Weight-Loss App Noom Gets $540 Million in Silver Lake-Led Round
(Bloomberg) -- Noom Inc., whose app is designed to help people lose weight by changing their behavior, raised $540 million in a new funding round as it seeks to expand into other realms of personal health.
Private equity firm Silver Lake led the round, which also included investors such as health-care funds Oak HC/FT and Novo Holdings. Noom plans to use the money to hire fresh talent, Chief Executive Officer Saeju Jeong said in an interview.
Noom is valued at $3.7 billion after the round, according to people who asked not to be identified because the information was private. A representative for the company declined to comment on the valuation.
Noom, founded more than a decade ago under a different name, saw interest swell amid the coronavirus pandemic. Sales reached $400 million last year, up from $200 million in 2019, said Chief Financial Officer Michael Noonan.
Noom is expanding beyond weight loss to areas such as stress management, help with sleep, diabetes and hypertension. While it currently focuses on individual consumers, it’s also reaching out beyond the app store, tapping employers and possibly even health insurers.
Pushing into the enterprise market will pit Noom against a growing number of companies vying for that business. The digital health space is booming, with startups pitching employers on technology to make their workers healthier and reduce their costs.
“That’s where we come in, and we get excited because that’s very much our bread and butter,” said Andrew Adams, Oak HC/FT’s co-founder and managing partner.
Noom could go public within a year. The company has met with potential advisers to discuss an initial public offering, eyeing a valuation of around $10 billion, Bloomberg has reported. Noonan wouldn’t comment on the company’s listing plans.
Sequoia, Samsung Ventures
The latest funding round was a mix of primary and secondary purchases, Noom said. Silver Lake, Oak HC/FT, Novo Holdings and Temasek were the new investors participating in the Series F round. Existing investors Sequoia Capital, RRE and Samsung Ventures also contributed.
Adam Karol, managing director at Silver Lake, and Stacy Brown-Philpot, former Taskrabbit Inc. CEO and a founding member of the SoftBank Opportunity Fund, will join Noom’s six-member board of directors.
Getting people to lose weight and keep it off is challenging -- and potentially lucrative. Almost three-quarters of adults in the U.S. are overweight and about 43% qualify as obese, according to the Centers for Disease Control and Prevention. Dieting can help people shed pounds, though people tend to gain them back. Noom markets its program as addressing underlying psychological factors related to weight gain.
“We are building the world’s best behavior-changing platform,” Jeong said.
Users input information such as their current and ideal weight, as well as their motives and time frames for wanting to shed pounds. People enter the foods they eat into the app and receive tips on nutrition and exercise.
In a 2016 study of roughly 36,000 Noom users, 78% of them dropped pounds while using the app. Almost one-quarter of the people lost more than 10% of their body weight. To Jeong, those numbers show Noom is working -- and that the company could push into treating some diseases.
Many Noom users have weight-related health conditions like diabetes and hypertension, Jeong said. The company wants to treat those, too.
Managing chronic diseases will require some retooling of Noom’s current product and continued investment, Adams said.
“I wouldn’t call it a risk, but you’ve got to have real execution and focus,” he said.
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