Brave Raises $40M for Medicaid Mental Health

Serve a large need. Serve it at scale. Serve it well. It’s a popular playbook for many mental health startups, but Brave Health is looking to put a twist on the model with $40M in Series C funding.

Brave’s strategy differs from employer-focused mental health providers like Lyra and Headspace in its commitment to Medicaid members, no easy path considering only a third of psychiatrists accept new Medicaid patients.

To serve this population, Brave employs nearly 200 behavioral health providers and supports them with a tech stack that’s one part teletherapy tool and one part engagement platform.

  • These providers offer virtual counseling, therapy, and psychiatry, while the priority is to get Medicaid patients referred to mental health services into care as quickly as possible.
  • This engagement component is key. Brave boasts an 80% contact success rate and has received 23k referrals this year alone through partnerships with payors and hospitals.

The fresh funding will be used to help Brave expand beyond the 18 states in which it currently operates, and to accelerate the activation of more value-based contracts.

  • After entering its first VBC contract with Molina Healthcare of Texas earlier this year, Brave’s now signed two others to push the total number of lives it could potentially cover under risk-based arrangements to over one million.
  • It’s also likely that we’ll see Brave double down on partnerships with other startups in the Medicaid space, building off of existing relationships with MedArrive (in-home care) and Doula Network (maternal mental healthcare).

The Takeaway

Brave’s “you can’t treat who you can’t reach” approach is fairly unique among its cohort of VC-favorite mental health startups, but its focus on Medicaid sets it even further apart from competition. By taking ownership of getting members into treatment as well as their care journey, Brave seems well-positioned to deliver results for both health plans and the patients they serve.

Redesign Health Closes $65M to Launch Startups

Launching a healthcare company is hard. Launching dozens of them is even harder, but that’s exactly what Redesign Health is setting out to do with $65M in Series C funding.

Redesign isn’t a venture capital firm, although it’s funded more digital health startups than most VCs. It’s not an accelerator, yet it’s launched more early-stage companies in its four years of existence than post pure startup studios.

Then what is it? Good question. Redesign’s team consists of roughly 300 analysts that  “accelerate the healthcare innovation cycle” by researching sectors, identifying challenges, then assembling companies to pursue solutions.

  • The “assembling companies” piece is every bit as hands-on as you might imagine. Redesign funds the initial product development, handles the branding, and even installs the leadership team.
  • By bringing everything in-house, the idea is that Redesign can eliminate many of the barriers that healthcare founders usually face, allowing them to deliver outsized value… and shareholder returns.

Redesign takes an equity stake in every company it launches, a fact well-known to its Series C investors like CVS Ventures, General Catalyst, and UPMC Enterprises.

  • Since 2018, Redesign has launched over 40 companies, including home-health startup MedArrive, cancer-care platform Jasper Health, and mental health company UpLift. 
  • The latest funding will go toward Redesign’s own platform that helps its portfolio companies tackle repeatable processes, and innovation agreements with its Series C investors will ensure that they’re able to co-build companies using the technology.

The Takeaway

Healthcare startups have high upfront capital costs, steep inflection points between business stages, and difficulty recruiting the seasoned executives needed to reach scale. Although there isn’t a magic wand that can be waved to make those problems disappear, we’re guessing that Redesign’s startups see smoother sailing than most.

It’s a unique model that’s hard to put in a box (especially one the size of a DHW top story), but Redesign’s portfolio of already-launched startups and its eye-popping $1.7B valuation seem to suggest that it’s a model that’s working.

Mental Health Startup Alma Raises $130M

Digital health’s recent momentum saw another boost this week as mental health startup Alma hauled in a massive $130M Series D round. Between the return of nine-figure funding rounds and a new string of mega-acquisitions, it’s almost starting to feel like 2021 again. 

Alma helps mental health practitioners manage their practices and contract with payors, equipping them with teletherapy software, automated billing and scheduling tools, as well as a directory to help patients find in-network providers.

  • The platform is offered through a $125/mo membership, which allows clients to keep all earnings generated from patient visits. Over the past 12 months, Alma has tripled the size of its network to 8,000 providers licensed to practice in all 50 states.
  • Nearly 40% of providers in Alma’s network self-identify as Black, Hispanic, or Asian, and the company said that one of its main goals with the fresh funding will be to connect its diverse clinicians to underserved patient populations.

Originally founded in 2018, Alma’s taken a pretty interesting path to end up at its current managed services membership model.

  • The company started as a coworking space for therapists prior to the pandemic, then began adding support tools to make its users’ lives easier as it evolved into an MSO.
  • Now Alma is aggregating those independent therapists into its own provider network that it can leverage to negotiate directly with payors.

The Takeaway
At a time when payors are clamoring to improve access to mental healthcare, Alma’s unique approach to provider enablement and payor negotiations seems like it might be part of the solution. Alma is only the third mental health startup to raise a $100M+ round so far this year, following Lyra Health and Brightline.

