Telehealth startup 98point6 sells business line in $100M deal, pivots to licensing plans

Seattle-based telehealth startup 98point6 Inc. is selling its original business line aimed at employers and rebranding to 98point6 Technologies.

Palo Alto, California-based telehealth company Transcarent is the buyer of the business line, which connects patients to health care through text.

Jay Burrell, 98point6's CEO, said the deal is worth about $100 million and should close by the end of the month.

"At the very end of last year, we were engaged with Transcarent around talking to them about how they could license this technology," Burrell said. "During that process, it became really clear to Glen (Tullman) and I, their CEO, that they were attacking the same problem we were, which is inefficiencies in the health care system."

98point6, founded in 2015, is now focusing on licensing its technology to health care providers, a strategy it announced in September when the company said it was working with Tacoma-based MultiCare Health System and its ambulatory care program, Indigo Health. The company also raised $20 million at the time.

Burrell said in the fourth quarter of last year 98point6 began evaluating its business and decided it would be more successful selling its technology to employers than its care model.

Burrell added that Transcarent is more focused on the care delivery model, so the deal is a good fit for the two companies. 98point6 has 303 employees now, Burrell said, but will have about 120 after the deal. Most of the remaining about 180 employees will join Transcarent, but Burrell said there are some redundancies that will result in layoffs. 98point6 laid off an undisclosed number of employees in July. Burrell joined the company in 2020 and became CEO in the fourth quarter of last year, replacing chairman and co-founder Jeffrey Greenstein.

Transcarent was founded in 2020. The company works with employers that have at least 2,000 employees, allowing members to talk to a doctor at any time. Transcarent also offers mental health care.

As for when 98point6 will land more deals with health care systems, Burrell said to expect more announcements by midyear.

"These are true health care delivery systems that are not technology companies," Burrell said. "These are going to be geographically disbursed health systems initially, and that's by design because we're creating is a national network of providers that will be linked by a common technology platform."