HIPAA-compliant social network startup Audax Health raises $21M, partners with Cigna

By: Jonah Comstock | Jan 21, 2013        

Tags: | | | | | | | | | | |  |

zensey logoWashington, D.C.-based Audax Health, a health social networking and gamification company, raised $21 million in debt, options, and other security, according to a recent SEC filing first reported by the Washington Business Journal. The company, founded by 23-year-old Grant Verstandig and supported by former Apple CEO John Sculley, is developing the Zensey social network, which is currently in closed public beta. Earlier this month, the company announced a partnership with insurer Cigna.

“One of the things missing in healthcare is there are 50, 100, 500 destinations and none of them are really an aggregate,” Verstandig said in a keynote at last year’s Consumer Electronics Show (CES). “None of them give you the engagement and connectivity of Facebook, the retention or the enjoyment of a Zynga game, or the recommendation engine of Amazon.”

Zensey’s beta launched in January 2012 (around the same time as Verstandig’s keynote), under the name Careverge. (Based on patent filings, it looks like the company made the name change at the very end of 2012.) At the time of the launch, Verstandig described it to AllThingsD as a HIPAA-compliant social network, where users can connect and discuss their health issues using pseudonyms.

“I want my personal health information to be mine,” Verstandig said last year, speaking of the need for a HIPAA-compliant social network. “It can’t be shared on the web. Which is why social has to invent healthcare, rather than healthcare coming to Facebook.”

Verstandig has also spoken about using gamified elements in the network, where users can earn points by setting and reaching certain health goals.

“Gaming is not a gimmick, it’s a psychology,” Verstandig said in his keynote. “It’s a way of life.”

Verstandig told AllThingsD last year that Audax’s business model would involve selling aggregated data to health insurers. He said the companies could give their customers promo codes to sign up for (what was then called) Careverge in exchange for deductions on premiums.

A year later, on January 3 of this year, the company announced it would be working with Cigna over the next 5 years to create a “customized digital engagement platform” for Cigna customers. The deal also included Cigna CIO Mark Boxer joining the Audax Health board and a capital investment of an undisclosed amount, which likely makes up at least a part of the $21 million round.

Verstandig is one of several digital health CEOs Sculley has mentored and endorsed recently. The semi-retired Apple vet co-founded Watermark Health with Sean Heyniger in 2006 and last year made a significant investment in Sonny Vu’s Misfit Wearables. According to a recent Bloomberg article, Sculley has described both Verstandig and Vu as “the next Steve Jobs” in their fields.

And if Sculley doesn’t bring enough star power to the company, Audax just announced four new executives with backgrounds at well-known Internet companies. Chief Marketing Officer Camille Watson has worked with Netflix, StubHub, GameFly and LivingSocial. Chief People Officer Tom Perrault comes from a human resources position at Meebo. Dogu Celebi and Phil Harker, senior vice presidents for informatics and client development, respectively, both come from divisions of Optum, which is a division of UnitedHealth Group.