Candid Health Raises $52.5M to Simplify Medical Billing

The Challenges of Medical Billing in the U.S.

Navigating the complexities of medical billing presents a significant hurdle for doctors and hospitals, given the presence of over 1,000 insurance companies operating within the United States.

Variations in required medical claim information, even for identical procedures, are commonplace across different insurers. Submitting claims with inaccuracies frequently results in denied coverage, necessitating manual resubmissions and causing payment delays.

Root Causes of Claim Denials

Nick Perry, co-founder and CEO of Candid Health, attributes a large proportion of medical claim denials to the difficulties faced by traditional billing system providers in adapting to the evolving demands of contemporary healthcare.

Perry established Candid Health in 2019, following a five-year tenure at Palantir, with a central mission: to streamline medical billing processes through automation of claims submissions and reduction of manual tasks for billing personnel.

Growth and Expansion

Since its inception, the company has successfully onboarded a growing clientele of telehealth providers, including Allara, Nourish, and Talkiatry. Recently, Candid Health has also begun to attract larger physician groups as customers.

The company experienced substantial revenue growth in 2024, reporting an increase of nearly 250%.

Recent Funding Rounds

This rapid growth has attracted investor attention. Candid Health announced a $52.5 million Series C funding round on Wednesday, led by Oak HC/FT and supported by existing investors.

This latest investment follows a $29 million Series B round secured six months prior, which was spearheaded by 8VC with participation from First Round Capital, BoxGroup, and Y Combinator.

Leveraging Data Analytics

Perry’s experience at Palantir heavily influenced the company’s approach, demonstrating the potential of data analytics. He views medical billing as fundamentally a data engineering challenge.

Traditional systems typically identify claim issues and return them to providers for correction. However, Candid Health asserts that it has developed and continuously improves a sophisticated rules engine.

This engine enables providers to submit accurate claims to insurance companies on the initial attempt.

Future Plans: Integrating AI

While Candid Health has not yet fully embraced generative AI, a portion of the new funding will be allocated to incorporating advanced machine learning techniques.

For example, AI can be utilized to identify claim types that are consistently rejected by insurers, allowing the system to proactively correct these claims before submission.

The company is also considering developing an AI-powered feature to automate follow-up calls regarding denied claims, though its primary objective remains preventing denials in the first place.

“The ideal scenario is to submit claims correctly from the outset, eliminating the need for denial-related phone calls,” Perry stated.

Competitive Landscape

Candid Health faces competition not only from established billing systems, often integrated with electronic health record companies like Epic and Athenahealth, but also from emerging startups such as Apero and Adonis.

Adonis is backed by Point72 Ventures and General Catalyst.