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A digital health company became an insurance carrier under the thin veil of a product launch

By DEEKSHA HEGDE

How to spot a fundamental business model shift from a mile away, long before the PR calls it a product launch or market expansion.

In April 2026, Progyny, a fertility and family building benefits administrator, announced Progyny Select, a supplemental health plan for small and mid-size employers (100-1,000 employees). “Pooled-risk” got me curious: did they cut a deal with an insurance carrier to back the product, or had they taken on insurance risk themselves?

Until now, Progyny had only served large, self-insured employers (1,000+ employees) as a third-party administrator. They negotiated rates with fertility clinics, routed employees to better providers, managed the claims paperwork, and took a margin while employers paid the medical bills. This product launch appeared to be a downmarket expansion to capture a segment previously untapped, but the mechanics were not apparent.

I didn’t have to look very far. It was right there in the legal disclaimer at the bottom of the press release: “through subsidiaries of Progyny Inc. with state licensure to offer supplemental coverage.” Now this really got my attention. This is a digital health company turning into an insurer. You don’t see that happen every day. I decided to do some digging.

What states have they acquired licenses in, given you need one in every state you want to operate in? Their latest 10-K, surprisingly, didn’t mention anything about their flip to the insurer model. I realized they were not required to disclose the new insurance subsidiary since it hadn’t crossed revenue thresholds by the SEC’s definition. The fully insured expansion appeared as a growth target and a regulatory risk factor. They declared the move would subject them to additional laws applicable to health insurance that do not currently apply to them.

The product landing page did mention Progyny Health Insurance Company of Washington. So I pulled the thread. Washington state incorporation records showed the name had been reserved in August 2024. Six months later, in February 2025, the entity was formally incorporated. By July 2025, Progyny Health Insurance Company of Washington had been admitted as an active health insurer by the Washington Office of Insurance Commissioner. In the second half of 2025, they filed their first few products with the regulator, all still sitting in review on the SERFF database as of July 2026. The filings also make nationwide coverage ambition explicit. So this has been stewing since August 2024, the date the name was chosen. I went on LinkedIn to check if they had any actuaries on the team. They hired an actuary in April 2023, and a second in January 2026 (who specializes in pricing insurance products) three months before the launch. 

The announcement that the press called a product launch had been a strategic transformation at least three years in the making. The SEC filings hinted at it. These four signals — an actuary hire, a name reservation, an insurance license, and active product filings with a state regulator — were sitting in plain sight the whole time. For anyone watching, just one of those foreshadowed what was coming.

I’ve been watching the market reaction since the launch. The move is still being read as market expansion downward, when it’s really business model innovation.

Why become an insurer at all?

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Function Health has a 23andMe problem

By DEEKSHA HEGDE

I had an itch to draw parallels between the two. The structural facts kept lining up in ways I couldn’t dismiss, and by the end, I stopped trying.

Function’s product is an app: you pay $365 a year, go to a Quest Diagnostics location, get 160+ biomarkers tested twice a year, and receive clinician-written notes interpreting your results. The lab testing is fully outsourced. Function is the layer on top: panel design, member experience, clinician note generation, longitudinal tracking.

Function Health raised $298 million at a $2.5 billion valuation in November 2025. At 25x revenue, the market clearly isn’t buying a lab reseller. It’s buying the data flywheel: longitudinal biomarker histories that compound in clinical value over time, aggregated across hundreds of thousands of members into a dataset that health plans, pharma companies, and AI developers can’t build any other way. A member with four years of data can’t switch to a cheaper competitor without losing the trend. The unit economics work if the interpretation layer scales without proportionally scaling headcount, which is what the Medical Intelligence Lab, their generative AI model launched in November 2025, is built to do. Function is also building toward a B2B enterprise channel, positioning the product as a way to keep employees “healthy, focused, and ready to perform.”

It satisfies a burning need for specific personas: the worried well, the health optimizers, the people who saw their loved ones get diagnosed a little too late, the people who aren’t waiting for a diagnosis before they start paying attention. These are people the rest of the industry has mostly left alone. I wrote earlier this year, in a piece on Hinge Health, about the prevention paradox: the employer ROI model is structurally blind to the member who benefits most from early intervention. Function skips the employer ROI story entirely, charges the member directly, and doesn’t try to prove a CFO case it can’t make. Yet.

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