Telepsychiatry startup Talkiatry recently announced the completion of its $37M Series A funding round, which it will use to scale its strategy of offering psychiatric care as an in-network benefit with payors.
- Talkiatry’s platform guides patients through an online survey before matching them with a staffed psychiatrist based on the results, offering continuous virtual care from diagnosis to medication and ongoing support.
- Many psychiatrists don’t participate in private health plans due to minimal reimbursement and paperwork headaches. Only 62% of them are willing to work with payors while just a third will accept new patients using Medicaid.
- Talkiatry’s solution to this problem is to bring psychiatrists on board as W-2 employees as opposed to contractors, offering stability while streamlining administrative tasks. Since launching in April 2020, the company has hired 190 providers and conducted over 60k visits.
- The funding will help Talkiatry expand beyond its home state of New York and continue to aggressively hire psychiatrists to meet the needs of its payor contracts that currently cover more than 200M lives.
Nearly every startup in the behavioral health space is addressing a common issue: the supply-demand imbalance for providers. Many companies have turned to recruiting therapists in place of psychiatrists, despite the fact that only psychiatrists can prescribe medication.
By avoiding the contractor model, Talkiatry is finding success in attracting these highly sought after providers, and so far the approach appears to be scalable. Over 83% of the psychiatrists in the company’s pipeline have actively applied to join the team.
It’s less than a month into the new year and the first major digital health SPAC merger of 2022 has arrived. Digital therapeutic company Akili Interactive announced plans to go public in a merger with Social Capital Suvretta Holdings Corp, a SPAC run by high profile venture capitalist Chamath Palihapitiya.
The transaction values Akili at approximately $1B and is structured to provide over $400M in new capital after it closes in mid-2022, after which the company will be listed on the Nasdaq under the ticker symbol AKLI.
- Akili develops video games designed to address cognitive impairments in patients. The games actively adapt to each player’s abilities to deliver individualized regimens for building attention control.
- EndeavorRx is the company’s flagship product targeted at treating ADHD in children by requiring them to manage multiple tasks simultaneously while navigating a character through complex levels. It became the first FDA approved video game in June 2020.
- The proceeds from the merger will support the commercial launch of EndeavorRx later this year and help to expand Akili’s digital therapeutic pipeline to other cognitive impairments such as depression, autism spectrum disorder, and multiple sclerosis.
SPAC enthusiasm is clearly alive and well, often chosen for the structure’s ability to take companies public quickly while avoiding much of the volatility associated with traditional IPOs. Last year saw a record 23 digital health companies go public, 8 through IPOs and 15 through SPAC mergers, including another DTx-developer Pear Therapeutics.
Prior to its public listing, Akili raised $301M in funding while projecting that the US market for its ADHD solution could generate $500M by 2030, a potentially rosy forecast given that EndeavorRx has yet to be made commercially available.
The public markets have not been very kind to pre-revenue healthcare companies so far this year, but the FDA and investors both seem to agree that Akili’s fresh approach to video game-styled therapeutics offers significant potential.
Home-centered care startup Reimagine Care recently raised $25M in Series A funding, its first round of outside capital that it hopes will help it live up to its namesake for US cancer patients.
Reimagine Care provides technology-enabled services that support oncologists in delivering value-based care remotely, while helping health systems, payors, and employers accelerate the shift to coordinated home-centered cancer care.
- Taking inspiration from European models for home-based cancer treatment, the Reimagine Care platform gives patients access to a 24/7 virtual care center that allows them to view their treatment plan and communicate with their care team.
- For providers, Reimagine Care offers remote patient monitoring and end-of-life care management solutions that have been shown to reduce ER visits and inpatient admissions.
- For payors and employers, home-centered care is “a lever for value,” improving member satisfaction while reducing adverse events such as hospital-acquired infections that drive expenses.
- The funding follows a survey that found that 66% of healthcare executives believe home-centered cancer care offers significant potential to grow their organization, and that 60% are concerned that their organizations may fall behind if they don’t make the shift to home-centered cancer care in the near future.
With the pandemic as a catalyst, cancer patients and their families have begun seeking not only the best treatments, but also the best experiences. Reimagine Care believes that health systems that are first-movers in home-centered care will have a strong advantage over those who fail to make the leap, which rings true, but time will be the judge. The company has yet to begin taking patients, and its success will hinge on the ROI that they deliver when they’re fully operational later this year.
Last week, UnitedHealth Group (UHG) reported its full-year financial results for 2021, defending its title as the most profitable US healthcare company while serving as the earnings season bellwether for the broader industry.
Between its UnitedHealthcare payor operations and its Optum hybrid care service lines, UnitedHealth Group pulled in $287.6B in revenue for the year (up 11.8%), beating their initial projections by about $10B.
UnitedHealthcare is the nation’s largest commercial payor, and the company spent a lot of time in its conference call highlighting its success in Medicare Advantage (MA).
