We have set up a webinar for you to meet the founder of Clear Health as well as ask any additional questions that you might have about the opportunity.
You can hear from him directly Monday, August 14th at 1pm EST.
Topic: Clear Health <> Republic Deal Room Webinar
In less than 12 months of operation, the founders have bootstrapped the company to a profitable $2.7M ARR (22% MoM Growth) → $4.5M EO23 → $15M EO24, with an 65:1 LTV:CAC ratio. To date, they have supported 6,500 patients and plan to use these funds to bring their dermatologists in house and invest more heavily in paid marketing (currently only spending $5k / mo on paid acquisition) which they expect will yield stronger margins + significant revenue growth. Today 75% of their patients are covered by insurance and 25% are uninsured customers representing 50% of revenue.
Deal Highlights:
85M Americans / $47B+ Market Opportunity: 85M+ Americans in the US suffer from chronic skin conditions including acne, eczema, psoriasis, and more. The total addressable market for chronic skin diseases is $47B+ and is expected to grow at a 7.4% CAGR through 2027, driven by societal and environmental factors such as the increasing prevalence of chronic skin diseases, rising demand for effective treatments, and the growing awareness of skin health. Clear Health is starting with the $1.2B Accutane market that is used by over 500k Americans every year.
A Convoluted Care System: The current in-person care model for chronic skin disease is inaccessible, impersonal, complex to manage, and doesn’t take behavioral health into account. For patients, this leads to delays in treatment, poor adherence, and expensive processes - ultimately leading to sub-par results. The emotional impact that the current in-person care model has on acne patients has contributed to 70%+ patients suffering from depression, even though mental illness is typically not addressed as part of the care. For healthcare personnel (HCPs), the current in-person care model leads to bloated admin costs, burnout, and poor quality of care - the focus becomes paperwork and coordination instead of patients, leading to up to 6x more communication, longer registration time, and higher admin costs. This is where Clear Health comes in.
Innovative Solution: Clear Health combines previously siloed systems into a single intuitive workflow to reduce hours of admin work down to minutes. Clear Health is bridging the skin health journey from the dermatologist office to the pharmacy + retail beauty store through a digital-first approach, driving convenience, affordability, and superior results for customers. The patient interfaces with a seamless treatment portal that manages all the complexity from labs to required contraception, to post-treatment therapy. With Clear Health, patients can access everything from doctor-led telemedicine, specialty pharmacy prescriptions, bundled supporting items and skincare items, mental health services, and more from the comfort of their homes. For HCPs, all work functions can be accessed through one easy system, including telemedicine, custom electronic medical records specifically designed for skin disease treatment, insurance coverage pre-authorizations, HIPAA Efax, and digital reminders. Their initial beachhead market is chronic acne (Accutane) and then plan to move to Eczema (Dupixent), Psoriasis (Humira), and Rosacea (low dose accutane).
Bootstrapping to ~$3M ARR: In less than 12 months of operation, the founders have bootstrapped the company to a profitable $2.7M ARR (22% MoM Growth) → $5M EO23 → $15M EO24 → $30M EO25, with a standout 65:1 LTV:CAC ratio. To date, they have supported 6,500 patients (3k monthly right now) and plan to use these funds to bring their dermatologists in house and invest more heavily in paid marketing (currently only spending $5k / mo on paid acquisition) which they expect will yield stronger margins + significant revenue growth. Today 75% of their patients are covered by insurance and 25% are uninsured customers representing 50% of revenue.
Founding Team: The founding team has an impressive background across investing and healthcare services, as well as an understanding of the impact that chronic skin conditions can have on patients. The company is led by Michael Chang (CEO), who previously worked in consumer private equity at Roark Capital Group, and has experienced chronic acne first-hand and the impact that Accutane can have on the condition. Michael is joined by Wen-Chen Chiu (COO), who spent 10+ years at Bridgewater Associates, the largest hedge fund in the world, and is also a licensed esthetician. Dr. Aaron Farberg, MD/FAAD (Medical Director), is a Mount Sinai-trained Mohs surgeon and dermatologist with extensive collaborative care experience in major hospital settings. The founding team is joined by an advisory board, Danielle V Samuels, PhD, whose expertise follows the connection between mental health and acne, and Johann Verheem, former Head of Product at Pro-Activ.
Reasonable $16M Valuation: In the context of a quickly growing $2.7 ARR → $5M EO23, we are investing on what we deem a reasonable $16.7M valuation, which equates to 3.3x revs EO23. The founders plan to raise a $10M+ Series A in 2024, so this is an opportunity to get in before then.
Problem
The current in-person care model for chronic skin disease is inaccessible, complex to manage, and doesn’t take behavioral health into account. For patients, this leads to delays in treatment, poor adherence, and expensive processes - ultimately leading to sub-par results. The emotional impact that the current in-person care model has on acne patients has contributed to 70%+ patients suffering from depression, even though mental illness is typically not addressed as part of the care. For healthcare personnel (HCPs), the current in-person care model leads to bloated admin costs, burnout, and poor quality of care - the focus becomes paperwork and coordination instead of patients, leading to up to 6x more communication, longer registration time, and higher admin costs.
