Olive AI
Set out to automate the hospital back office: from USD 4 billion to a piecemeal sale
- Founded
- 2012
- Closed
- 2023
- Lifespan
- 11 years
- Total funding
- $850 million
- Peak valuation
- $4 billion
- Country
- United States
- City
- Columbus
- Sector
- Health
- Founders
- Sean Lane
- Investors
- Vista Equity Partners, Tiger Global, General Catalyst, Drive Capital, Base10 Partners
- At its peak
- USD 4 billion valuation in July 2021
- Cause of closure
- Business model failed
What did it do?
Olive sold software that automated administrative work in hospitals, such as revenue cycle, insurance checks and prior authorisation. It was founded in 2012 in Columbus, Ohio, and led by Sean Lane. By the company's account its products were used in more than 900 hospitals across 40 states. It raised more than USD 850 million over nine rounds.
Why did it shut down?
A USD 400 million round led by Vista Equity Partners in July 2021 took the valuation to USD 4 billion, and headcount reached about 1,000 by August 2021. New ventures and acquisitions scattered its focus. In April 2022 Axios reported that the company had delivered only a fraction of the savings it promised. Hiring was frozen in May 2022, and in July 2022 about 450 people, a third of the staff, were cut. Business units were sold one by one during 2023. On 31 October 2023 the remaining units went to Waystar and Humata Health and the company closed, without filing for bankruptcy.
The story
Olive began in 2012 in Columbus as a company founded by Sean Lane. In later years its focus moved to automating hospital back-office work. Insurance checks, prior authorisations and billing were to be handed over to software.
Growth sped up in the pandemic years. In July 2021 it raised USD 400 million led by Vista, taking the valuation to USD 4 billion. Headcount neared 1,000, and acquisitions and new ventures followed.
2022 reversed all of that. In April Axios published a report that cast doubt on the promised savings. Hiring was frozen in May, and about 450 people were laid off in July. With no new money coming, business units went up for sale.
In 2023 Availity and BurstIQ took some of the businesses. On 31 October the remaining units passed to Waystar and Humata Health and the last staff left. The company closed without a bankruptcy filing, and of more than USD 850 million invested nothing was left for investors or employee shareholders.
Lessons for founders
- Every line you open while money is plentiful is next year's fixed cost: once headcount reached 1,000 in 2021, no single line could carry the way back.
- If you sell a product that promises savings, measure the number in the customer's hands: as the gap between promise and delivery widens, customers leave faster.
- Plan the cutback before new funding fails to come: freezing hiring in May 2022 and cutting a third in July shows the move came late. Shrink your cost base before the cash runs out.
Sources
- Olive Shutters Business After Sale to Waystar and Humata Health (HIT Consultant, 2023-10-31)
- Shaken and stirred (Rock Health, 2023-11-06)
- Olive AI winds down (October 2023 archive) (Telecare Aware, 2023-10-31)
- Olivedämmerung (Thomas W. Dinsmore)
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