H1 secures $40M from CVS, proving SaaS startups can still attract investment

Source: TechCrunch

Market context

It’s no secret that pre‑AI era startups are generally getting little love from investors now. Ariel Katz, co‑founder and CEO of the nine‑year‑old healthcare data platform H1, argues that not all SaaS companies should be painted with the same broad brush.

“If you’re a workflow SaaS company, you could vibe code that,” Katz told TechCrunch. What AI cannot easily replicate, according to Katz, is a company that is a data provider at its core.

H1’s business model

H1’s entire business is built on selling detailed information about doctors to pharma companies, hospital systems, and health insurers. Katz believes that the data H1 collects on physicians globally could be so valuable to AI model makers that they are more likely to become customers than competitors.

“I don’t worry about Claude ever doing what we do,” he said, referring to Anthropic’s popular AI model.

Funding from CVS Health Ventures

CVS Health Ventures, the corporate venture capital arm of the CVS/Aetna health giant, led a $40 million round into H1. According to Katz, H1 wasn’t actively looking to raise capital; the startup turned cash‑flow and EBITDA profitable last year and is forecasting growth of over 40 % this year. The partnership with one of the largest healthcare companies in the world was hard to refuse.

Financial performance and valuation

Despite strong fundamentals, companies like H1 aren’t exciting for traditional VCs who are currently focused on backing AI startups at soaring valuations. H1 was last valued at $750 million when it raised $100 million in funding led by Altimeter Capital at the height of the Covid‑era tech bubble in November 2021.

Growth through acquisitions

Like other companies that secured capital just before valuations plummeted in 2022, H1 has focused on becoming profitable while expanding its capabilities. The startup has grown by acquiring smaller competitors and complementary businesses.