Healthcare data firm H1 raises $40 million in new funding

Healthcare data platform H1 has secured $40 million in a funding round led by CVS Health Ventures. The investment in the nine-year-old company highlights how data-centric Software as a Service (SaaS) platforms can still attract capital, even as investors prioritize artificial intelligence startups over pre-AI era companies. CVS Health Ventures, the corporate venture capital arm of CVS/Aetna, led the round, signaling confidence that H1 is in no danger of becoming a victim of the “SaaSocalypse”—a term used to describe the downturn for SaaS startups.

Ariel Katz, co-founder and CEO of H1, argues that not all SaaS companies should be painted with the same broad brush. According to Katz, workflow SaaS companies could be replicated by AI, suggesting that developers could “vibe code” them—a colloquialism implying AI can easily replicate or generate code for workflow software. However, Katz asserts that H1 is a data provider at its core, which AI cannot easily replicate. “I don’t worry about Claude ever doing what we do,” said Ariel Katz, co-founder and CEO of a nine-year-old healthcare data platform H1, referring to the Claude AI model made by Anthropic. Instead, Katz believes the data H1 collects on physicians globally could be valuable to AI model makers, potentially turning them into customers rather than competitors.

H1 was not actively seeking capital, according to Katz, as the startup turned cash flow and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) profitable last year. However, the partnership with CVS was difficult to refuse. The company’s current financial trajectory stands in contrast to its positioning during the previous tech market peak:

• 2021 Peak Valuation: H1 was last valued at $750 million when it raised $100 million in a funding round led by Altimeter Capital in November of 2021, shortly before market valuations plummeted in 2022.
• Current Financial Performance: After shifting its focus to profitability, the company has grown by acquiring smaller competitors and complementary businesses. It is now forecasting growth of over 40% for this year.

Why it matters

The deal demonstrates that data-centric SaaS companies can still attract significant investment despite a broader market trend where investors are prioritizing AI startups over pre-AI era companies. It highlights how core data assets remain difficult for AI models to replicate, maintaining their value to investors.