• Adonis was founded last year by two brothers to automate how providers submit insurance claims.
• Adonis just raised a $17.3 million Series A, six months after its seed round.
• The startup used this pitch deck to get backing from top healthcare VC firm General Catalyst.

Brothers Aman and Akash Magoon started their first company together in 2019. The startup, Nayya, helped simplify how employees choose their health insurance benefits.

Nayya got backing from firms like SVB Capital and Iconiq Growth, and Akash Magoon made it onto Forbes' 30 under 30 list in 2022. Along the way, though, the brothers learned about the challenges that health insurers face in processing the medical bills submitted to them by healthcare providers, a process known as claims adjudication.

Last year, Aman and Akash Magoon started a new company tackling the other side of the equation: helping providers submit those claims to insurers in the first place, and making sure they get paid for it.

It's a big problem in healthcare, as improperly filing claims can lead to providers losing out on billions of dollars every year. According to 2022 CAQH Index estimates, the healthcare industry could save nearly $25 billion per year by switching to fully electronic revenue cycle management. 

The Magoons' new startup, Adonis, raised $5.6 million in seed funding in October to solve that problem with tech.

Just under seven months later, Adonis has raised $17.3 million more in Series A funding, led by top healthcare VC firm General Catalyst. Previous investors Bling Capital, Max Ventures, and Homebrew also joined the round.

General Catalyst managing director Holly Maloney told Insider that the firm has been keeping tabs on Adonis since its creation, and on the topic of revenue cycle management for even longer.

"Given all the work we do with health systems, we know how complicated and poorly organized these systems are, despite all the money they're collecting," she said.

Increasing financial pressures

The situation has become more dire in the face of healthcare's ongoing labor crisis and macroeconomic factors that are putting pressure on hospitals' bottom lines.

Plus, consolidation among hospitals and health systems has in many cases made the process of managing revenue much more complicated, said Akash Magoon, who serves as Adonis's CEO.

For example, when private equity firms acquire multiple practices, those practices have their own systems for scheduling and medical records in place already, and it can be difficult to reconcile those disparate systems with one another, he said.

The idea behind Adonis' tech is to integrate with electronic health records systems to automate how claims get assembled and submitted to insurers. That would simplify the process for providers — and aim to help them secure the money they might've lost out on otherwise.

Adonis provided Insider with the 19-slide presentation it used to land its Series A in May. The startup removed details about Adonis's revenue and growth rates from the deck before sharing it with Insider.

Check out the pitch deck Adonis used to get $17.3 million led by General Catalyst.

Adonis provides tech to automate the process of how healthcare providers get paid for their services by insurers.

Revenue cycle management, Akash Magoon said, includes everything from when a provider checks a patient's insurance benefits, to attaching medical codes to the patient visit in the electronic health record, to submitting a claim to that patient's insurance company for payment.

Around 15% of those claims are ultimately denied, Aman Magoon said — and the costs associated with those denials, as well as with trying to prevent them, can rack up fast.

The finding that on average 15% of claims are denied comes from Adonis's data science team and represents analysis of claims data from the startup's clients and prospective customers.

The figures on this slide have been pulled from a 2018 JAMA study on healthcare billing.

Those denials happen in part because of how complicated medical codes are, but also because the process of submitting claims is largely manual, which can introduce human errors, Akash Magoon said.

Providers often hire a third-party company to come in and handle their medical billing, Aman Magoon said, but those processes can be expensive since they're highly manual.

Adonis' founders said that these third-party companies typically charge between 6-8% of the hospital's revenue. Adonis aims to charge half of that, or roughly 3-4% of the hospital's revenue.

Akash Magoon said Adonis hasn't touched most of the money it raised through its 2022 seed round. Now, the company plans to invest more heavily in its commercial and engineering teams, he said.

Adonis currently has 22 full-time employees, with about a dozen more employed on a contract basis, the founders said. About half of those employees are engineers, and the other half are a mix of product, sales, and marketing staff.

Adonis' platform is currently used by about 3% of providers in the US, according to the founders. Adonis has been able to land those clients fairly quickly, they said, in part because many of these hospitals and other organizations are already looking for a solution to their revenue problem.

"The CFOs and COOs of these health systems already know, before we meet them, that their revenue "check engine light" is on," Akash Magoon said. "But sometimes quantifying it is a challenge. It's pretty crucial to our sales cycle that we can come in and help an organization quantify the money that's being left on the table."

Adonis' tech operates largely in the background, integrating with electronic health records systems and automating tasks for providers from verifying a patient's insurance data to submitting claims to their insurers.

Automating this entire process helps Adonis charge less money than existing revenue cycle management solutions, Aman Magoon said.

Providers also get access to Adonis' revenue intelligence platform, which provides a "cockpit view" of the flow of money in their accounts, Akash Magoon said.

Adonis has four different types of clients, each with their own needs — physician group practices, hospitals and health systems, digital health companies, and practice management companies.

Maloney said that two of General Catalyst's portfolio companies had already been working with Adonis before the firm decided to invest.

The figures on these slides are the averages seen by Adonis's clients so far, as analyzed by the Adonis data science team.

Adonis' health system customers include ApolloMD and Baptist Health of South Florida, according to the founders.

Adonis estimates it could capture up to $52.8 billion in revenue, based on its pricing and the pool of potential customers.

The Federation of State Medical Boards found in its 2020 census that there were just under 1.02 million licensed physicians in the US. This does not included other medical professionals who are not licensed as doctors, including nurses and physician assistants.

The National Center for Health Statistics estimated that 1.036 billion physician office visits were conducted in 2019.

Akash Magoon said Adonis plans to use the Series A funds to invest more in research and development around integrations with more systems, which will help the company expand into different specialties.

"Profitability is imminent for us," Akash Magoon said.

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