The nation’s largest insurer is making a bet on the convergence of wellness and wearable technologies, and maybe even encouraging aspiring entrepreneurs to drop out of college.
The UnitedHealth Group, through its Optum subsidiary, is buying a majority stake in Audax Health Solutions, a Washington D.C.-based maker of web and mobile health risk assessment and engagement applications.
United is not disclosing the percent of the majority stake or the financial terms of the deal, saying only that Audax will be a “freestanding investment of Optum” with the goal of expanding its offerings to “more broadly support consumers’ need for integrated benefit selection, wellness and healthcare administration.”
Audax’s main product, targeted at employer wellness programs and insurers, is a web-based wellness app and platform called Zensey, described as “your guide to healthier living – one small step at a time.” The startup pitches the platform as a “remagined” health risk assessment with options to incorporate health challenges, peer support and body monitoring.
Employees or groups of friends can use the app to compete against each other in exercise challenges, with the chance of winning prizes, and can also use wearable devices to track exercise and diet through partnerships with BodyMedia, FitBit, Polar and Within. (Audax itself tries to walk the wellness walk, recently hosting a challenge called “Hustle on the Hill” at its D.C. office and “Battle by the Bay” at its San Francisco office, in which the winning employees each posted more than 31 miles in three days.)
[Related: 10 guidelines for developing an effective patient-facing mobile app.]
Audax CEO Grant Verstandig, a 25-year-old former Brown University student who dropped out to found the company in 2010, and president and COO David Ko, a former Yahoo executive who most recently oversaw operations at the online game company Zynga, will continue to lead the company.
“Joining with Optum, especially with its unmatched depth of experience and resources, accelerates our momentum, providing the additional reach and scale,” Verstandig said in a prepared statement.
David Wichmann, the UnitedHealth Group's CFO, said Audax will help Optum in the pursuit of “serving people across virtually every healthcare channel.”
Verstandig started Audax after suffering a number of knee injuries while playing lacrosse at Brown, ultimately undergoing seven knee surgeries and a partial knee replacement. That experience left him mulling a move into entrepreneurship, even though as a neurobiology major with a high school internship at the National Cancer Institute under his belt, he could have pursued a career in biotech or healthcare.
After starting the company from his parent’s home in greater Washington D.C., he’s since managed to garner more than $55 million in backing from Florida Blue Cross subsidiary Navigy Holdings, New Leaf Ventures, Cardinal Health, Cigna and former Aetna and Apple executives.
[Related: Apple looks to the ears for mHealth innovation.]
He also got some direction from a family friend, Richard Klausner, MD, CMO at the genomics and molecular diagnostics company Illumina, who’s now Audax’s board chairman.
Former Apple CEO John Sculley said he thinks UnitedHealth’s investment “is evidence that a new era of consumer engagement and innovation can be the turning point that sets a new trajectory for global healthcare services.”
Among Audax’s clients is another large insurer, Cigna, which in January 2013 signed a five-year “strategic alliance” to make its apps available to members in its wellness programs.
Cigna CIO Mark Boxer, who took a place on Audax’s board, argued at the time that the startup’s “digital personalization, social networking, gamification and analytics can turn a mundane or onerous task into something positive, fun and rewarding.”
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