Abridge in Talks to Raise at $5 Billion Valuation as AI Health Startups Draw Investors
The Takeaway
• Abridge recently passed projections for contracted revenue
• Rival Ambience Healthcare in talks to raise at a $1 billion valuation
• Both startups aim to reduce manual work for physicians
Abridge, a seven-year-old startup that sells artificial intelligence software for transcribing physicians’ conversations with patients, is in discussions with investors to raise hundreds of millions of dollars at around a $5 billion valuation before the investment, according to two people with knowledge of the plans. The funding would nearly double Abridge’s last private valuation, announced three months ago.
At the same time, younger rival Ambience Healthcare is raising capital that would value the company at more than $1 billion, according to a person with knowledge of the matter, or more than triple its 2023 valuation. The discussions reflect investors’ interest in AI software that can reduce the time physicians and nurses spend writing visit notes and improve experiences for patients—say, by translating a patient’s responses in another language to English.
The startups, which include healthcare model maker Hippocratic AI and clinician assistant Freed, are also competing with Microsoft-owned conversational AI company Nuance.
Pittsburgh-based Abridge, which sells its AI software to hospitals and health systems such as Kaiser Permanente, has become a popular AI tool since 2023, when healthcare software giant Epic Systems began incorporating Abridge into its software.
The startup hit $117 million in contracted annual recurring revenue as of the first quarter, one of the people involved in the round said. This metric refers to sales expected over the next 12 months from signed contracts, although investors are sometimes skeptical of this metric because it’s possible for those contracts to fall through. Abridge’s annual recurring revenue—which investors view as a better measure of the state of the business—may be closer to $100 million.
That pace would give it a revenue multiple of 50, not far from where other AI apps such as legal AI firm Harvey and enterprise search startup Glean have raised money. It also suggests that Abridge was able to double its annual recurring revenue in less than six months from October, when it was generating $50 million.
Abridge told investors it was expecting to hit $200 million in contracted annual recurring revenue by the end of this year and $400 million by the end of next year, the person involved in the round said. It takes about a month for the company to generate sales from a signed contract, they said.
The company has already raised over $400 million from investors including Elad Gil and IVP, according to PitchBook. It has more than $400 million in cash, the person involved in the round said. Its last round valued the startup at $2.75 billion. A spokesperson for Abridge declined to comment.
San Francisco–based Ambience Healthcare, which is also integrated with Epic and recently started working with Cleveland Clinic, recently passed $30 million in annual recurring revenue, according to a person with knowledge of the financials. That’s up from about $1 million at the start of last year, according to that person and a second person familiar with the matter.
A new round valuing the startup at $1 billion would amount to 33 times revenue. The company has raised capital from AIX Ventures, Optum Ventures, Andreessen Horowitz, OpenAI’s Startup Fund and Kleiner Perkins.