Season recognizes that food can be medicine and drives proper nutrition to reduce healthcare costs.
- They use the existing rails in food supply chains. This allows them to leverage the cost-intensive aspect of the actual physical delivery of food, which others have invested in already.
- They also work with payers and unlock significant reimbursement per patient due to the reduction in healthcare costs.
Season enables people to adhere to nutritional plans regardless of how they want to get or make their food. This has been shown to lead to weight loss and well as lower health costs. Season scales dieticians to provide users with an easy nutritional assessment and a personalized analysis based on their clinical profile. Then, it facilitates shopping by surfacing recipes, shopping lists, food delivery options, and meal prep kit options that fit with the nutritional recommendations.
A Healthy Ventures deal
We’re always looking for the intersection of terrific founders and underserved and massive markets. Treating food as medicine has been of interest for more than a decade, but the business model was rarely compelling in the companies we evaluated and we never found a world-class team. Until Season.
Co-founder and Chairman/co-CEO, Josh Hix, previously co-founded Plated, a meal delivery service that he sold to Albertson’s for $300m. Josh’s experience while leading Plated convinced him that the big opportunity in food delivery wasn’t fulfilling delivery – that was quickly becoming commodity – but was rather in curating food for users in order for them to achieve their health goals. That opens up a very large market and unlocks significant reimbursement.
For Season, Josh teamed up with Mustafa Shabib, the ex-CTO of Quartet, a venture-backed behavioral health company building technology tools to asynchronously treat depression and anxiety. Mustafa's expertise lay in building complex products that are incredibly easy-to-use and intuitive to the end-user.
With Josh, we knew we found the right team to tackle a market already worth billions.
A Multibillion Market
It is well established that food is inextricably linked with our health. One of the best controlled studies looking at food and health was done by Geisinger Health in Pennsylvania. They launched a “Fresh Food Farmacy” to prescribe and directly distribute food to diabetic patients. In addition to the food, it provided diabetes management classes, pharmacist access to manage medications, etc. The control group was provided only the classes and pharmacist access.
The study showed that the return on investment for prescribing and distributing food was 83X. The group that received the food saved nearly $200K per patient per year relative to $2,400 that the food intervention cost.
In the US today, about 42.4% of the US adult population is obese, and the trend suggests the US will exceed 50% by 2030. Resultingly, the prevalence of obesity-related conditions like cardiovascular disease, diabetes, etc. is also increasing rapidly. Harvard’s School of Public Health estimates that the direct medical cost of treating obesity-related conditions is $190B/yr today growing to $250B/yr by 2030 if current trends continue. In addition to direct costs, The Miliken Institute estimates that obesity costs the US $1.24T/yr in indirect work loss costs.
It has been shown over-and-over again that food interventions have the best return-on-investment for reducing total healthcare costs among diabetics as compared with any other non-invasive intervention.
Given the size of impact on health costs, payers are beginning to pay directly for fresh food. Both Medicare Advantage (MA) and Managed Medicaid can now cover food in their supplemental benefits. Since the payer is at full risk for all medical costs under both programs, and the benefit of food for reducing cost is so well-established, the meal benefits supplement is growing fast. Today, 22M Americans are in Medicare Advantage plans. At a $250 monthly fee, this translates to a $66B annual addressable market for MA alone.
Season's go-to-market model is B2B2C: Season sells to other businesses who then onboard end-consumers. This model is particularly common in healthcare where other digital therapeutic companies have demonstrated the model's ability to scale. Companies as diverse as Talk Space (mental health) and Heal (pediatric home visits) have shown this model results in a 10-20% conversion rate into customers becoming paid end-users.
The magic of Season is pursuing this playbook for a much more clinically impactful and higher LTV product. In addition, with food being such a primary core need of all consumers, it's such a salient starting node for establishing a relationship to further meet a broader spectrum of health related needs. Thus, the consumer's first Season experience is the beginning of the channel journey to come.
If the power of food to improve health care and reduce costs is so established, why is it still such a problem?
Making it easy
In order to solve this problem, it must be easy for the patient to get nutritional recommendations AND easy to heed those recommendations.
Many companies are trying to make it easier for patients to get connected with registered dieticians. They’re either direct-to-consumer models that create a marketplace of patients on one side and nutritionists on the other, or they’re aggregation platforms for dieticians and then sell those services directly to payers or employers. Both have two major challenges: 1) it is expensive to attract the customers/patients (B2C) and 2) the relationships are transactional, not long-term, leading to low lifetime value.
Season not only scales registered dieticians but also turns the transactional business into a multi-billion revenue opportunity by ensuring that patients get and heed the recommendations and thus achieve results; that patients are able to actually lower their health care costs. Season’s innovation is to make following dietician recommendations easy.
Season’s founders came from the food delivery, healthcare and consumer spaces. They built their careers on building successful products by minimizing user friction. At Season built a product that incorporates the dietician recommendations automatically, so they are incorporated into every food option that is surfaced to the user. This makes it incredibly easy to follow recommendations whether the user is buying groceries, buying meal kits, or buying restaurant meal delivery.
Leverage existing delivery pipes
The second major hurdle that Season overcomes is a business operations hurdle. Individualized food delivery is inherently unscalable, as Geisinger found when they tried to expand their “Farmacy” program.
Fresh food delivery companies like BlueApron, GrubHub, Instacart have raised hundreds of millions of dollars to combat the challenge of local density: until there’s enough demand density in a given area, these companies lose money on the last-mile of actual physical delivery of food from grocery store/restaurant to the end-user.
Season sits on top of and leverages this existing distribution system. Thus, Season’s cost of operations does not extend to the last-mile of food itself. As a result, Season saves approximately $200/mo/customer in operating costs compared to the Geisinger program and over $50/mo/customer in last-mile physical delivery costs.
Hack consumer distribution
Beyond savings on the delivery side, Season has a much lower customer acquisition cost than traditional consumer food companies like Plated.
Season's has two immediate customer bases: registered dieticians and payers. Season offers its software to all registered dieticians to use with their patients. Dieticians love it because it makes eating well easier for the patient and helps the dietician track food. Dieticians are a focused and highly engaged audience; early customer-acquisition tests, mainly through trade publications, suggest that repeatable CACs are under $10.
Other companies like Quartet (behavioral health) have similarly gone to market by targeting specific clinician groups who aggregate and bring patients to the platform. They've demonstrated that this approach is scaleable (to tens-of-thousands of customers and >$10m in revenue) and that once on the platform, end-users are sticky, even if they churn from their referring clinician.
The largest market, however, is in selling to payers. There has been a significant uptake in full-risk health plans over the past 10 years. These are health plans that get paid a fixed rate every year per patient, and can pocket the entire gain if health expenses come in under that rate. These plans are government programs (Medicare Advantage and Managed Medicaid) as well as commercial plans and altogether cover at least 50 million Americans.
Companies like Omada Health & Livongo (both for type 2 diabetes) and Hinge Health (musculoskeletal conditions) have pursued this path - selling to payers who then onboard their appropriate patients. All three of these companies are worth >$1billion and have $50+m in annual revenue. The typical pricing structure for this model is per-member-per-month, with PMPM fees being $250-400/mo. Season is just beginning this journey with payers; given that their results in terms of decreased health expenses should be better, there should be little pushback to pricing in this range.