M&A / FundingProptech

Porch breaks into insurtech with $100M acquisition

Fresh off its merger and public debut, Porch buys Homeowners of America and three other companies

Fresh off a SPAC merger and public offering that loaded the company with roughly $200 million in fresh capital, proptech firm Porch made four acquisitions this week, notably investing $100 million in an insurtech company.

Porch, led by CEO Matt Ehrlichman, acquired home insurance company Homeowners of America, mover marketing and data firm V12, home inspection company Palm-Tech and roofing contractor software company iRoofing. In all, Porch spend $122 million, according to disclosures made to the Securities and Exchanges Commission.

The company, which has changed focus from a marketplace to a vertically integrated home, told HousingWire in December that it was on the hunt for companies that would take it deeper into the homeownership space.

Porch Group previously acquired insurance broker Elite Insurance Group, logistics and moving services firm Kandela and personal services company HireAHelper.

The big acquisition is for Homeowners of America, an insurance company that operates in six states and is licensed in 31 more.

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“Part of our business is insurance,” Ehrlichman said. “We’re committed to it. The reality is insurance is the most valuable service in the home and it’s a service that is recurring in nature. Since we have access to so many homebuyers and they have to purchase insurance, we’re perfectly set up to go deeper into the channel, plus we know so much about the home.”

He noted that Porch’s visibility into the overall homebuying pricing – through data partnerships with movers, inspectors, contractors, utility companies and others – gives the firm an advantage on pricing risk.

“Porch is capable of more than just insurance, it’s bundling other services to make the move really easy,” he said. “We can create a differentiated experience for the consumer.”

Porch disclosed that it expects a 2020 net loss between $53 million and $55 million, and an adjusted EBITDA loss between $18 million and $19 million. Porch raised its 2021 revenue outlook from $120 million to $170 million.

Investors were evidently enthused by the acquisitions. Trading halted on Thursday and closed at a 5% gain to $15.93. Shares jumped even higher by Friday afternoon, checking in at $17.35.

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