Daffodil Health, a San Francisco-based company focused on automating health plan administration and claims processing, has raised $16.3 million in Series A funding, bringing its total capital raised to $20.9 million. The round was led by Flare Capital Partners, with participation from LRVHealth and existing investor Maverick Ventures.
Individual investors also joined the financing, including Scott Mingee, former CEO of Equian, which was acquired by Optum, and Jim Lacy, former president and COO of Collective Medical, which was acquired by PointClickCare.
Daffodil Health applies artificial intelligence and large language models (LLMs) to healthcare pricing and administrative workflows. The company focuses on reducing administrative costs for payers by automating out-of-network (OON) pricing and payment integrity processes. Its platform supports the development of employer- and code-specific pricing rules, configuration of employer and provider reports, and generation of pricing rationales.
According to Navin Nagiah, cofounder and CEO of Daffodil, rising employer healthcare costs are closely tied to payer-side administrative inefficiencies. “For most employers, healthcare premiums are already the second or third largest line item on the P&L, and they continue to rise faster than wages or revenue. A significant driver of that cost sits upstream with payers, in the form of low-value out-of-network repricing and payment integrity middlemen whose incentives are fundamentally misaligned,” Nagiah said.
He added, “Daffodil automates OON and payment integrity end-to-end with an AI-first platform, giving innovative payers control over pricing and transparency - and allowing savings to flow back to employers, where they belong.”
The company plans to use the Series A proceeds to further enhance its product capabilities and expand relationships with health plans and third-party administrators. The funding is expected to support continued platform development and commercial growth.
Daffodil operates within a competitive landscape that includes claims automation providers such as Change Healthcare, owned by UnitedHealth Group, and Experian Health. In 2024, the company raised $4.6 million in seed funding in a round led by Maverick Ventures, with participation from Epic Ventures.
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