and a loss of $16.4 million (down 9%). The company now serves nine million members and 400 customers. Its headcount is close to 2,000.
Shares of Accolade are up more than 50% since it raised $220 million at a valuation of $1.2 billion in July. Its market capitalization is more than $2.5 billion.
Accolade, based in both Seattle and Philadelphia, was founded in 2007 by Michael Cline and Tom Spann. The company has been led since 2015 by Singh, who previously co-founded travel expense software giant Concur, which sold to SAP for $8.3 billion in 2014. Concur co-founder Mike Hilton is the Accolade chief product officer.