Serial entrepreneur, venture partner, and Angel investor Banuprasad Dhanakoti founded a new HealthTech SaaS based on a genius Medicare reimbursement model 18 months ago. The founder and CEO recently sat down with the GetLatka team to discuss how virtual-first care platform company HBox grew from 3 customer clinics to 100 in a year, how he’s wrestling with the question of incremental funding, and why he’s so bullish on the company’s growth potential.
- $1.4m ARR, expected to hit $3m by year-end
- Team of 30: 9 engineers in India, Customer success and clinical staff in US
- 100 provider clinic customers
- 1,800 subscriber patients
Charging $60-79 per customer per month
CEO Dhanakoti began by sharing his unique business model with Latka. According to Dhanakoti, all revenue is driven by subscription. Dhanakoti and his team have built home monitoring kits for patients with chronic conditions. HBox charges clinics between $60 and $79 per patient per month. Dhanakoti’s team then offers to process the supporting Medicare claims on behalf of the clinic, as Medicare reimburses doctors between $140-200 per patient per month for the home monitoring kit.
12-month patient contract guarantees ARR for HBox
Every patient prescribed by the clinic automatically gets the HBox home monitoring kit for 12 months, thus guaranteeing Dhanakoti’s ARR. Each kit is equipped with a mix of hardware and software. All kits feature a 10” tablet and a specialized app to monitor the patient’s chronic condition. The kits also include additional equipment, such as pulsometers and blood sugar monitors, to support the monitoring requirements. Since Medicare guarantees payments for a year, clinics are happy to offer patients a no-cost option to monitor their specific chronic condition more closely. Dhanakoti explained that this model provides consistent revenue with little volatility. “The best part is we were generating cash from day 1,” he noted.
Global team of 30 managing clients in 8 US states
Founder Dhanakoti shared that the HBox team currently numbers 30. He confirmed that the team of 9 engineers is located in India, while the rest of the headcount is headquartered in the US (predominantly customer success and clinical staff).
Negotiating hardware costs to $200 with a minimum guarantee of 3,000 units
Founder Dhanakoti negotiated with a Chinese manufacturer to deliver Android tablets for $200 landed, with a minimum commitment of 3,000 units. The tablets represent the most significant cost of goods in Dhanakoti’s business model and the one that keeps him thinking about if and when it’s time to pull the trigger on incremental funding.
HBox burning $30,000 in cash monthly
When Latka asked Dhanakoti about their current burn rate, he revealed that HBox is burning about $30,000 in cash monthly. They are sitting on $600,000 in cash in the bank and are discussing how to best manage their cash, equity, and growth goals.
Eyeing potential $1-1.5m in capital to cover hardware costs
Dhanakoti explained that HBox is currently adding 300 patients per month. He expects that number to increase to 1,000 per month in short order. Because of the upfront hardware expenditure, the founder recognizes that the company will need more capital to fund growth. He admitted that he’s now talking to capital providers about raising an additional $1-1.5m in capital. “We want to increase growth, so we are internally debating whether it should be equity capital or debt,” revealed Dhanakoti.
$1.55m raised in 2 rounds of funding
CEO Dhanakoti shared that to date, HBox has raised $1.55m in funding: $750,000 in a pre-seed round last year at a $5m valuation and an additional $800,000 this year at a $30m valuation. An impressed Latka ran the math and cautioned Dhanakoti that today’s investors are unlikely to fund against a 21X multiple like a year ago, given the changing market conditions. “We’re not even seeing 10X multiples right now,” shared Latka.
$100,000 ARR to $115,000 MRR in a year
Founder Dhanakoti discussed HBox’s explosive growth over the last year, as the company went from $100,000 in ARR (representing 3 customers) to over $115,000 in MRR in just a year from 100 customers. Dhanakoti explained that their first customer was a connection from his own personal network and previous venture. Once the clinic came on board, the number of clinic customer clinics grew entirely by referrals. When asked about net dollar retention, Dhanakoti replied, “We haven’t lost a single client so far.”
Zero CAC to date, 40m eligible patients.
Dhanakoti revealed that their current base of 100 providers alone can reach 180,000 patients but that Medicare serves a total of 40m eligible patients. Because HBox’s business is based entirely on referrals, Dhanakoti shared that their current CAC is zero. He added that when a clinic comes on board, they typically sign up 20 patients in the first month, then quickly accelerate to 200-300.
Processing $350,000 per month in Medicare claims in 8 states
Dhanakoti shared that HBox’s geographic footprint currently covers 8 states. In terms of dollar volume, they are processing roughly $350,000 in Medicare claims each month. When Latka asked about their processing success rate, Dhanakoti noted that every claim had been accepted and reimbursed as expected.
$1.4m ARR tracking to $3m ARR this year: growth from new customers and more patients
When asked if growth was coming from new customers or more patients from existing customers, Dhanakoti replied both. He reiterated that each clinic takes a while to onboard, but then patient growth accelerates. Because all business to date has come from referrals, HBox continues to add new clinics as customers, as physicians see the benefits of ongoing virtual monitoring for their patients with chronic conditions.
Famous 5 with Banuprasad Dhanakoti
HBox founder and CEO Banuprasad Dhanakoti shared that his favorite business book today is Making the Elephant Dance by Arvind Pande. Banu’s favorite CEO to follow is Elon Musk. He named the business intelligence tool Metabase his favorite online tool for building HBox. Banu gets 6 hours of sleep per night. He is 45, married, with a daughter in 11th grade. When asked what he wished he had known at 20, Banu paused and thoughtfully replied, “To start the entrepreneurial journey earlier.”
