H1 Secures $40M from CVS, Highlighting Investment Opportunities for SaaS Startups

Startups from the pre-AI era are finding it challenging to garner investor interest in the current landscape.

Ariel Katz, co-founder and CEO of the nine-year-old healthcare data platform H1, argues that not all SaaS companies conform to the same standards.

“If you’re a workflow SaaS company, there are aspects you can automate,” he shared in a TechCrunch interview. Katz believes that a data-driven company is not something AI can simply imitate.

This perspective may have a self-serving edge—after all, H1’s main business involves providing extensive information about physicians to pharmaceutical companies, hospitals, and health insurers—yet it doesn’t entirely negate his viewpoint.

“I’m not worried about Claude ever replicating our work,” Katz remarked, referring to Anthropic’s renowned AI model. He posits that the data H1 collects on doctors globally could be so invaluable to AI developers that they would likely become customers instead of competitors.

CVS Health Ventures, the corporate venture capital arm of the CVS/Aetna healthcare giant, appears to align with this perspective, believing that H1 is not in danger of falling victim to the “SaaSocalypse.” Recently, the investor led a $40 million funding round for H1.

Katz mentioned that H1 was not actively seeking funding. The startup achieved cash flow and EBITDA profitability last year and expects over 40% growth this year. However, he acknowledged that the opportunity to partner with one of the largest healthcare providers in the world was too enticing to pass up.

Despite strong financial results, companies like H1 are not generating much enthusiasm among traditional VCs, who are primarily focused on supporting AI startups with soaring valuations.

H1 was last valued at $750 million during its $100 million funding round led by Altimeter Capital, coinciding with the tech bubble that peaked in November 2021.

Much like other companies that secured funding just before valuation declines in 2022, H1 has shifted its focus to profitability and has also expanded through the acquisition of smaller competitors and complementary businesses.