Function Health raises $298M Series B at $2.5B valuation, slashes price to $1/day and adds full-body MRI via Ezra acquisition

numeral worry about sales tax and VAT compliance compliance handled so you can focus on growth. Uh our next guest is

where do I have it?

Jonathan.

Jonathan Swerlin.

Function.

Hey, sorry.

We were in, you know, a political quagmire. We were in the swamp.

We were in the swamp.

We went to the swamp. We don't normally go to the swamp. Normally we talk about series B's. We talk about large series bees. He did get us going though. He was telling us how much value has been created in in his district. It's in the trillions. It's in the tens of trillions. And we were just, you know, foaming at the mouth about the market caps. Uh and then we said a bunch of other stuff. But thank you so much for coming on the show. Uh for those who aren't familiar, uh introduce yourself, introduce the business, tell us what's going on.

Absolutely. Great to be here. Now you're climbing out of the swamp. We're going to talk about something a little less swampy.

Thank you.

We talk about health. It's great to see you guys.

Well, I mean, health is health is like honestly more political than politics.

It can be. It can be, but uh but uh this conversation won't be.

It's funny. We say we actually say that biology is bipartisan though.

And I and I like this idea of everybody can agree that nobody likes to suffer.

Yeah.

You know, and and everybody can agree that preventable death shouldn't happen.

Yeah. So it it it comes at but of course the nuance of how you get there can become political because who's gonna pay for it, right?

Oh that but also just

well that or or the uh well this diet is

this diet is rightwing that diet. Oh working out that's a right-wing thing or like oh this is leftwing and like you know different ingredients became politically charged over the last few years.

My powder is better than your powder

for sure. And sometimes there's political influencers on the right and the left who actually have the same supplier and then they put different branding on top of it and they sell that. That that's a fascinating rabbit hole to go down. But anyway, we're not here to sell supplements. Uh let's talk about the business. Uh what what you know it's funny. It's like I'm not leftwing, I'm not rightwing. I'm the whole bird. Otherwise, you fly around in circles is kind of the idea with all this.

I love it. I like it. I like it.

The whole bird. That's great.

The whole bird. The whole turkey.

So yeah. Uh take us through the shape of the business these days. What what's the value prop to consumers? Uh what's the progress been? How big is the company? Kind of set the table for us.

Okay, so simple value prop is get on top of your health. It's time you open your health. So what does that start with? It starts with a new platform. It's $1 per day to join. And the platform includes twice a year comprehensive lab testing at over 2200 locations, Any Quest Diagnostics around the country. You go and you test everything, heart, hormones, liver, kidney, thyroid, cancer signals, you name it. up and down. All of that data goes into a platform into an app that explains you what's actually happening inside your body. And these are the things that you would not get in a physical. This is like a true true deep look. And what function has created is this entirely new standard for your health that every year for the rest of your life, you know that you're well on top of whatever's happening inside your body. You're seeing how it's changing over time. You're making sure that you're getting well ahead of disease. You're doing everything you can to feel your best. So that's that's the the value proposition and that's what function delivers right now. We started with lab testing. Yeah. Because that's that's like that's the most impactful data. 70% of medical decisions are based on lab testing. And recently we acquired a company you might have heard about this called Ezra.

And Ezra is an imaging business. And so Ezra does. And what has been amazing for us, we've gotten FDA cleared AIs that have reduced the time that it takes for somebody to get an MRI. Okay.

So why does that matter? One, nobody wants to be beside an MRI machine typically.

Yeah.

Two, it also massively reduces the cost

and it picks up the efficiency.

Yeah. And so you what we've actually done is we've introduced lab testing became one of the largest most powerful lab testers in the country and then we went into imaging on the imaging side bringing down the cost and what you're seeing actually emerge as this new standard for health. We took the most impactful parts of the health system for capturing your data and we we packaged it up into something that's really simple to understand and really affordable for for many many people. talk about how talk about how M MRIs were used historically. Are these things that that get done when uh like you're act you have like acute pain or you have an issue and and then you're doing it and this feels like

Terry ACL.

Yeah. Or this this feels like kind of flipping it and saying using it as like preventative uh preventive care. Is that the right read?