Solution
Clear Health is a quickly growing digital clinic that treats the physical + mental side of complex chronic skin disease affecting 85M+ Americans.
Clear Health is bridging the skin health journey from the dermatologist office to the pharmacy + retail beauty store through a digital-first approach, driving convenience, affordability, and superior results for customers. The patient interfaces with a seamless treatment portal that manages all the complexity from labs to contraception, to post-treatment therapy. With Clear Health, patients can access everything from doctor-led telemedicine, specialty pharmacy prescriptions, bundled supporting items and skincare items, mental health services, and more from the comfort of their homes. For HCPs, all work functions can be accessed through one easy system, including telemedicine, custom electronic medical records specifically designed for skin disease treatment, insurance coverage pre-authorizations, HIPAA Efax, and digital reminders. Clear Health combines previously siloed systems into a single intuitive workflow to reduce hours of admin work down to minutes.
Traction
In less than 12 months of operation, the founders have bootstrapped the company to a profitable $2.7M ARR (22% MoM Growth) → $4.5M EO23 → $15M EO24, with an incredible 65:1 LTV:CAC ratio.
3k monthly patients today → 4-5k EO23 → 10k EO24
The company has grown consistently since launch with average 22% MoM growth
Average 65x+ LTV/CAC
~$8 CAC / $110 AOV / $1K - $5K total treatment
40% blended gross margins → 75% at maturity
25% of customers are uninsured (representing 50% of revs)
Cuts the typical resolution process down for Accutane related skin conditions by 70%+
The company is solely focusing on the $1.2B Accutane market, before moving into other acne solutions, as well as Rosacea, Eczema, and Psoriasis solutions.
Business model
Clear Health charges a simple telemedicine evaluation fee of $59 for an initial visit or follow-up. On an initial visit, the company pays their physicians $40, for a gross margin of 32%. Follow-up visits pay the physician $20, for a gross margin of 66%.
Market
85M+ Americans in the US suffer from chronic skin conditions including acne, eczema, psoriasis, and more. This is a problem space that I relate to personally as I suffer from psoriasis personally. The total addressable market for chronic skin diseases is $47B+ and is expected to grow at a 7.4% CAGR through 2027, driven by societal and environmental factors such as the increasing prevalence of chronic skin diseases, rising demand for effective treatments, and the growing awareness of skin health. Clear Health is starting with the $1.2B Accutane market that is used by over 500k Americans every year.
Competition
Hims & Hers provides prescription and over-the-counter products for men and women, including skin care products.
Curology provides personalized skin care prescriptions to patients.
DermatologistOnCall connects patients with board-certified dermatologists for video appointments and treatment of skin conditions.
Mandel specializes in dermatology, offering video appointments, prescription refills, and skin consultations.
- Roman provides men with convenient and affordable access to healthcare services, including erectile dysfunction, hair loss, and skin care.
Funding
The company plans on using the funds from this round to supercharge growth via new product lines and key hires before expanding into adjacent skin diseases, Rosacea, Eczema, and Psoriasis.
This is a $1M Seed on a $16.7M post-money SAFE.
Funds from this round will be used to scale and accomplish the following milestones ahead of their much larger Series A:
Key hires
In-house physicians
Full-scale collaborative care implementation
Micro-dose Accutane ($5B SOM)
Cetaphil/Aquapho competitive skincare line
Achieve $20M+ ARR in 18 months
Founders
The founding team has an impressive track record of investing and medical services, along with personal experiences with skin diseases and solutions.
Michael Chang (CEO) - Previously worked in consumer private equity at Roark Capital Group, and has experienced chronic acne first-hand and the impact that Accutane can have on the condition.
Wen-Chen Chiu (COO) Spent 10+ years at Bridgewater Associates, the largest hedge fund in the world, and is also a licensed esthetician.
Dr. Aaron Farberg, MD/FAAD (Medical Director), is a Mount Sinai-trained Mohs surgeon and dermatologist with extensive collaborative care experience in major hospital settings.
The founding team is joined by an advisory board, Danielle V Samuels, PhD, whose expertise follows the connection between mental health and acne, and Johann Verheem, former Head of Product at Pro-Activ.
Disclaimer
In addition to the carried interest Republic Deal Room Advisor LLC is entitled to for the syndicated investments it organizes, certain principals of Republic Deal Room Advisor LLC may have a personal interests in these investments, as disclosed below. When making an investment decision please review any applicable disclosures as they represent pre-existing financial interests held by those principals of Republic Deal Room Advisor LLC.
We do not represent that the information contained herein is accurate or complete, and it should not be relied upon as such. Opinions expressed herein are subject to change without notice. Certain information contained herein (including any forward-looking statements and economic and market information) has been obtained from and/or prepared by the Company or other third-party sources and in certain cases has not been updated through the date hereof. While such sources are believed to be reliable, Republic Deal Room Advisor LLC does not assume any responsibility for the accuracy or completeness of such information. Republic Deal Room Advisor LLC does not undertake any obligation to update the information contained herein as of any future date.
