Candid Health raises $120 million to take on America’s $280 billion medical billing mess

Candid Health cofounder Doug Proctor spun his laptop around to show me a herd of wild horses grazing behind him in upstate New York during our first Zoom call. It was a fitting flex for two guys who built one of healthcare’s hottest infrastructure companies while deliberately staying out of the Bay Area bubble, dressed, as cofounder and CEO Nick Perry put it, in “glasses and black T-shirts.”

The duo just raised a $120 million Series D, Fortune learned exclusively, led by Sixth Street Growth. Existing backers Oak HC/FT, 8VC and Y Combinator also piled back in. The round triples Candid’s 2025 valuation, and comes as annual recurring revenue grew 190% year over year. It lands roughly 18 months after Candid’s $52.5 million Series C, which itself followed a $29 million Series B just six months earlier, bringing Candid’s total raised past $219 million.

Candid runs the billing operation for doctors so they don’t have to. Every insurer has its own rulebook for how a claim must be filled out, and most providers still rely on billing software built in the early 2000s to navigate over 1,000 different insurers’ rules. When something’s off (like a misplaced comma or wrong code), the claim gets kicked back, and either the patient or the doctor eats the cost. Candid replaces that process with AI agents and a rules engine trained on the submission quirks of more than 1,000 payers, so claims go out correctly the first time.

Perry and Proctor met at Palantir, where Perry led healthcare work and Proctor built defense and intelligence systems. Both describe revenue cycle management (RCM), the process by which healthcare providers get paid, as fundamentally the same data integration problem Palantir was built to solve, just applied to medical billing.

Perry says growth has been almost entirely organic. “We’ve grown by word of mouth,” he told me, noting Candid spent virtually nothing on marketing until now. According to him, the business has grown 6x, then 5x, then 2.5x on a run rate basis in recent years, with net revenue retention close to 200%, meaning existing customers barely churn and simply grow their spend as their own claim volume scales.

Medical billing represents roughly 1% of U.S. GDP, and per federal data, U.S. healthcare spending overall runs about 18% of GDP. The country spends $280 billion annually on healthcare billing administration nationwide, a figure independently cited across industry coverage of the space. He calls the problem “worthy and wicked”: worthy because it touches nearly every American who’s ever gotten an incorrect medical bill, and wicked because fixing it requires untangling decades of bad incentives baked into how providers get paid.

Sixth Street’s Alex Katz says his firm interviewed nearly 40 Candid customers before writing the check, and the feedback was “consistently off the charts.” Customer proof points back that up: Talkiatry cut manual billing work by 40% and now collects 98.3% of what payers owe, while Nourish grew without adding billing staff and automatically processes 96.7% of its claims.

The real threat to legacy incumbents isn’t just software, it’s economics. Proctor frames Candid’s mission as shrinking the billing industry itself, stripping out the manual, offshore labor that props up older vendors and keeping those savings for the business instead. Perry, for his part, says he’s not fixated on an eventual IPO. “Stripe is a very large private company, and they seem great,” he said.

See you tomorrow,

Lily Mae Lazarus X: @LilyMaeLazarus Email: [email protected] Submit a deal for the Term Sheet newsletter here.

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