Everside Health lands $164M in NEA-led growth funding

Everside Health, the direct-to-employer primary care provider that just canceled IPO plans, raked in $164 million in growth equity funding led by longtime investor New Enterprise Associates, the parties tells Sarah exclusively.

Why it matters: Employers are desperate to save money on health care, as well as attract and retain talent. Everside helps its customers achieve both of those things while attacking the nation's access, quality and affordability problems through a value-based care playbook.

• The deal comes just One Medical is taken out by Amazon for $4 billion — proof that primary care's antiquated model remains ripe for disruption, and employers have a role in that.

Details: Existing backers Oak HC/FT and Alta Partners participated alongside nine new investors including Endeavor Catalyst — propelling Everside's valuation north of $1 billion, Axios has learned.

• Proceeds will finance new health centers and clients acquisitions, investment into technology and potential M&A, CEO Chris Miller says.

Catch up quick: Everside last week became the 25th such IPO cancellation in health care since January 2021 as the digital health market sees a huge correction.

• Miller and NEA managing general partner Mohamad Makhzoumi say an IPO was considered opportunistically in light of 2021's friendly environment — not because it needed access to a ton of capital to break even.
• "It's rare for us to find companies that have achieved scale yet have that incredible growth trajectory in front of them," Makhzoumi says, pointing to Everside's minimal working capital needs, recurring revenue, and lack of government and commercial reimbursement exposure.

How it works: Meshing in-person and virtual care capabilities, Everside builds and customizes on-site and near-site clinics, selling directly to employers. The company is approaching 400 health centers in 34 states.

• With an increasingly remote workforce, the clients Everside concentrates on have employees "that come to work every day", Miller says. That is, labor unions, school districts and manufacturers—in contrast to ONEM, which operates a D2C model and focuses on bigger cities and employers. (Though Everside's Fortune 500 footprint is growing, too.)
• Employers pay Everside a fee for each employee, whom in exchange score 24/7 access to its care delivery services with low- to no out-of-pocket costs.
• Everside physicians meet with patients for 30, 60 or 90 minutes — a selling point when it comes to recruiting docs from the fee-for-service world, Miller notes.

Between the lines: Miller's long-term vision is what he likes to call a "total cost-of-care savings solution."

• In other words, there's a big opportunity, including through M&A, to expand into ancillary services.

• Everside has already started to offer physical and occupational therapy services, and as it continues to diversify, "that puts us in a good position to take more risk," Miller says.

💭 Our thought bubble: Considering Everside's roots (see below), kidney care would be an obvious specialty in which to penetrate.

By the numbers: Everside says that it saves its clients an average of 17% on claims costs by year three, and 31% by year five, which it bases on retrospective claims analysis it conducts.

• Health care spend on average increases 6% to 7%, but Everside has decreased that rate to about 1% for customers, it says.
• Everside is growing top line by 25-30% annually, Miller notes.

Flashback: Representing a non-traditional deal for venture capital, NEA in 2018 carved out what was then Paladina Health, the primary care arm of kidney care giant DaVita.

• NEA then led a $165 million growth financing into the company.
• The platform followed with acquisitions of Activate Healthcare, Healthstat, and R-Health, ultimately forming Everside.

The bottom line: While 2020 and 2022 saw the pendulum swing aggressively towards tech-only offerings in health care, Everside perhaps suggests the pendulum is fluttering back the other way.

• "Every single client is asking for both virtual and physical care," Miller says.
• "The meeting of those two forces is fundamentally where you’re going to see the most ROI for customers and that's exactly where Everside sits," Makhzoumi says.