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Virgin Pulse and HealthComp to merge in $3B employer benefits deal

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Sep 27, 2023

Illustration: Annelise Capossela/Axios

Virgin Pulse and HealthComp are merging in a $3 billion deal to create a health benefits navigation company for employers.

Why it matters: Employers bracing for a record-breaking spike in health care costs could see promise in new offerings designed to cut costs while boosting health outcomes.

Details: Providence, Rhode Island-based Virgin Pulse is backed by Marlin Equity Partners and Fresno, California-based HealthComp is backed by New Mountain Capital, per a release.

  • New Mountain will hold a majority ownership of the combined company while Marlin will maintain a minority stake.
  • Blackstone and Morgan Health also backed the deal, which is expected to close in Q4.

How it (will) work: Virgin Pulse CEO Chris Michalak will serve as CEO of the combined company, which will help employers personalize their benefit offerings and track outcomes associated with those benefits.

What they're saying: "We are addressing a problem that has plagued the industry for years — a misaligned, complex benefit structure that results in unmet needs and escalating costs," Michalak says in the release.

Flashback: JP Morgan launched Morgan Health publicly in 2021 with an eye towards improving employer-sponsored health care. Other Morgan Health investments include:

State of play: Venture-backed benefits navigation companies offer what they pitch as customizable and more convenient alternatives to existing third party administrators (TPAs). For example:

  • Pebble, a health benefits company courting small startups, last December pulled in $17 million in two consecutive seed rounds.
  • Health plan builder Flume Health last March raised $30 million in Series A funding at a $100 million valuation.
  • Third party benefits administrator Collective Health in 2021 collected $280 million in Series F financing at a $1.5 billion valuation.
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