# Troy Medicare Financial Model Medicare Advantage health plan that acquires members through independent community pharmacies at near-zero CAC. - Canonical: https://finamodel.com/startups/troy-medicare - Excel download: https://finamodel.com/startup-models/troy-medicare.xlsx - Category: Biotech/Pharma - Model type: SaaS ARR / Valuation - Funding round: Series B - Funding: $10M - Founded: 2020 - Geography: North Carolina (initial counties); expanding to 13 more NC counties in 2020; early-stage regulatory discussions in SC, VA, TN [DECK, slide 13]. - Customer: B2B2C ## About the company Troy Medicare is a Medicare Advantage plan distributed solely through 21,000 independent community pharmacies. Pharmacists act as local care managers, while the plan offers zero premium, deductible, and primary-care visits through benefit design informed by proprietary Medicare data. CMS pays monthly capitation per enrolled member, while Troy bears medical risk. The pharmacy channel is designed to eliminate advertising and broker commissions, supporting claimed zero CAC. Future Dual Eligible Special Needs Plans could add members with higher CMS payment rates, but medical-loss ratio and risk adjustment remain central drivers. Troy received its state and CMS approvals in 2019, enrolled 250 members at zero CAC by October, and passed $3 million ARR in January 2020. Projections showed 400 members and $4.5 million of 2020 revenue. The model should forecast pharmacy partners, members, PMPM, medical costs, reserves, capital, and retention. ## What's included - 5-year monthly revenue build with stage-appropriate growth assumptions - Full P&L, headcount plan, and operating-expense schedule - Cash-flow statement, runway, and burn-rate tracking - Valuation via exit multiple with a DCF cross-check - Returns analysis with MOIC and IRR - Unit economics including CAC, LTV, payback, and cohort retention ## Product & value proposition - Medicare Advantage plan built on three differentiated pillars: 1. **Pharmacy distribution channel**: 21,000+ independent community pharmacies as the sole enrollment channel - no broker commissions, no ad spend. Members acquired via pharmacist word-of-mouth and trust. 2. **Pharmacy-based care management**: Every member assigned a local pharmacy care manager who meets them in-person monthly; pharmacy has 36 touchpoints/year vs. 3 for a PCP. 3. **Data-driven benefit design**: $0 premium, $0 deductible, $0 PCP visits, transparent drug pricing, $0 DME up to $90. Designed using a "decade of proprietary Medicare data." - The company positions itself as eliminating "the fat" in MA: advertising (45% of non-medical SG&A), broker commissions (25%), PBM spread (5%), TPA costs (20%), care management vendors (4%). - Adding a Dual Eligible Special Needs Plan (D-SNP) in 2021. ## Market - Medicare covers 50 million seniors and is growing. - Medicare Advantage (private MA plans) covers 21 million Americans at time of deck. - MA projected to surpass 40 million seniors by 2025 - cited market size $800 billion. - MA penetration growing at an increasing rate; source cited: L.E.K. Consulting. - 21,767 independent community pharmacies = 36% of all US pharmacies; located disproportionately in underserved areas. ## Revenue model - **Revenue source**: CMS pays a monthly premium (PMPM capitation) per enrolled Medicare Advantage member. Troy Medicare bears full medical cost risk (typical MA structure). - **Enrollment channel**: Independent pharmacies - $0 CAC claimed (word-of-mouth, no broker, no ad spend). - **Pricing**: $0 premium to members; revenue comes entirely from CMS capitation payments. - Implied PMPM revenue (derived from deck table): 2020 revenue $4.5M / 400 members ≈ $937 PMPM - consistent with CMS MA benchmark rates for NC. - Additional future revenue line: D-SNP members (higher CMS rates for dual-eligible population) planned 