Health benefits platform Thatch reaches US$1B valuation
Thatch has raised US$108m at a US$1bn valuation for its healthcare benefits platform for employers and workers.
The new funding comes 17 months after the company raised a US$40m Series B at a US$410m valuation, according to PitchBook.
Thatch co-founder and chief executive Chris Ellis said the company had increased its annual recurring revenue about sevenfold.
Founded in 2021 by Ellis and former Stripe engineering executive Adam Stevenson, Thatch gives employers access to individual health insurance plans through an Individual Coverage Health Reimbursement Arrangement, or ICHRA.
The model, created by federal regulation in 2020 and recently rebranded as CHOICE, allows companies to give workers a fixed health budget to buy their own insurance rather than enrolling all employees in a single company-wide plan.
Employees can use pre-tax funds to choose from dozens of health, dental and vision plans available through Thatch’s marketplace.
The platform uses AI to recommend health plans based on individual needs. Employees who need more extensive care can supplement their allowance with their own money for more comprehensive coverage.
Workers who choose lower-cost plans can use remaining eligible funds through a Thatch debit card for other healthcare expenses, including GLP-1 medicines or an Oura Ring. GLP-1 drugs include treatments used for weight loss and diabetes, such as Ozempic and Wegovy.
The company is operating against a backdrop of rising employer healthcare costs, with 2027 expenses projected to increase by more than 8 per cent, the largest rise since 2003.
Ellis said the model gives workers greater choice while meaning employers no longer have to renegotiate traditional healthcare agreements with individual insurers each year.
“If [employees] don’t like their insurance, they can switch to another one,” he said. “It creates pressure on insurers to compete for better service, denying fewer claims because they want to keep you as a customer.”
Ellis said employers can still provide the same level of coverage, often at a slightly lower cost.
The US$108m round came from existing investors The General Partnership, Index Ventures, General Catalyst and Andreessen Horowitz.
Thatch competes with other companies offering alternatives to traditional employer health benefits, including Take Command, Remodel Health and Zorro.
“People are waking up to this because of costs, but then they’re realising this is a better, more efficient way to do it,” Ellis said.