- UHG leads the MA space with 7.9M members, adding 800M in 2021 alone. Over the past year, total MA plan enrollment grew 8.8% to 28.5M beneficiaries, meaning that UHG accounted for nearly 1 in 3 new members – a huge revenue boost from the government at $1,000/patient/month.
Optum’s fast-growing health services business was no less impressive, serving 100M people at year end 2021 while growing revenue per consumer by 33% as it expanded the reach of its value-based care arrangements.
- UHG spent $100M in 2021 helping partners prepare for value-based contracts. This investment was divided between three primary work streams (clinician training, tech enhancements, network coordination), with similar investments expected this year.
The Forecast for 2022
Looking ahead to the rest of 2022, it’s difficult to forecast a scenario where UHG doesn’t continue its momentum. In the past few months the company’s expansion has only accelerated, with UnitedHealthcare debuting a virtual-first health plan NavigateNOW and Optum moving into the direct-to-consumer pharmacy arena.
UNG expects its 2022 revenue to grow roughly 10%, falling between $317B and $320B, and there’s even a kicker. That projection doesn’t include any gains from the pending acquisition of Change Healthcare for $8B, which has its April approval deadline quickly approaching.
Value-based care enabler Babylon is wasting no time making M&A moves in 2022, announcing patient engagement platform DayToDay as its second acquisition in as many weeks.
Just days after kicking off its US expansion by acquiring health kiosk manufacturer Higi, Babylon is bolstering its remote care capabilities with DayToDay’s digital-first programs supporting patients through major health events such as surgeries, childbirth, and the diagnosis of chronic conditions.
- DayToDay supports patients during crucial recovery periods that often extend beyond a hospital stay. It provides targeted education resources and clinical support from a personal care team, a strategy that it reports is able to keep rehospitalization rates below 4% (vs. a 15% industry average).
- Babylon works with providers, employers, and payors to offer members digital-first healthcare through the devices they already own. Its AI platform powers its Babylon 360 value-based solution as well its Babylon Cloud Services data analytics suite.
- The combination of DayToDay’s patient engagement services with Babylon’s existing offerings should enable better care delivery for both the hospital setting and the home, widening the impact that Babylon can have across the care continuum.
Babylon’s goal is to “make high-quality healthcare accessible and affordable for every person on Earth,” a mission that’s as big as the company’s appetite for acquisitions that could help make it happen. The Higi acquisition was a strong entry point into US healthcare, and DayToDay’s patient engagement services strengthen Babylon’s value-based care portfolio as it establishes itself internationally.
Mental health benefits provider Lyra Health is making a habit out of starting the new year with a ton of momentum.
In January 2021, Lyra closed $187M in Series E funding and entered a partnership with ICAS World to bring its benefits overseas. This week, the company raised another $235M at a $5.58B valuation, while announcing the acquisition of ICAS World as it begins to make international expansion a top priority.
- Lyra provides a suite of in-person and virtual behavioral health benefits to over 75 large employers, offering accessible treatments for conditions such as depression and anxiety that are often stigmatized in the workplace.
- The latest raise pushes Lyra’s private funding total to $916M and ranks it among the most well-funded companies in one of the hottest corners of the digital health market. The timing follows Lyra’s September announcement of a trio of new solutions designed to address complex conditions such as alcohol use disorder and suicidality.
- ICAS World is a global employee assistance provider with a specialist network that offers “culturally responsive care” and localized support in more than 155 countries and 66 languages.
- The acquisition greatly expands Lyra’s worldwide reach, allowing it to provide mental health coaching, therapy, and medication within a single platform to over 10M global members. That’s a big jump from the 2.2M members covered by Lyra prior to the acquisition.
Lyra’s employer-facing model has quickly gained traction in the US, but mental health challenges are hardly isolated to US-based employees. The WHO estimates that productivity losses due to depression and anxiety cost the global economy $1T annually. Mental healthcare is a global challenge, and the ICAS acquisition is a large step towards making Lyra a global solution.
Many mental health startups are beginning to take a specialized approach to treating a specific population, a strategy that is delivering impressive results for Mantra Health.
Student-focused clinic Mantra Health closed a $22M Series A round to address the growing prevalence of mental health disorders on US college campuses, raising its funding total to $27M.
- Mantra Health equips campus counseling offices with dedicated therapists and a digital platform to work as an extension of on-campus providers. Since introducing its Higher Education solution in 2020, Mantra has expanded to 52 US colleges accounting for over 500k students.
- The treatment model begins with an online assessment to introduce students to their care options, before allowing them to schedule an initial video consultation. The Mantra provider then works alongside the student to create a personalized care plan involving therapy, lifestyle adjustments, and possibly medication.
- The funding will be used to enhance Mantra’s clinical infrastructure to handle more complex diagnoses and expand its nationwide provider network. The company stated that it will need to quadruple its team within the next year to meet overwhelming demand – 100% of its partner campuses renewed or expanded services in 2020.
