Candid Health Raises $120 Million to Automate U.S. Medical Billing With AI

Candid Health, an AI-driven healthcare billing infrastructure startup, has secured $120 million in a Series D funding round led by Sixth Street Growth. The investment, which triples the company’s valuation, comes amid a period of rapid growth for the firm, which has seen its annual recurring revenue surge by 190% year-over-year.

Existing investors, including Oak HC/FT, 8VC, and Y Combinator, also participated in the round. The Series D brings Candid’s total funding to more than $219 million, following a $52.5 million Series C raised roughly 18 months ago and a $29 million Series B six months prior to that.

Candid Health focuses on automating revenue cycle management (RCM), the complex administrative process healthcare providers use to get paid by insurers. According to data from the Centers for Medicare & Medicaid Services, overall healthcare spending in the United States accounts for roughly 17% to 18% of the nation’s gross domestic product (GDP). Within this ecosystem, administrative billing expenses alone consume an estimated $280 billion annually, representing about 1% of the entire U.S. GDP.

Traditionally, medical billing has relied on legacy software platforms built in the early 2000s. Because each of the more than 1,000 insurance providers in the U.S. maintains its own complex, frequently changing rules for claim submissions, minor clerical errors can result in rejected claims. This leaves healthcare providers or patients to absorb the costs. Candid addresses this friction by deploying AI agents and a proprietary rules engine trained on the submission requirements of over 1,000 payers, ensuring claims are processed correctly on the first attempt.

The company was founded by Nick Perry, who serves as CEO, and Doug Proctor. The founders previously worked at Palantir Technologies, where Perry led healthcare initiatives and Proctor engineered defense and intelligence systems. They view the systemic inefficiencies of medical billing as a massive data integration challenge—similar to the complex data problems Palantir was designed to solve.

Candid’s growth has been largely organic, driven by word-of-mouth referrals with virtually no marketing spend. The company has reported net revenue retention close to 200%, indicating that existing clients consistently expand their usage as their own claim volumes scale. On a run-rate basis, the company’s business has grown by multiples of 6x, 5x, and 2.5x in recent consecutive years.

Before finalizing the investment, Sixth Street Growth conducted extensive due diligence, interviewing nearly 40 of Candid’s active clients. Customer data highlights the platform’s efficiency gains: Talkiatry, a mental health provider, reduced its manual billing workload by 40% while achieving a 98.3% collection rate from insurers. Similarly, the digital nutrition platform Nourish scaled its operations without expanding its billing staff, automatically processing 96.7% of its claims.

By automating these processes, Candid aims to restructure the economics of medical billing. The startup’s long-term strategy focuses on eliminating the manual, offshore labor pools that traditional billing vendors rely on, allowing healthcare providers to retain a larger share of their revenues. Addressing future plans, Perry indicated that the company is not rushed to pursue an initial public offering, drawing a comparison to major private tech firms like Stripe that have successfully scaled while remaining private.