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Olive AI

Olive raised about $852 million and spent it on software robots that logged in to hospitals' own systems and on a spread of acquisitions, and could not show the savings it promised, while Waystar sold one paid platform built on payer connections it owned and bought Olive's clearinghouse when Olive shut down.

Why Olive AI lost to Waystar

  1. Drop-In Adoption
  2. M&A Strategy

Versus Waystar: Waystar built one paid platform on the claims clearinghouse and payer connections it owned, and sold more of it to the same clients OLX-14 OLX-3 OLX-13. Olive raised about $852 million, ran software robots inside hospitals' existing systems, bought separate capabilities, could not show the savings it promised, and sold its clearinghouse to Waystar when it shut down OLX-8 OLX-16 OLX-18 OL4.

Arena: Market Conditions Before Olive AI

US hospitals and health systems · 2020 · United States

Disconnected workflowsSpecialist requirements

In 2020 a US hospital's revenue-cycle staff worked between clinical systems and many insurers. Before a scheduled procedure they had to learn whether the payer required prior authorization, look up that payer's rules, and pull supporting documentation from the electronic health record; prior authorizations were the most costly and time-consuming provider transactions of 2019 and among the top reasons care was delayed OL1. After care, claims passed through a clearinghouse to payers, and an estimated one in seven US claims was rejected, forcing rework and delaying payment OL2. Each step lived in a different system with its own payer-specific rules, so a gap at one point held up both the patient and the hospital's cash OL1 OL2.

How each step happened

Step 1 of 4 · 2012–20

Robots logged in to hospitals' own systems

Waystar started from the claims clearinghouse, the link that carries a provider's bills to every insurer. Navicure and ZirMed, each rated Best in KLAS for claims clearinghouse and claims management since 2010, merged in November 2017 and in February 2018 took the name Waystar, serving 21,000 healthcare organizations including 550 hospitals and health systems OLX-14 OLX-4. Chief executive Matt Hawkins described an end-to-end cloud platform for providers in every care setting, partnered with the leading EHR and practice-management vendors OLX-14 OLX-6. By 2023 that single-instance platform ran from eligibility checks and prior authorization approvals through collections and remittances, on payer connections Waystar had built over two decades OLX-3 OLX-13. Its integrations with EHR and practice-management vendors made each added product faster to implement OLX-13.

Olive came at the same hospitals from inside their own software. Sean Lane founded the company in Columbus in 2012 as CrossChx, and his team first deployed Olive in 2017 OLX-1 OLX-15 OLX-17. Olive was sold as a "digital employee": it held its own usernames and passwords for the systems a hospital already ran, logged in and worked through eligibility checks, claims and prior authorizations OLX-16 OLX-15. In December 2020 it bought Verata Health, which connected to major EHR systems, retrieved payer rules and helped submit clinical documentation; Verata's chief executive, Jeremy Friese, described solving prior authorization on "both ends of the fax machine" OL1. The purchase added more than 60 employees, taking Olive to about 500 staff OL1. Each robot worked inside software the hospital already ran, ahead of a claim that Waystar's clearinghouse already carried to payers OLX-16 OLX-3.

Rivals Waystar ran its own payer connections and had bought Digitize.AI, which applied AI to prior authorization, in 2019, a year before Olive bought Verata OLX-13 OLX-7.

Drop-In AdoptionEnd-to-End Workflow

Step 2 of 4 · 2020–22

Raised $852 million and spread across workflows

Waystar's acquisitions went into the one platform and were sold back to the clients it already served. In 2019 it bought Connance, PARO and Digitize.AI, and in 2020 eSolutions, which added Medicare-specific tools; by 2023 it had completed and integrated seven acquisitions since 2018 OLX-7 OLX-13 OLX-3. Clients paying Waystar more than $100,000 a year rose from 733 in the twelve months to March 2021 to 1,023 in the twelve months to June 2023, and net revenue retention, revenue from existing clients against a year earlier, was 109.5% in 2022 OLX-3. Hawkins said Waystar could roughly double its business without a new product or client, by getting existing clients onto the whole platform OLX-7.

