Pareto Health, Inc., a leading employee benefit group captive manager that helps businesses with 50+ employees self-fund health benefits with greater savings and lower volatility, today announced that it has completed a recapitalization with Great Hill Partners, a leading growth-oriented private equity firm. The investment will allow the company to significantly expand its geographic footprint, sales and marketing, and industry-leading cost containment efforts. Financial terms of the transaction were not disclosed.
Pareto Health has grown rapidly in recent years as rising healthcare costs have become an increasingly painful problem for employers. Although self-insurance for employee health benefits offers meaningful savings opportunities, most small and medium-sized businesses struggle to self-fund on their own due to their size; they have fewer lives to spread risk across, less data for carriers to appropriately price stop loss, and insufficient scale to gain access to and implement many high quality cost containment solutions. Pareto Health addresses all of these challenges to make self-funding an attractive and sustainable option that can deliver long-term savings to smaller businesses. Its member-owned captives offer unique features such as maximum renewal increases and no stop loss lasers after a company joins the captive. The company partners with a select group of benefit brokers and consultants to educate employers about the benefits of group captives and already has approximately 800 employers representing over 200,000 lives nationwide and an approximate total benefits spend of $1 billion in its captive programs.
"Businesses with 50 to 500 employees face skyrocketing healthcare costs and most don't know why or what to do about it. Our proven solutions help companies escape the cycle of inexplicable premium hikes and save real dollars while providing benefits tailored to their employees," said Andrew Cavenagh, Founder and CEO of Pareto. "We are excited to partner with Great Hill given their track record with high growth companies in the self-insured employer space and look forward to scaling our solutions to help many more employers across the country in the coming years."
In addition to Pareto Health, Great Hill Partners' portfolio of healthcare companies includes Vatica Health, Quantum Health, PartsSource, RxBenefits, and Qualifacts. Prior healthcare investments include PlanSource, bSwift, Passport Health Communications, and SterilMed.
"Our investments in the self-insured ecosystem have demonstrated the value that self-insurance provides to employers while highlighting the obstacles that small and medium-sized businesses encounter if they try self-funding on their own. Pareto solves these challenges while providing employers with best-in-class cost containment solutions to help the companies take control of their healthcare costs," said Rafael Cofiño, Partner at Great Hill. "We are thrilled to partner with the market leader in employee benefit group captives and support the Pareto team as they help more employers rein in their healthcare spend."
As part of the transaction, Mark Taber and Rafael Cofiño of Great Hill Partners will join Andrew Cavenagh and Andrew Clayton (President of Pareto Health) on the Pareto Health Board of Directors.
TripleTree, LLC served as exclusive financial advisor to Pareto Health. Goodwin Procter LLP served as legal advisor to Great Hill Partners, and Sullivan & Cromwell LLP and Kurtz & Revness, PC served as legal advisors to Pareto Health.
About Pareto Health
Pareto Health forms and manages employee benefit group captives that mitigate the year-to-year volatility and risk inherent in self-insurance, thereby allowing employers to focus on reducing healthcare costs. Members of Pareto Health captives gain access to an exclusive suite of risk management and cost containment initiatives to help them provide affordable and effective healthcare to their employees. For more information, visit www.paretocaptive.com.
About Great Hill Partners
Great Hill Partners is a Boston-based private equity firm that has raised $7.7 billion in commitments since inception to finance the expansion, recapitalization, or acquisition of growth companies in a wide range of sectors in business-to-business and business-to-consumer industries including software, financial technology, healthcare, insurance, digital media, eCommerce, and internet infrastructure. Great Hill targets investments of $40 million to $250 million. For more information, visit www.greathillpartners.com.
