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Exclusive: Florence acquires Zipnosis from Bright Health

May 24, 2023
Illustration of a hundred dollar bill puzzle with pieces missing out of the center in the shape of a red cross

Illustration: Sarah Grillo/Axios

Patient intake and tracking startup Florence is acquiring asynchronous telehealth company Zipnosis from Bright Health (BHG: NYSE) in an all-cash deal, CEO Aniq Rahman tells Axios exclusively.

Why it matters: Corporate divestitures continue to provide fruitful acquisition opportunities for strategic buyers in a strained deal market.

What's next: After Florence digests this acquisition, Rahman says he sees potential opportunity to acquire similar companies serving other sites of care.

  • "I think there are going to be opportunities to strengthen what we're doing, especially as it relates to reaching patients before or after their emergency medicine journey," says Rahman.
  • At just 70 employees, Florence doesn't necessarily have the corporate development resources that a larger tech player might, he says.
  • But it's a good time to be a well-capitalized buyer, particularly as startups struggle for funding and public players prune their business lines, he adds.

Catch up fast: Florence debuted this year with a whopping $20 million seed led by Thrive Capital, GV and Salesforce Ventures, Axios reported in March.

What they're saying: "We actually had an initiative internally to build something that was very similar to Zipnosis," Rahman says.

  • "When we got further down the path, we realized, 'Hey, this is a really interesting asset. We should see if we could bring some of it in-house,'" he adds.
  • Florence reached out directly to insurtech Bright Health to pursue Zipnosis, Rahman says, declining to disclose additional details about the transaction.

How it works: Florence offers health systems digital intake and tracking tools that help patients update their clinical information, fill prescriptions, initiate self-discharge and book follow-up visits.

  • Florence charges health systems for its subscription-based service, which is tiered based on patient volume.
  • Zipnosis offers its white-labeled asynchronous telemedicine, and the combined entity serves more than 50 health systems.

Between the lines: Bright Health only owned Zipnosis for two years, acquiring the business from its venture backers for about $50 million in March 2021, per an SEC filing.'

  • Tiger Global-backed Bright Health went public shortly thereafter at a dizzying $11.2 billion valuation — but like other high-flyers of the 2021 funding frenzy, the company struggled to chart a path to profitability.
  • Bright Health was staring down bankruptcy as of March, and this week finalized a reverse stock split to raise its share price in order to meet NYSE's threshold,

The intrigue: Last month, Bright Health announced plans to sell its Medicare Advantage health plan in California, spelling the end of Bright Health's tenure as an insurer.

💭 Our thought bubble: Bright Health is rebranding itself as a "consumer care delivery" company, which is somewhat incongruent with the decision to sell one of its care delivery assets.

The big picture: For its part, Florence is growing but focused on maintaining longevity in the markets it serves, Rahman says, pointing to its recruiting efforts as a differentiator.

  • "When we're selling to enterprise health systems, they want to make sure that if they're doing a deal with an early stage company that that company is going to be around — especially if that's mission critical software that's being deployed in their emergency room," he says.
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