JPMorgan Chase & Co. has agreed to buy InstaMed, a payment processor for the health-care industry, based in Philadelphia and Newport Beach, Calif.
The nation’s largest bank paid $500 million, CNBC reported Friday, making it the New York-based lender’s biggest acquisition since the 2008 financial crisis.
InstaMed said in September that it expected to have $58 million in revenue last year, up from $31 million in 2015. It processed $94 billion in health-care payments from consumers to doctors and other providers last year. The company said in 2017 that it was processing $3 billion a month, or $36 billion a year.
The company employs 185 at its Center City headquarters and plans to stay there, said Deirdre Ruttle, Instamed’s vice president of strategy.
Bill Marvin, who grew up in Wynnewood, and Chris Seib cofounded InstaMed in 2004 after a 2003 federal law created Health Savings Accounts, which allow consumers to save pre-tax dollars to pay for health-care expenses. Both worked for Accenture at the time, connecting insurers and health-care service providers electronically.
It was immediately clear, InstaMed chief executive Marvin said in 2017, that the money flow in health care was going to completely change if deductibles went to more than $2,000 and the consumer had to pay the first claims because of that.
InstaMed allows doctors’ offices to accept card payments in person and over the internet. It also handles electronic payments to doctors from insurers. But its services come with an additional layer of security because the payments are linked to health records that include Social Security numbers, a highly valued commodity among cyber criminals.
Millions of Americans are now covered by high-deductible plans, leading to InstaMed’s rapid growth and now its sale by venture capital firms that have put millions into it.
As recently as September, Marvin, a University of Pennsylvania graduate, said the company planned to remain independent.
“We have no desire to be bought out, though we’ve had lots of opportunities.... We think this is a huge market. We’re just now starting to see what having some scale and brand recognition can do in a market with a huge problem that remains unsolved,” he said.
On Friday, Marvin said: “The opportunity for InstaMed to become part of JPMorgan Chase with access to its resources and scale while operating as a subsidiary is very unique and exciting.”
JPMorgan is part of a joint venture with Amazon and Berkshire Hathaway designed to rein in health-care costs for their employees.
Among InstaMed’s investors is Carrick Capital Partners, a California firm that put in $50 million in 2016, bringing the total amount of venture capital InstaMed had raised since its founding in 2004 to $100 million.