2021. ## Traction & metrics - Apr 2019: NC Department of Insurance license received. - Jul 2019: CMS approval received. - Sep 2019: $10.2M financing closed. - Sep 2019: Provider network contracted (Duke Health, CHS, South Eastern, Cape Fear Valley). - Oct 2019: 250 members enrolled at $0 CAC. - Jan 2020: Surpassed $3M in ARR. - Actuarial financial projections (from table, slide 9 image confirmed): | Year | Members | Total Revenue | EBITDA | Capital Reserves | | ----- | -------- | ------------- | ------- | ---------------- | | 2019 | 0 | $0 | $3,267,488 | $4.6M | | 2020 | 400 | $4,500,600 | $5,797,274 | $23.8M | | 2021 | 2,085 | $31,571,286 | $284,368 | $24.0M | | 2022 | 8,030 | $135,208,457 | $3,061,158 | $27.1M | | 2023 | 10,070 | $181,958,868 | $7,732,212 | $34.1M | | 2024 | 13,690 | $255,441,356 | $14,644,130 | $43.6M | | 2025 | 16,640 | $322,692,780 | $20,134,241 | $56.7M | | 2026 | 24,790 | $497,371,236 | $33,400,259 | $78.4M | - Capital Contribution: $10.2M (2019), $25M (2020 - Series B), $0 thereafter. - Series B target milestone: $113M in ARR within 18 months of closing. ## Unit economics - **CAC**: $0 claimed - all members acquired via pharmacy word-of-mouth, no ad spend, no broker commissions. CAC stated as 1/20th of competitors (United, Humana, Aetna). - **Retention / LTV**: Higher retention claimed due to trusted pharmacist relationship vs. broker relationship; no specific churn rate or LTV figure given. - **Implied PMPM revenue**: ~$937 PMPM in 2020 (400 members, $4.5M revenue). - **EBITDA margin**: Turns positive at ~2,085 members in 2021 ($284K EBITDA). By 2026 implied EBITDA margin ~6.7% ($33.4M / $497.4M). - **Medical Loss Ratio (MLR)**: Not explicitly stated. Implied MLR = (Revenue − EBITDA − non-medical opex) / Revenue - not directly derivable from table without opex split. MA plans typically target 85–88% MLR; non-medical SG&A ~10–12%. - **Capital reserves**: Company maintains statutory capital reserves as required by CMS/state insurance regulators; growing from $4.6M (2019) to $78.4M (2026). ## Competition / moat - Direct competitors identified: - UnitedHealthcare - $240B market cap, partnered with Walgreens - Humana - $40B market cap, partnered with Walmart - Aetna - acquired by CVS for $69B - Cigna - merged with Express Scripts ($67B) - WellCare - acquired by Centene ($15B) - Moat claims: - Relationships with 21,000+ independent pharmacies nationally - $0 CAC (20x cheaper than competitors) - Pharmacy care management model (36 annual touchpoints vs. 3 for PCP) - Proprietary decade of Medicare data from iMedicare (CEO's prior company - facilitated 1M+ Medicare Advantage enrollments) - Founded by software engineers with Medicare disruption history ## Team & funding ask / use of funds - **CEO**: Flaviu Simihaian - previously CEO of iMedicare (SaaS platform used by 6,000+ pharmacies; 1M+ Medicare Advantage enrollments). - **CFO**: Michael Cutroni - prior CFO at MDWise, Consumers Mutual Insurance of Michigan; VP Financial Planning at Universal American. - **COO**: Elyse Eisenberg - prior Vantage Cancer Care Network, Bravo Health, AmeriHealth. - **CCO**: Jeff Scribner - former Deputy US Marshal; compliance officer for publicly traded companies and HMOs. - **Pharmacy Officer**: Josh Young, Pharm D - co-founder, pharmacy owner, built the pharmacy playbook. - **CIO**: Lateef Jackson - 20+ years ML/data science, 2 startup exits, lead architect at New Relic. - **Clinical Director**: Amina Abubakar - pharmacy owner, national pharmacist of the year. - **Medical Director**: Dr. Bader Almosheli - value-based post-acute care, physiatry. - **Chairman**: Jeff Spight - former President ACO business at Universal American, VP Development at Bravo Health. - **Actuary**: Steve Kaczmarek - Milliman (leading Medicare actuarial firm). - **Funds raised**: $10.2M from pharmacy owners and providers. - **Current