Honor is back in the spotlight in a big way, just two months after it announced its industry-shaping acquisition of Home Instead.
The San Francisco-based company announced Tuesday it has raised $70 million in Series E funding, in addition to securing $300 million in debt financing. Honor has earmarked the funds to further invest in its operations, technology capabilities and its ongoing expansion across the Home Instead network.
Thanks to the injection of capital, Honor additionally plans to triple its overall research and development spend, which will surely help in its quest to fundamentally transform the highly fragmented $83 billion global home care market.
“This helps us with the opportunities around the acquisition of Home Instead,” Seth Sternberg, CEO and co-founder of Honor, told Home Health Care News. “Honor’s technology and operations platform will be offered and diffused throughout the full Home Instead network. This will create new capabilities for the entire Home Instead network and increase more capacity to provide care. This also drives new product development — new R&D.”
Founded in 2014, Honor has suddenly grown into one of the world’s largest senior care networks, operating in over a dozen countries in total. Sternberg and Honor’s early leaders originally envisioned Honor as a company that directly connected clients and caregivers, but the business eventually evolved into a partnership model with existing home care agencies.
It’s through that partnership model that Honor has been able to refine its tech capabilities and uncover the best ways of retaining home care workers, which the company calls “Care Pros.” By using machine learning, predictive analytics and other tools, for example, Honor has been able to drastically lower Care Pro call-off rates, which leads to stronger relationships between in-home care workers and the clients they serve.
Industry-wide caregiver call-off rates are around 12%, according to previous statistics shared by Honor. In comparison, Honor’s are around 6%.
Adding Home Instead now gives Honor the scale to really lean into its operations and technology know-how, according to Sternberg, who previously founded a company called Meebo in 2005, which Google later acquired.
“We started offering our platform out to all of our partners within our care network. The next step was to expand our scope and capacity even further and acquire Home Instead,” Sternberg said. “That was effectively acquiring a network … to further deploy the operations platform and the technology platform — and serve more people.”
Baillie Gifford led the equity financing, with participation from existing investors. That list includes funds and accounts advised by T. Rowe Price Associates Inc., Prosus Ventures, Andreessen Horowitz, Thrive Capital and several other groups, plus Home Instead founders Paul and Lori Hogan.
Perceptive Advisors led the debt financing, with a significant commitment from Ares Management funds. The purchase of Home Instead positioned the company to take on the $300 million in debt financing, Sternberg explained.
“You have to be a more mature company to be able to utilize debt financing,” Sternberg said. “The combination of Honor and Home Instead, together, we are a more mature company with a more mature financial structure. We’re able to use debt as well as equity.”
As a result of Tuesday’s news, Honor’s total equity funding to date rises to $325 million. Its overall valuation is now over $1.25 billion as well, according to the company.
When Honor purchased Home Instead in August, the company announced that the combined organizations would represent more than $2.1 billion in home care services revenue.
Aside from enabling it to take full advantage of its latest acquisition, the additional capital will allow Honor to triple the size of its engineering and product team within the next year.
“We’re very actively hiring for software engineers, product managers and designers,” Sternberg said. “We need as many awesome people who are mission-driven as we can find to help to continue building the technology platform.”
Currently, the combined Honor-Home Instead enterprise serves over 100,000 older adults around the world every month, providing more than 80 million hours of care annually. Besides delivering care in the home setting, Honor has also partnered with some senior living operators over the past few years, including Sacramento, California-based Eskaton.
Moving forward, Honor is focused on completing its integration with Home Instead. So far, those efforts have gone smoothly, Sternberg said.
“I think the core reason for this is, the teams are just mind-bogglingly aligned in our vision for the future and what we’re trying to accomplish,” he said. “The teams are jelling extraordinarily well. Reason No. 2 is, when you look at what Home Instead was and what Honor was, there’s very little overlap, which is another way of saying we’re super complementary.”
In other words, a lack of overlap means that Honor can avoid many of the redundancy challenges organizations run into when trying to become one entity.
Sternberg also noted that Honor’s experience partnering with various home care organizations has prepared it to join forces with a large personal care network like Home Instead. In fact, Home Instead has already begun infusing Honor’s tech platform into its operations, though Sternberg pointed out it’s still early days.
“The No. 1 thing that we’re focused on is ensuring that we have the team, internally, be in a really great place and that everybody understands our mission,” he said. “We’re just very focused on making sure that the team is in a really good spot. As we roll the technology out, it’s a really good opportunity to make sure that everything works well in the Home Instead context.”
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