Exclusive: Frontier Direct Care seeks investors for rest of Series B
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Frontier Direct Care, a worksite primary care provider for self-funded employers, is seeking investors for the rest of its $20 million Series B, CEO Bibb Beale tells Axios.
Why it matters: Roughly 70% of large employers that offer health insurance are self-insured.
Catch up quick: To date, Harlingen, Texas-based Frontier has raised about $10 million of the round, led by independent sponsor Mehshah Capital, Beale says.
By the numbers: The raise values Frontier at $50 million to $70 million, with the precise number depending on 2025 revenue performance, says Mehshah managing partner Gaurav Mehta.
- Frontier is generating north of $25 million in annual recurring revenue, up from around $1.5 million in 2022, he adds.
The latest: Frontier hopes to close the round this quarter, says Mehta.
- Prospective investors include "a family office that owns one of the largest mental health benefit companies in the country," Mehta says.
- Other potential logical investors include strategics like third-party administrators and health systems, he adds.
- "Those are the kind of groups that we're talking to right now and ... trying to drive into our syndicate," Mehta says.
How it works: Frontier offers direct primary care and pharmacy services at 11 locations across Texas, as well as virtually, for self-insured employers.
- Its customers are mostly municipalities and school districts, including the city of McAllen, Texas, and Leander Independent School District in Austin. Frontier also serves clients in other industries, like manufacturing and industrial.
State of play: Frontier's peers include players like OMERS Private Equity-backed Premise Health, LLR-backed Care ATC and General Atlantic-backed Marathon Health.
Yes, but: Frontier takes on more of the risk alongside the employers than existing players, Beale says.
- "We sit on the same side of the incentive fence as the employer, as the employee, as the employee's family, as the doctors and staff that work for us, as the negotiating pricing team that work for us," Beale says.
- "As a sponsor, I've looked a lot other DPCs (direct primary care) out there," says Mehta. "The fact that Frontier has in-house ... capabilities around care, navigation, price negotiation, direct contracting — that's pretty unique."
What's next: Frontier has plans to expand out of Texas eventually, Beale says, with eyes on California, Florida, Michigan and Ohio.