That that's the right read. Not just preventive, I would just say I would just say responsible because this idea of preventive is great, but it's also what might be happening right now that you don't even know about,

right? And so the word preventive and the word early are a little tricky for me because the word early, it's like why is it early detection? We just call it detection. Can't we just get rid of the word early? Um what MRI does is traditionally it allows somebody to look inside the body but to do that it's been really really expensive to get an MRI you you know tear your ACL something like that like you basically um you you have to spend thousands of dollars to look inside your body and that's the way insurance is set up and that's the way MRI is set up but what MRI can do is it can look at every single organ and look for tumors that are 2 cm 2 millimeters It can look for stroke risk, aneurysm risk, endometriosis, hernas tears, everything. So, if you actually want to understand what's happening inside the body, an MRI is an incredible way to do it. But it's been so arcane and so difficult. It's never actually been architected and set up to look at the body and get well ahead of things. And it's usually been, oh, you go in a hospital, you broke something, you have an issue, you go look at this one particular area. In function's case, you can actually look at most of the body through an MRI. and you can detect cancers early, you can detect aneurysm, stroke risk, etc. Um, and you can do it for $499 and you can do it across almost 200 locations by the end of this year. There's never been anything like this. This is the first time in history this has been possible. It is the first time in history it's been possible geographically from a cost perspective, um, technologically and culturally it's changing. People are realizing this. What I was alluding to before, it's a really important point is a new standard of health is emerging and that standard includes twice a year comprehensive lab testing. It takes a 10 15 minutes each time you go in, you get your whole body tested, you find out what's actually happening inside. And the second thing is now a quick MRI every year. And if you do it, what you're doing is you're actually creating a baseline for your whole health. And you're seeing how things are changing over time. You're catching velocity. You're seeing bad trend lines. And you're also just flagging critical issues as well as finding out what you can optimize and what can be better in your life. And what's crazy to me is the current standard like the status quo. We've all done this. We've all gone into the doctor's office. They test you for like 20 things. You get a phone call in 3 weeks. You're good to go. John, Jordy, see you in six months, a year, two years, whatever. And you move on with your day. And that's just this episodic once in a while very narrow perspective on your health that's gone. But they miss. They're not looking at cancer and they're really not even looking at heart disease, the two leading causes of death, let alone metabolic dysfunction, hormonal issues, thyroid issues, and function looks at all that. I give you a crazy stat. A new study just came out. 45% of people that were hospitalized for their first heart attack did not have what is considered high- risk cholesterol.

That should be terrifying. Why? Because if you go to a doctor's office today, a regular old physician's office for a checkup, you get your LDL checked, right? You guys have done this. Yeah.

Yeah.

Okay.

That marker was born in the 1950s. It's older than my father.

Vintage.

It's vintage marker.

Some people would say Lindy. Some people would say that's Lindy. Okay, let's just steal man for a minute. They might say it's Lindy. So, so look, um, there is no world where any top cardiologist say, I'm just going to rely on LDL cholesterol. Basically, what every top cardiologist tell you, let's look at APOB, let's look at LB, little A, let's look at lipid particle size. For most people, they don't, those words are far into them,

but they should be. I mean, it's this off guard stuff, right? But so there are way better ways to look at the heart, but we're relying on something that's back to the 1950s as status quo. And what function has done is for hundreds of thousands of people now, we've actually delivered a new standard of health that includes twice a year testing

of everything that looks at your heart. It's looking at your kidneys, your thyroid, your hormones, everything. Women don't have to go to their doctor and ask for horn panel and get chased around. instead they can actually get a look at what's going on with their hormones.

And then on the cancer side, real quick, cancer side,

400 you're you're four times more likely to survive cancer if you catch it early. But right now, status quo is you have to wait till you have symptoms to catch cancer.

Yeah, it's crazy.

There's no way that's okay. I don't want that for my family. So, and now there's technology where we can actually with an MRI as well as with a grail test that we test for many, many, many thousands of people, we can actually get way ahead of these things. So, I can talk about

Yeah. Yeah. So, I'm I'm sold on the product. Uh I think it's I think it's hard I think it's hard hard not to be. It's it's the best kind of like value offering I think in health like period. Uh, and I was sold obviously uh when you were raising uh preede uh back in the day, however been two two and a half years ago or something like that. Feels feels like forever ago. Can you give us like a I'd love to get your view on an update of like the the market uh structure. A lot of companies have seen uh you guys weren't uh function wasn't the first uh first lab, you know, testing and and and health platform like this to exist, but your guys' execution and the growth. I think you're one of the uh uh at least uh growing faster uh than than a lot of the the fastest growing AI companies that we're seeing out of the last year. um give us an update on like the shape of the market, how you see the market evolving because like I was saying, a lot of people are trying to like ride uh ride your your coattails. Um but uh I'm curious for for an update there. You know, we the the market is realizing that the word consumer health has been this like dirty word for 20 years or something. And it's not it's it what it is is it's premised on the most primary thing that we experience as human beings is our biology. It's our it's our life experience. And what's the LTV of your health, right? You'd be willing to pay anything for health. It's the most valuable thing in the world for you. And so we're finally in a place where we can actually see technology and products broadly applied to health. And so it's it's you're looking at a TAM that conservatively is $7 trillion in some

give it up for 7 trillion TAMs. John, hit the hit the hit the size gong for a $7 trillion TAM.