Mantra’s Future After Funding
As part of its expansion, Mantra is launching a new program to support students with long term mental healthcare needs, working with the students’ health plans as the payor instead of the school.
The long term care program allows graduating students to keep their current provider or make an appointment with a new one that has access to a Mantra Collaboration Portal designed to ensure patients receive care continuity during a major life transition.
Lack of availability for specialist appointments is a growing problem that’s hard to tackle by just adding video calls or improving referral systems, but AristaMD believes that a combination of both solutions will move the needle in the right direction.
eConsult company AristaMD announced the acquisition of referral management startup Preferral to help address the 20% of referrals that it reports are misdirected and the 50% of referrals that “are often unfulfilled.”
- AristaMD’s eConsult platform allows primary care physicians to submit a case to a contracted team of over 300 specialists, who then have 24 hours to review it. The patient’s clinical history, lab results, and images are provided to allow the specialist to return a treatment pathway during the one-day window.
- The model is able to operate due to the fact that peer-to-peer asynchronous consultation is an informational consult, meaning that the specialist does not have to be licensed in the patient’s state. AristaMD works with health plans that offer eConsults as benefits, as well as health systems that use the platform to facilitate collaboration.
- Preferral’s solution enables PCPs to easily send a referral to a specialist and confirm receipt with both the originating practice and the patient, eliminating avoidable complications that result from busy clinics using fax machines and follow-up calls to coordinate referrals.
- Combining AristaMD’s eConsults with the Preferral platform will create a comprehensive physician-to-specialist referral solution, complete with reviews for prior authorization, scheduling, and interim care plan support.
The acquisition of Preferral greatly improves the referral management component of AristaMD’s eConsults service, reshaping it as a comprehensive platform with the ability to improve access to specialists while expediting treatments.
Value-based care enablement company Aledade announced the acquisition of Iris Healthcare, a provider of Advance Care Planning (ACP) solutions for the seriously ill.
- Aledade uses data analytics and guided workflows to help primary care practices with the shift to value-based care. The company’s platform helps practices identify and better manage their highest risk patients.
- Iris Healthcare provides ACP services aimed at reducing unnecessary care while ensuring that critically ill patients receive care consistent with their values and preferences by formally documenting those wishes in an advance directive.
- The tuck-in acquisition will see Iris’ ACP offerings folded into Aledade’s new health services unit called Aledade Care Solutions, which is designed to give the company’s partners more ways to address their current inefficiencies.
- Combining Iris’ services with Aledade’s predictive algorithm and data will help better identify patients who could benefit from ACP, which demonstrated better outcomes and higher patient satisfaction following a successful pilot program last year.
Change the Model, Change the Results
Aledade’s software-led model for assisting providers is highly scalable, allowing it to be more capital efficient than competitors that are building value-based primary care clinics from scratch. The company’s contracts collectively cover more than 1.7M patients (up 20% from last year), and it’s operations rank it among the coveted healthcare startups that are turning a profit.
Aledade was profitable for the second straight year in 2021 with gross revenue of $300M, a figure that it expects to double by 2023.
Headspace Health isn’t skipping a beat in its mission to create a comprehensive behavioral health platform, acquiring AI-enabled wellness app developer Sayana less than six months after forming through the merger of Headspace and Ginger.
Sayana emerged from the Y Combinator incubator in 2020 with $125K in Seed funding and a goal of introducing as many people as possible to self-care exercises rooted in cognitive behavioral therapy, acceptance commitment therapy, and dialectical behavioral therapy.
The company’s solutions leverage a chat-based AI avatar named Sayana to encourage users to track their moods, allowing it to personalize content delivered through its three primary apps:
- The Sayana App provides mood tracking and journaling tools coupled with mindfulness exercises to provide insights into how users are feeling over long periods of time.
- Sayana Sleep aims to match user moods to sleep patterns in order to help those struggling with insomnia fall asleep through custom relaxation sessions.
- Sayana Workplace uses the same approach but targets it towards employers by helping their employees manage workplace stressors.
The acquisition brings Sayana’s AI expertise and team to the Headspace Health platform to improve its own recommendation algorithms and coaching offerings. The employer-facing component is also interesting given Headspace Health’s enterprise operations, which are a key growth driver for the company and are distributed by over 3,500 employers looking to increase productivity by improving employee wellbeing.
Data, AI, and Accessible Care
Although Sayana’s 300k+ user base is fairly substantial, it’s tiny in comparison to the 70M+ members commanded by Headspace Health. More user sessions training the AI models should improve the recommendations and ultimately lead to better outcomes for users (and a large competitive advantage for Headspace Health if well executed).
Mental healthcare is a complicated challenge, and requires a scalable solution beyond hiring more therapists and putting them in front of a screen. With the acquisition of Sayana and its AI-enabled chatbot, we’re beginning to get a good idea of what Headspace Health’s solution might look like.