raise**: $25M Series B. - **Use of proceeds**: Not itemized; implied to fund capital reserves + growth to $113M ARR within 18 months. Per actuarial table, $25M capital contribution in 2020 supports member scale-up. --- ## Recommended financial model - **Archetype + why**: **Medicare Advantage (MA) insurance operating model** - specifically a member-based PMPM revenue model with actuarial cost structure (Medical Loss Ratio, SG&A, capital reserves). This is not a SaaS or standard P&L; it follows managed care accounting: revenue = members × PMPM premium; costs split into medical (claims) and non-medical (SG&A). The deck already provides an actuarial projection table (slide 9) - the model should replicate and extend it with full cost-line transparency. A 3-statement model is appropriate for Series B purposes. - **Forecast horizon & granularity**: 2019–2026 (8 years as shown in deck), annual. Monthly granularity for Years 1–2 (2019–2020) given early stage; annual thereafter. Sensitivity on member ramp is the critical variable. - **Key drivers & assumptions**: - Members enrolled: 0 → 400 → 2,085 → 8,030 → 10,070 → 13,690 → 16,640 → 24,790 - Annual member growth rate post-2020: ~421% (2020→2021), ~285% (2021→2022), then tapering to ~26% → ~36% → ~22% → ~49% - PMPM revenue (CMS capitation): ~$937/month in 2020 based on $4.5M / 400 members; escalating ~2–3%/year with CMS rate updates - Medical Loss Ratio (MLR): 85–88% of revenue (MA industry standard); implied by breakeven at ~2,085 members - Non-medical SG&A: ~8–10% of revenue scaling down with volume (CAC is $0 so no marketing spend; admin + tech + care management) - Capital reserves: grow with member base per CMS statutory requirements; ~$1,000–$1,500 per member reserve requirement - Series B capital: $25M in 2020; no further external capital needed per projections - Geographic expansion: NC multi-county 2020, potential SC/VA/TN 2021+ - new state entry costs modeled as one-time regulatory/licensing expense of $0.5–1M per state - D-SNP launch: 2021; higher PMPM (~$1,200–1,500/month for dual-eligibles) with higher MLR (~88–90%) - Pharmacy network costs: care manager fee paid per-member-per-month to pharmacy partners; not disclosed in deck - key open question - **Scenarios (Base / Bull / Bear - which variables flex)**: - **Base**: Member ramp per actuarial table; MLR 86%; PMPM per deck-implied rates - **Bull**: Faster geographic expansion (SC/VA/TN by 2021); lower MLR (84%) from pharmacy care management impact; D-SNP adds 15% members from 2021 - **Bear**: Slower member ramp (50% of projected); MLR runs hot at 90% (actuarial risk in early cohorts); Series B closes later than modeled - **Required sheets / outputs**: 1. **Assumptions** - all drivers in one place (PMPM rates, MLR, SG&A %, member ramp, capital reserve %, state expansion timeline) 2. **Member Model** - enrollment ramp by year/state/plan type (standard MA, D-SNP) 3. **Income Statement** - Revenue (members × PMPM), Medical Claims (MLR × Revenue), Gross Margin, SG&A, EBITDA - matching slide 9 table exactly for Years 2019–2026 4. **Capital Reserves** - statutory reserve calculation (CMS risk-based capital requirement), reconciliation to slide 9 reserves row 5. **Cash Flow / Runway** - operating cash flow + capital contributions; confirm $25M Series B suffices to reach profitability 6. **Unit Economics** - PMPM revenue, PMPM claims, PMPM non-medical cost, PMPM EBITDA contribution by year 7. **Sensitivity Table** - Members enrolled vs. MLR → EBITDA and capital reserves 8. **Dashboard** - Member count, ARR, EBITDA, capital reserves, MLR vs. target ## Frequently asked questions ### Is the Troy Medicare financial model free? Yes. The Troy Medicare model is a free Excel download with live formulas. ### Can I change the assumptions? Yes. The workbook is editable and its live formulas recalculate when assumptions change.