Olive used venture money to widen in several directions at once. It raised $106 million in September 2020, $225.5 million at a $1.5 billion valuation in December 2020 and $400 million at a $4 billion valuation in July 2021, about $852 million in all by March 2023 OLX-8. In April 2021 it bought Empiric Health, surgical analytics spun out of Intermountain, to enter the operating room OL3. In August 2021 it bought the clearinghouse Healthcare IP, started a venture studio and kept building tools for payers; executives said its AI ran in more than 900 hospitals OL2 OLX-8 OLX-17. By April 2022 it employed 1,400 people OLX-2. In a July 2022 email to staff, Lane said fast growth and a lack of focus had strained product and engineering resources and slowed key projects OLX-11. Olive narrowed to provider revenue cycle and payer utilization management, which produced 80% of its revenue OLX-12.

Rivals Waystar consolidated each acquisition into its platform and won 82% of competitive decisions over the 30 months before its 2023 S-1 OLX-13 OLX-3.

M&A StrategyMulti-Product

Step 3 of 4 · 2021–22

Promised savings it could not show

Waystar charged for every part of that platform and was paid as claims moved. Its contracts combine a subscription fee with a volume-based component, usually for two or three years with automatic one-year renewals, so over 99% of revenue is recurring or tied to predictable volumes OLX-13 OLX-3. In 2022 it reported $704.9 million of revenue and $295.5 million of adjusted EBITDA OLX-3. Its fees grew with each product a client added and each claim it processed OLX-13.

Olive sold on savings it could not show. It claimed its technology would cut customers' administrative spending fivefold OLX-19. In April 2022 an Axios investigation, based on interviews with 16 people including current and former employees, found Olive relied on rough estimates, tracked savings only when a client asked, overstated its capabilities and in many cases produced a fraction of the savings it pledged OLX-18 OLX-19. A former employee said some hospitals avoided Olive because they knew people it had disappointed OLX-2. In July 2022 Olive laid off about 450 people, about a third of its staff OLX-11 OLX-12.

Rivals Waystar kept its subscription and volume fees and grew revenue from $578.6 million in 2021 to $704.9 million in 2022 OLX-3.

Transparent PricingSubscription Pricing

Step 4 of 4 · 2022–23

Two health systems left, and the clearinghouse went to Waystar

Waystar's clients faced real work to leave. Its 2024 10-K cites the significant time and resources needed to switch healthcare payments providers, and integrations with over 200 channel partners that make it harder to replace OLX-13. When clients did switch vendors or buy something new between 2022 and 2024, Waystar won 83% of those decisions, and net revenue retention reached 110.1% in 2024 OLX-13. Revenue rose to $943.5 million that year, up 19% OLX-5.

Olive's clients had less holding them. Two health systems gave notice in August and September 2022 that they were ending their contracts, three top executives left that September, and Olive sold its population health and 340B lines OLX-9. It cut 215 more jobs in February 2023, about 35% of the roughly 630 who remained, sold utilization management to Availity in April and business intelligence to BurstIQ in June OLX-10 OLX-19 OLX-8. On October 31, 2023 Olive announced its shutdown and the sale of the units that made up "the heart of Olive's business": its clearinghouse and patient access businesses went to Waystar, and its prior authorization unit went to Humata Health OL4 OLX-17. Waystar completed the clearinghouse and patient-access purchases in November as tuck-in acquisitions OLX-7.

Rivals Waystar bought Olive's clearinghouse and patient-access assets and listed on Nasdaq in June 2024 at an enterprise value of about $5 billion OLX-7.

