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EasyHealth: a modern Medicare relationship from the beginning

EasyHealth marks the 3rd investment of our Fund 2.

EasyHealth provides an end-to-end platform that modernizes the massive $800 billion Medicare market.

1. The platform starts right at the beginning with enrollment, as a wholly re-imagined registered broker agency. They use a well-optimized, tech-enabled process that arms sales agents with the right information and discovery process to match eligible members with the plans specifically best for them.

2. They then persist the relationship with members by providing education and additional support. This ongoing dialogue yields valuable information about the members' medical and social challenges to further reinforce the virtuous cycle of connecting members with the support services to meet their specific needs -- resulting in improved healthcare and financial outcomes.

Easy provides members with a new, modern agent-member relationship that starts with a human-centered, tech-reinforced sales process (read: smart management of CAC). They continue to apply proven principles of conversion marketing and sales optimization to cultivate the relationship with members, going up the value chain of engagement to influence ultimate health outcomes (read: smart cultivation of customer lifetime value 'LTV').

In a model unique to the Medicare market, Easy leverages the high-margin, working capital-efficient aspect of a broker business + with a tech-enabled platform --> to persist relationships with enrolled members to create value throughout the lives of Medicare-eligible patients (15% of the US population).

Easy's revenue is driven by a combo of enrollment commission (currently) + additional payouts by carriers for member engagement, data discovery, and improved outcomes (hereafter).

Leaning in when others lean out

For Easy, Medicare enrollment is just the beginning.

Instead of simply handing off members to insurance carriers as agents typically do once enrollment broker commissions have been paid, Easy continues to directly support the customer's journey. They do so through a mix of 'high code, low code, no code' solutions for better POST-ENROLLMENT Activation from members. Their toolkit is very much informed by conversion marketing best practices.  

Typical brokers: Brokers, even big ones like the publicly traded company EHealth (Nasdaq: EHTH), all leave the scene once members are enrolled, moving onto looking for the next enrollment commission pay-out.

In smart contrast: Easy recognizes enrollment is just the beginning. In fact, Easy's broker capacity with members effectively primes the grounds to keep cultivating a trusted relationship when members are the most open to it. During this critical window, Easy lays down the paths for future engagement, such as securing data via low-code nudges like reminder calls, discovery conversations, education about benefits in the short-term -- all things that carriers themselves have found impossible to do successfully, esp. at scale. 

These touchpoints drive more - and, importantly, earlier - transparency into members' true-life backgrounds including medical profiles and social challenges. This further optimizes the support nudges and services that Easy provides --> inform members' health outcomes --> yield great revenue opportunity for Easy. Longer term, they'll curate a portfolio of internal and external solutions to support more member needs. There are multiple revenue streams that carriers (eagerly) pay to Easy. It's worth noting that carriers are well-incentivized to drive better health outcomes among members (via 'risk-adjustment fees' from the government), but are themselves ill-equipped to do so. Recognition of their inability to do so drives the entire business model for big service- and physical clinic-driven businesses such as the recently IPO'ed Oak Street Health - more below.

Easy revamps all 3 legs of the Medicare tripod

1. Eligible members - overwhelmed and ill-matched to sub-optimal plans plans, don't know about benefits available to them

2. Insurance brokers - lack scale to be able to offer wide range of plans and the know-how to persist the member relationship

3. Insurance carriers - want to drive better medical outcomes while controlling costs, which requires visibility into members' backgrounds which they struggle to get. Many resort to 'offloading' the most expensive and complex patients to other carriers as a means to control costs, in a game of musical chairs.

The massive, confusing Medicare market / opportunity

The massiveness of the Medicare market opportunity is widely known. As is how confusing it all is.

Medicare is the US government's single largest expenditure (23%) and growing to over $1 trillion in 2 years.

In the US, everyday 20,000 Americans turn 65 years old and become eligible for healthcare coverage from Medicare. Yet there are slews of available plans, some traditional Medicare, some Medicare Advantage, with supplementary prescription coverage, etc.

Bloated Medicare 2.0 payers 

There are several players that have cropped up over the past few years to tackle the Medicare morass. These include many well-capitalized upstart payers such as Oscar, Alignment (filing for IPO in 1Q21), Clover (recent $3.7 billion SPAC), Devoted, and Bright. In the private markets alone, they've raised over $4 billion. Incredibly, these enormous valuations have been supported by still tiny enrollment numbers, underscoring investor enthusiasm for innovation within this market. Alignment and Clover lead the pack at 62,000 and 54,000 Medicare Advantage members respectively.

Primary Care 2.0 players

In many ways, an emerging cohort of successful, scaled Primary Care providers reflect a service-oriented (and heavier capex-requiring) version of Easy Health in aiming for a robust support platform focused on preventative health and early intervention. These players include OneMedical (Nasdaq: ONEM; raised $530m in venture; for all demographics, not just Medicare), Iora (raised $350m in venture; for all demographics, not just Medicare), and Oak Street (NYSE: OSH; raised $105m in venture; specific to Medicare). ONEM trades at some 15X of Sales TTM, OSH at 17X. Oak Street's business is predicated on Medicare carriers outsourcing clinical intervention to them. Medicare plans enter into contracts with Oak Street and pay them a percentage of each members’ monthly premium.

Singular differentiation of the EasyHealth team

The co-founder team here is singularly poised. Their strong background in adtech and conversion marketing greatly informs the ability to execute on the beginning of the journey in enrollment (which is essentially consumer acquisition) + the follow-on communications and touchpoints with members (which are essentially supporting tactics for consumer calls-to-action and customer retention). It's this know-how that enables David and Aaron to identify the gaping opportunity of marrying an insurance broker nexus point --> with the downstream consumer relational challenge of 'member engagement' which continues to confound the $800 billion Medicare market.

What Easy uniquely sees is that the challenge is basically one continuous conversion funnel. By deploying their toolkits honed in other markets and contextualizing it for the Medicare journey, Easy creates an operationally excellent and relevant experience that successfully unlocks members who otherwise are black boxes to carriers. Improved health outcomes are a happy side-effect of this prescription, so to speak.

As well, co-founder Aaron was previously the co-founder and CEO of Matic which is a very similar playbook to EasyHealth but for property casualty insurance. (Matic has raised $34m in venture, most recently a $24m Series B round.)

Easy only launched in July 2020 and already is on a $3m run-rate, having completed its first Annual Election Period. The company 'skipped' a grade and went straight to a $12m Series A raise led by Anthemis, a prior investor in Matic, and joined by QED (we brought them in, a fintech fund that's followed several of our portcos) and the strategic Nationwide. We invested $2.65 million in the round, own 5% of the business, and have a Board Observer seat.

We're actively working with the founders now to round out the team with clinical / medical director folks to design intervention support and to identify 3rd party solutions for the tech stacks of the sales-enablement and member-facing products.

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