eHealthInsurance.com Snares $42 Million in Second Round Financing

Illustrating that there is growing acceptance—at least from investors—that the Internet is an effective medium to handle health insurance transactions, a major online player has secured millions in additional venture capital to expand its business and marketing efforts. eHealthInsurance.com, a one-year-old start-up that enables corporations and individuals to purchase health insurance online, closed its second round financing totaling $42 million, the company announced. New investors include Goldman Sachs, Dell Computer, and The Sprout Group, the venture capital affiliate of Donaldson, Lufkin & Jenrette. First round financiers included Kleiner Perkins Caulfield & Byers and Weiss, Peck & Greer Venture Partners.

eHealthInsurance.com said it will use the new financing to expand its selection of health insurance options to address a broader category of individual consumers, small businesses, and seniors. The funding will be used to build brand awareness through new marketing and advertising campaigns, and to further expand the company's operations and staffing.

"Receiving funding from such a respected group of firms reinforces our leadership position in the online health insurance market," said Vip Patel, founder and chairman of eHealthInsurance.com.

Other companies that offer online health insurance purchasing are HealthAxis.com, InsWeb Corp. and Intuit Insurance Services. But eHealthInsurance.com executives believe they have a leadership position.

"Since launching our service one year ago, eHealthInsurance.com has made rapid strides including a national marketing agreement with the Blue Cross Blue Shield Association and the ability to provide instant pre-approval to qualified applicants. With this round of funding, we intend to intensify our current successful programs and kick off aggressive marketing and strategic alliance initiatives."

Those investing in the enterprise are confident in its business model. "Our research in the eHealth market has confirmed eHealthInsurance.com's position as one of the category leaders in both the business to consumer and the business to business segments of online health insurance," said Randall Blumenthal, Managing Director, Goldman Sachs.

The eHealthInsurance management team and board include former or current executives of Healtheon, Pacificare, Foundation Health, Aetna, United Healthcare, Lincoln National, MetLife and other companies in the field.

Edited by Christine Woolsey