Osmind Raises $40M for Breakthrough Mental Health Therapies

Severe mental health disorders are complicated problems to solve, and the legacy documentation systems used by most psychiatrists don’t do much to help the rate of progress. Electronic health record startup Osmind raised $40M in Series B funding to equip psychiatrists with tools to better manage complex patients, while also starting to fill the data gap in research for breakthrough therapies.

On the surface, Osmind offers an EHR tailored to clinicians serving patients with treatment-resistant mental health conditions like severe depression and PTSD.

  • The Osmind EHR supports clinical and administrative functions with features that streamline charting workflows, automate outcome tracking, and drive engagement.
  • An integrated mobile app enables patients to record their thoughts and feelings in between visits, giving providers a clearer view of their patients’ overall well-being. 

The back end of Osmind’s platform is equally as important as the EHR. A real-world evidence engine takes the granular data from the EHR and makes it available to researchers studying breakthrough mental health treatments such as ketamine and psychedelics.

  • While other companies like Flatiron Health and Verily also leverage anonymized patient data to influence therapy design, Osmind has quickly compiled a leading dataset to help translate this strategy to the mental health arena.
  • Earlier this year, Osmind partnered with Stanford University School of Medicine to publish the largest-ever real-world data study on ketamine infusion therapy as a treatment for depression.

The fresh funding will be used to expand Osmind’s team as well as the types of data its software can capture to advance a wider range of clinical trials and therapies.

The Takeaway

Mental health startups have proliferated over the past few years, but few have focused on breakthrough treatments for the millions of patients who have tried and failed multiple other options. Osmind’s new funding will allow it to better help these patients, not with direct clinical care, but by supporting the providers and researchers already serving them.

Health AI, Unicorns, and Stretched Valuations

In recent years, digital health has been a hot-bed of innovation as companies tackle healthcare inefficiencies with new technology, but the rapidly climbing valuations are causing many to wonder: how much higher can they go?

Healthcare AI raises $8.5b in 2021.

According to a report from CBInsights, private healthcare AI companies have raised $8.5b through the first three quarters of the year, surpassing 2020’s full-year total of $6.6b.

  • Q3 2021 was healthcare AI’s strongest quarter ever ($3.2b raised across 149 rounds)
  • Top areas of focus include remote patient monitoring, decentralized clinical trials, and home diagnostics.
  • AI startups account for approximately 40% of year-to-date digital health funding

Unicorns are no longer endangered.

The term “unicorn” used to indicate that a young company was a successful outlier with a $1b+ valuation, but has recently been diluted as more startups earn the designation.

  • CBInsights now counts the total number of “unicorns” at 925 globally, including 13 healthcare AI companies that received the title just last quarter.
  • When the term unicorn was coined in 2013, there were fewer unicorns than there are “decacorns” with a $10b+ valuation today (45).
  • Devoted Health currently has the highest healthcare company valuation ($12.6b).

How much higher can valuations go?

Digital health companies scaled quickly during the pandemic by taking on outside investment to keep up with the surge in demand, which sent private valuations soaring. Many of these valuations were based on the size of the total addressable market, driven more by potential than current revenue. If these companies fail to capture share, or if health-tech adoption declines as the pandemic wanes, then these expectations might be hard to meet and we could start to see some moderation.

FemTec Health Emerges From Stealth, Acquires Birchbox

Former Livongo executive Dr. Kimon Angelides announced that FemTec Health, a technology-focused women’s health sciences company, is emerging from stealth with $38m in funding and the acquisition of subscription box pioneer Birchbox.

FemTec was originally formed in May 2020 with the aim of using technology to personalize care for women across the health continuum, from specialty and reproductive care to mental health and chronic condition management.

  • At launch, FemTec has over 10m members, two in-progress clinical trials, and 150 employees. Using a combination of AI and predictive analytics, it is looking to create a unified experience for its products and services across multiple channels, including D2C, B2B (employers, health plans), and subscriptions.
  • BiomeAI is the data analytics platform around which most of FemTec’s solutions revolve, which customizes care by using machine learning to transform data (consumer, genetic, microbiome, biometric) into personalized product and treatment recommendations.
  • Key acquisitions have helped FemTec launch with an established member base, such as digital cosmetics store Mira Beauty, social marketing platform Liquid Grid, and beauty box early mover Birchbox. FemTec announced plans to re-launch Birchbox later this year with a focus on BiomeAI-curated skin and healthcare products as opposed to beauty supplies.

The Takeaway

While FemTec is first and foremost a female health company, its acquisition history and BiomeAI recommendation platform show that it will likely focus more on consumer products than other competitors in the space. Female health is a giant market and one that’s been historically underserved, opening up plenty of runway for FemTec to meet unmet demand for personalized care.

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-- The Digital Health Wire team