Extend Health Secures $15 Million in Series B Funding

Extend Health Inc., a provider of employer-sponsored health care insurance services, has raised a $15 million Series B round and made some high-profile appointments to its board of advisors in its last anticipated venture capital round.

New investor Psilos Group Managers led the Series B round, which also included existing investor Revolution Health Group, a consumer-focused health care company started by AOL co-founder Steve Case. At the same time, Extend Health said it has changed its name from Extend Benefits Group LLC.

This will be our final round of venture financing. We will be cash-flow positive by the middle of next year, said Extend Health President and Chief Executive Bryce Williams. We’re really focused on growing the business at this time.

Burlingame, Calif.-based Extend Health provides services to help retired and active employees of corporations select a health care plan best suited for their individual needs. The company’s first and currently most popular program, ExtendRetiree, allows a retired employee to select the best insurance plan to cover their medical needs, including Medigap, Medicare Advantage and Medicare Part D insurance plans. Extend Health’s other program, ExtendAccess, allows for the selection of coverage for employees who are not eligible for coverage by a company’s group plans, such as independent contractors.

With the Series B funding, Extend Health plans to improve its technology platform used by patients to select coverage, as well as its customer support and client integration tools. The company currently has more than 100 corporations as customers, Williams said.

The new name of the company also marks its establishment as a stand-alone corporation from its previous status as an affiliate of Revolution Health, Williams said. Extend Health raised a $10 million Series A through Revolution Health and Extend Health’s founders in 2005.

Revolution was very much in favor of bringing in an external investment, Williams said. We are still very much aligned philosophically, which is that consumerism is going to continue to come to health care. 

Extend Health has also appointed new members to its board of advisors. Those appointments include: Mark McClellan, former head of the Center for Medicare Services and the Food and Drug Administration; Richard A. Gephardt, former U.S. House of Representatives Majority Leader; Charles Bowsher, former head of the U.S. General Accounting Office and Comptroller General of the United States; Edward Mazur, former State Comptroller for the Commonwealth of Virginia and former member of the Government Accounting Standards Board; and Alain Enthoven, Stanford Graduate School of Business Professor of Public and Private Management.

With the Series B round, Extend Health has also added Psilos Senior Managing Member Albert Waxman and Managing Member Stephen Krupa to its board of directors.

Extend Health approached Psilos, impressed by the venture firm’s reputation in health care services through its past deals, according to Williams, including the $300 million acquisition of portfolio company Definity Corp. by UnitedHealth Group Inc. in 2004. Definity represented Psilos’ first investment in a defined contributions plan provider, Krupa said.

I think the whole health reimbursement arrangement has caught on as a way to involve the consumer in health care purchasing decisions, Krupa said. The more [the consumer] is involved; we think the better the quality of those insurance programs and the better the quality of care.

For more information, please visit www.extendhealth.com