At Flare Capital Partners, we are excited to share our lead investment in Daffodil Health, a company building a next-generation, AI-native pricing and payment integrity platform for U.S. payers. Today, Daffodil Health announced $16.3M in Series A funding, bringing its total funds raised to $20.9M.
Why We’re Excited
Medical cost growth continues to outpace wage growth, placing unprecedented pressure on employers, members, and the payers that serve them. The industry has long relied on utilization management, network design and post-pay integrity to control costs, with gradual innovation driving incremental improvements. However, not enough has been done to address the root cause of cost growth, how claims are priced, repriced and adjudicated across complex commercial contracts.
At the same time, payers – particularly third-party administrators (TPAs) and regional plans – are constrained by legacy, opaque vendors that dominate out-of-network repricing through percentage-of-savings models. This multi-billion-dollar market remains largely outsourced, limiting flexibility and preventing payers from retaining the full economic upside of better pricing decisions. Daffodil’s transparent, SaaS-based approach allows payers to bring this function in-house, reclaim control over pricing, and internalize savings.
For decades, payers have been dependent on a fragmented ecosystem of legacy vendors to manage out-of-network (OON) pricing and pre-payment integrity. These solutions are typically rule-based, retrospective, and opaque – operating as black boxes that extract a percentage of savings while offering limited visibility into how decisions are made or value is created. That lack of timely insight contributes to widespread improper payments across the system; for example, 31% of inpatient and 32% of outpatient claims submitted to commercial payers weren’t paid out for more than three months in 2023, underscoring the scale of inefficiency created by legacy approaches. Importantly, the insights they provide are static. As regulatory scrutiny intensifies and employers gain access to detailed pricing data that was not historically available, responsibility is shifting toward plan sponsors to more actively manage healthcare costs – bringing new fiduciary and legal obligations that make opaque, black-box solutions increasingly untenable.
These limitations are a challenge for all payers, but are especially acute for TPAs and regional payers, which collectively serve the majority of commercial lives yet often lack the infrastructure to manage complex pricing and integrity workflows at scale. Daffodil is purpose-built to meet this moment.
Why Now: A Generational Shift in Pricing and Payment Integrity
Several structural forces are converging to create a “why now” moment for Daffodil:
Daffodil sits at the intersection of these trends, offering a platform that is not only more transparent and accurate, but also structurally aligned with payer incentives.
Why Daffodil
Daffodil is designing an AI-enabled smart plan platform to replace opaque, legacy repricing and payment integrity systems with a unified, dynamically configurable, and auditable solution.
The company’s initial products focus on out-of-network repricing and pre-pay payment integrity, enabling payers to automatically price, defend, and edit claims in real time. Unlike incumbent vendors, Daffodil gives payers direct, dynamic control over pricing logic with full auditability into every decision. This is powered by an AI-native architecture that learns from claims, pricing decisions, and outcomes over time, which continuously improves accuracy, defensibility, and automation in ways static, rules-based legacy systems simply can’t.
In our diligence, one theme came through clearly: customers genuinely love the product and are realizing meaningful ROI almost immediately, in some cases approaching 10x returns. Payers consistently described Daffodil as “easy to understand and easy to consume,” with a level of modularity “down to the code level” that felt meaningfully differentiated from legacy vendors. Early customers are seeing materially higher margins relative to legacy solutions, alongside faster cycle times and improved provider engagement with several calling the product “very profitable for us.” In a market where “everybody has OON claims problems” and “everybody hates percentage savings models,” customers highlighted Daffodil’s ability to deliver value on significantly shorter implementation timelines than legacy vendors. Most importantly, through the transparency Daffodil offers, payers can understand and configure exactly what is happening, removing the “black box” completely.
Over time, Daffodil aims to become the core pricing and payment infrastructure for payers: a modular, AI-native platform that supports longitudinal pricing, benefit design customization, and real-time adjudication across the claims lifecycle.
Product Built for the Real World
Daffodil’s platform is purpose-built to integrate seamlessly with existing claims systems, support configurable plan designs, and provide granular reporting that helps payers and employers understand exactly how pricing and payment decisions are made.
Its out-of-network repricing engine aggregates multiple reference datasets to generate defensible reimbursement recommendations, complete with a full audit trail. An embedded AI co-pilot assists negotiators in real time, shortening settlement cycles and reducing administrative burden.
Building on this foundation, Daffodil’s pre-pay payment integrity module identifies anomalies and errors before payment occurs – shifting integrity from a reactive to a proactive discipline. Future modules, including dynamic member cost-sharing, extend this pricing intelligence all the way to the member experience.
A Team That Knows the Problem Firsthand
We are especially excited about Daffodil’s founding team, which possesses deep domain expertise across payer operations, enterprise software, and AI.
CEO Navin Nagiah is a three-time technology entrepreneur and former SVP of Product at MultiPlan, where he gained firsthand insight into the structural inefficiencies of legacy repricing systems. CTO Shuo Yang brings world-class engineering experience from Google and Huawei, while Adrienne Cromwell, VP of Customer Operations, adds decades of operational expertise from within the incumbent ecosystem.
This combination of insider knowledge and technical depth has enabled Daffodil to move quickly from concept to commercial traction.
Looking Ahead
Daffodil is already working with leading TPAs and health plans, delivering hard-dollar savings and faster adjudication. As the company expands into additional payment integrity modules and prepares to scale to additional TPAs and payers, we believe it is well-positioned to become a foundational platform in payer cost management.
At Flare Capital, we believe the next era of healthcare infrastructure will be defined by transparency, automation, and intelligence. Daffodil Health exemplifies this shift, and we are thrilled to partner with Navin and the team as they build the future of pricing and payment integrity.
To learn more about Daffodil Health: reach out to Parth Desai (parth@www.flarecapital.com), Uma Veerappan (uma@www.flarecapital.com), Alyssa Tsenter (alyssa@www.flarecapital.com) or any member of the Flare Capital Partners team – we would love to hear from you.
We’re excited to be on this journey together!
