Centivo gets $75M from Cone Health venture arm, others

Insurance startup Centivo has raised $75 million in equity and debt financing.

CEO Ashok Subramanian started Centivo, which offers health plans to self-insured employers, in April 2017. Since then, the company has signed about 160 clients — with its largest employing roughly 240,000 workers — in 20 states.

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Subramanian said the round included about $25 million in equity financing. Participants included the venture businesses of Greensboro, North Carolina-based Cone Health and Fountain Valley, California-based MemorialCare Health System, along with JP Morgan Chase’s Morgan Health business unit, media company Cox Enterprises and venture capital firms B Capital, F-Prime Capital Partners and Ingleside Investors.

JPMorgan Chase and venture debt leader Trinity Capital provided debt financing, according to a news release.

Subramanian said he expects the company will be profitable within three years. He declined to disclose the company’s annual revenue.

“With debt, this is the most efficient way for us to get to profitability,” Subramanian said. “We will be profitable on this money. There’s no need for us experience unnecessary levels of dilution when once we’re profitable, we’ll be able to manage the interest of the debt with our own operational capital.”

The startup has raised $196 million in equity financing, including the latest round.

Centivo’s health plan is integrated with the company’s virtual practice, which got a boost through its acquisition of primary care startup Eden Health in May. The telehealth business offers primary and behavioral care, as well as care management services, Subramanian said.

The company partners with local providers in its coverage areas, Subramanian said. More than 250,000 providers are in its network, according to its website. Centivo uses its virtual practice, its local provider networks and the promise of a lower-cost health plan to try and win over benefits consultants for self-insured employers, Subramanian said.

Centivo looks to enrich employers' benefit programs "by contracting with high-quality providers who are more cost-effective and aren't doing procedures over and over because they got it wrong the first time,” Subramanian said. “There’s no magic bullet.”

With the funding, Subramanian said Centivo will expand its geographic footprint and invest in backend automation.