Had to had to. Anyways, continue.

I love it. I love it. No. So, so, so look, this is this is people have been spending absurd amounts of money on their health through these massive service platforms like insurance companies and big health systems. And finally, people are saying, you know what, health happens outside of the doctor's office, and I'm taking it into my own hands. And what we're doing is we're bringing scientific and medical rigor directly into a a platform that people they themselves can sign up for. They themselves can manage and so they can make decisions for themselves. And that gets them way ahead of disease as you know as you saying before like this is this is not a it's not a trivial space. I think it's it is the best it is the most anticipated service for AI. it is the best application of AI in the world is to our health because that is the major experience and so of we're we're we're surprised that that the the category and all the all the competitors aren't it's not that it's not bigger that more people are jumping into this like we we know that people are going to try to ride these coattails but but um we just we are our head is down and our focus is in how can we deliver as much value per dollar for each one of our members. We have hundreds of thousands of members, soon millions of members. We have been growing really fast because we're at we're actually delivering something to somebody that has real real substantial value. And at a time when a lot of technology can do a lot, it's it's like what are we really paying for? And it's like

where can where can people get started? You mentioned it's a dollar a day. Um correct. Does it take me through like the customer flow? Is it just a website and then I go to the lab? explain how people can get can get going.

Okay, so it used to be $999 when we started. It was manual and it was per day.

$1,000 per day. No, $1,000 per year.

Sign me up.

He said per year. Don't Don't worry, John's just messing with you.

So, it started at a,000 bucks per year. Then we worked really hard to to bring up the efficiencies and tech. Got it down to 499

and and a couple weeks ago we announced it's now 365. It's like when actually

$365 per day because health health is an everyday thing and it's an understandable price and when has healthcare actually been deflationary.

Yeah. And then so so uh go to Quest Labs probably twice a year.

You go to functionhealth.com.

Yep.

functionalth.com.

functionalth.com.

You just sign right up.

Yeah.

Right there in theuler. You sign up for your lab appointment. You show up at the lab. You get your blood drawn. Urine collected. You walk out 10 15 minutes later.

Cool. In 24 hours, results start pouring in.

Yep.

Now, now your app is live.

Yep.

And all the data is coming in. It's making sense of it. And you test every six months.

Six months.

Got it.

Exactly.

I think people I think people one of one of the reasons people underestimated this kind of category it was as it was emerging is so many people got burned on like DNA testing, open DNA, DNA like the 23 and me is you test it once

then there's like zero incentive to retest, right? You just you you did 23 and me, you have have the data. It depends. Are you working on your DNA or not? Have you been modifying your DNA?

If you modify your DNA regularly, you should probably be testing your DNA regularly.

You never know.

You never know.

I might have I might have rewritten my entire DNA. All of it from start to finish. Every base pair is different now. Sign me up again. I'm ready to go.

We have to study you if that's the case. We're gonna have to We're going to have to bring you in.

John John needs to be studied. Honestly, got ridiculous. What does 25,000 diet cokes do to the human body? We're going to find out. What is 500 diet cokes a year?

A dollar a day on function and four diet and and at least four diet cokes a day for John. Uh we're we're actually running we're running a split test. We have the exact same uh lifestyle. We we show up at the gym every morning. We work out. We prep the show. We do the show. We hang out with our family. We just we're going to do that forever. But John drinks Diet Coke and I drink uh

Mattina Yerba Mate podcast in a Clint can from Andrew Huberman of course. Uh and uh we're going to find out. Yeah. Yeah, we're going to find out. Well, thank you so much for taking the time to come chat with us. We have a small bit of breaking news I want to get to before our next guest. So, we will be seeing you soon. Oh, one last thing. Uh give us the numbers on the last fundraising round. I want to ring the gong for real.

Yeah, let's do it. Series B, $298 million raised, $2.5 billion valuation. But look, look, the the thing to think about here is that's basically a dollar for every American adult.

There we go.

And so what what that is is that's a that's a vote on your health. That's not just

I love it. I love it. Well, thank you so much for taking the time to stop by. We will talk to you soon here, Jonathan.

Long live TVPN for for for the next one for the C. Come in person. We got a seat here for you. I'd be honored to have you in person.

Be great.

Let's do it, brother.

We'll talk to you soon.

Great to see you.

Goodbye.

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