Transcarent has completed its merger with health benefits platform Accolade, the company announced Tuesday. The $621 million deal comes amid economic turmoil nationwide.
As President Donald Trump’s tariffs destabilize the stock market and healthcare costs rise, Transcarent and Accolade’s merger could provide a breath of reprieve for employer-sponsored healthcare and health plans.
Transcarent first announced its intention to merge with Accolade in January for $621 million, or $7.03 per share of Accolade. The transaction was completed just three months later, on April 8. The transaction was financed by General Catalyst and Transcarent CEO Glen Tullman’s 62 Ventures. Accolade has now been taken private.
The combined organization now serves over 20 million members and more than 1,700 employer and health plan clients, according to the company.
By merging with Accolade, Transcarent customers will gain access to its leading patient advocacy, virtual second opinion and virtual primary care solutions, executives said.
Accolade customers will be able to choose between Transcarent’s offerings, which include its "Care in 60 Seconds" solution, its AI WayFinding benefits navigator as well as its solutions for cancer care and weight loss and its pharmacy solution.
Tullman’s thesis for the integration of the two companies was to lean into the word “merger.” The two companies combined their leadership teams and selected the best people from each company, Tullman said. He said the companies are retaining 99% of staff.
“Fortunately for us, this is really a perfect fit,” Tullman said. “Accolade has really made a name in becoming the leader in advocacy, number one in second opinions through their 2nd.MD operations and in virtual primary care. So those are the three big areas, and they offer that not just to employers and health plans, but also direct-to-consumer. So all those businesses are things that we don't do.
He continued: “So it was a perfect addition to us, along with really great people. And if you look at the new management team, it's almost evenly split between the two organizations, so a lot of great people, a lot of great technology and last but not least, a world class list of clients that we couldn't be more excited about.”
Founded in 2007, Accolade provides a health benefits platform for employers aimed at improving health outcomes and controlling costs by helping consumers make better, data-driven decisions. The company went public in July 2020, raising $220 million in its initial public offering.
Tullman, founder of Livongo, launched Transcarent in March 2021 to tackle the employer-sponsored benefits space. The startup uses a combination of software, technology and data science to provide members with health navigation, virtual care and bundled providers.
Last May, the company pocketed $126 million in series D funding to build out its artificial intelligence capabilities. Transcarent has raised $450 million in total funding at a valuation of about $2.2 billion.
Tullman said the completion of the merger is a beacon of light in the otherwise murky economic conditions of the U.S. The economy has been in a state of uncertainty since President Donald Trump announced new reciprocal tariffs last week. The Dow closed 349 points down on Monday, ABC reported, and the stock market may be entering bear territory, according to The New York Times.
“In this market where IPOs are getting pulled and everything else, getting this size transaction done flawlessly in three months speaks to the importance of what we're doing,” Tullman said. “People say we've got to fix healthcare, and we need a digital solution. That's the only way we're going to do it, and it needs to have an experience that people really like.”
Combined with looming cuts to Medicare and Medicaid, Tullman said employers are going to be further squeezed and could bear more of the costs of healthcare. Many employers have been looking to get ahead of the curve by examining Transcarent’s offerings to reduce costs, he said.
“Most of the third-party benefit consultants would tell you that healthcare costs are increasing this year eight to 12% for the mid-market and smaller companies, it can be up to 18%,” Tullman said. “So that's the backdrop that was before all of the current administration stuff that's only going to make it worse. So we have companies calling us and saying, ‘Can you come back in and show us every solution that you have to not just improve the quality, but to take the cost out?’”
Building personalized, proprietary AI will be a core part of the combined companies’ strategy going forward, Tullman said. Both companies have leaned into the technology to enhance their offerings to customers, including for benefits navigation and to relieve administrative burdens on providers.
It also plans to retain the brand identities of Accolade and 2nd.MD, the virtual second opinion company Accolade acquired in 2021, to maintain stability for customers. “We're very focused on making sure there's no blips for our most important people, and those are the people we deliver care for," Tullman said.