Key dates

  1. 2012Sean Lane founds CrossChx, later Olive, in Columbus OLX-1 OLX-15
  2. 2017Lane's team first deploys Olive OLX-17
  3. 2017-11Navicure and ZirMed merge OLX-14
  4. 2018-02The combined clearinghouse is named Waystar OLX-4
  5. 2019Waystar buys Digitize.AI for prior authorization OLX-7
  6. 2020-12Olive raises $225.5M at $1.5B and buys Verata Health OL1 OLX-8
  7. 2021$578.6M revenue Waystar, full year OLX-3
  8. 2021-04Olive buys Empiric Health OL3
  9. 2021-07Olive raises $400M at a $4B valuation OLX-8
  10. 2021-08Olive buys the clearinghouse Healthcare IP OL2
  11. 2022$704.9M revenue Waystar, full year, +22% OLX-3
  12. 2022-04Axios: a fraction of promised savings OLX-2
  13. 2022-07Olive lays off about 450 OLX-11
  14. 2022-08Two health systems give notice to leave Olive OLX-9
  15. 2023$791.0M revenue Waystar, full year OLX-5
  16. 2023-02Olive cuts 215 more jobs OLX-10
  17. 2023-10Olive shuts down; clearinghouse to Waystar, prior auth to Humata OL4 OLX-17
  18. 2023-11Waystar completes purchase of Olive's clearinghouse OLX-7
  19. 2024$943.5M revenue Waystar, full year, +19% OLX-5
  20. 2024-06Waystar IPO raises $967.5M OLX-7

Sources

Oldest first.

  1. OLX-14 New company branding highlights Waystar's commitment to delivering simplified, unified revenue cycle technology. Waystar · 2018-02-01 Company press release with CEO quotes
  2. OLX-4 Navicure, ZirMed merger gives rise to Waystar. Becker's Hospital Review · 2018-02-02 Trade press with CEO quote
  3. OLX-6 Waystar CEO has plans to expand in Kentucky, considers IPO: 4 insights. Becker's ASC Review · 2018-03-01 Trade press with CEO interview
  4. OLX-16 AI startup Olive raises $32.8M for robotic process automation. MedCity News · 2018-07-30 Trade press
  5. OLX-15 How this Ohio startup is leveraging AI to automate repetitive healthcare tasks. MedCity News · 2019-03-26 Trade press with CEO interview
  6. OL1 Olive acquires Verata Health. Olive · 2020-12-03 Primary disclosure
  7. OL3 Olive enters the operating room with Empiric Health. Olive · 2021-04-13 Primary disclosure
  8. OL2 Olive enters the clearinghouse business. Olive · 2021-08-10 Primary disclosure
  9. OLX-18 $4 billion health tech startup Olive overpromises and underdelivers. Axios Pro · 2022-04-05 Investigative press with former-employee accounts
  10. OLX-2 Local health tech startup Olive overpromises. Axios Columbus · 2022-04-07 Investigative press with former-employee accounts
  11. OLX-11 Healthcare automation company Olive lays off around 450 workers. MobiHealthNews · 2022-07-19 Trade press quoting CEO email
  12. OLX-12 News 7/20/22. HIStalk · 2022-07-19 Industry news column
  13. OLX-9 AI company Olive loses 2 health system clients, selling some assets. Becker's Hospital Review · 2022-10-05 Trade press with company spokesperson
  14. OLX-3 Waystar Holding Corp. Form S-1. Waystar / SEC · 2023 Filing with management statements
  15. OLX-10 Olive AI lays off 215 employees. Becker's Hospital Review · 2023-02-10 Trade press with company spokesperson
  16. OLX-19 Olive's failures shouldn't challenge the promise of AI. EMARKETER · 2023-02-10 Analyst commentary
  17. OL4 Health AI startup Olive to shut down. Healthcare Dive · 2023-10-31 Outside reporting
  18. OLX-17 Once a high-flying 'unicorn,' Olive AI sells two key businesses, winds down operations. Fierce Healthcare · 2023-10-31 Trade press with company statement
  19. OLX-8 The rise and fall of Olive AI: A timeline. Becker's Hospital Review · 2023-11 Trade press timeline
  20. OLX-1 How Olive AI ran out of time and money. Becker's Hospital Review · 2023-11-17 Trade press
  21. OLX-7 Healthcare payments tech company Waystar hits the public market, raising $968M. Fierce Healthcare · 2024-06-07 Trade press with CEO interview
  22. OL6 Waystar Q3 2024 filing: Olive asset acquisition. Waystar / SEC · 2024-11-06 Primary filing
  23. OLX-13 Waystar Holding Corp. Form 10-K for 2024. Waystar / SEC · 2025-02 Filing
  24. OLX-5 Waystar Reports Fourth Quarter and Fiscal Year 2024 Results. Waystar · 2025-02 Earnings release with CEO quotes