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Exclusive: BehaVR, Fern Health merge to spawn RealizedCare

Illustration of a phone wearing a doctor's coat and a stethoscope.

Illustration: Aïda Amer/Axios

BehaVR and Fern Health are merging to create RealizedCare, a digital care management tool for chronic pain, BehaVR CEO Aaron Gani tells Axios exclusively.

Why it matters: Chronic pain impacts 20.9% of U.S. adults, many of whom have mental health issues, and it drives nearly $300 billion in annual direct health care costs.

Details: Germany-based pharmaceutical company Grünenthal, which specializes in pain management, will become RealizedCare's largest investor.

  • While deal terms were not disclosed, Grünenthal will be the new company's largest shareholder with an approximate 20% stake, a source familiar tells Axios.
  • Grünenthal is also investing "mid-single-digit millions" in equity in RealizedCare, the source says.

How it [will] work: Elizabethtown, Ky.-based BehaVR's virtual reality programs use tenets of exposure therapy to treat various mental health conditions.

  • Programs are largely self-directed, and clinicians oversee and manage patients' treatment asynchronously.
  • NYC-based Fern Health's virtual pain platform offers guided exercise therapy, interventions for sleep, nutrition, movement, and emotional health. The company also provides pain-focused one-on-one clinical coaching and education.
  • The combined entity as RealizedCare will serve health plans, employers, and VBC providers.
  • The company is generating revenue but is not yet profitable, Gani says.

What they're saying: "We were evolving our strategy to embed our digital therapeutics inside more fulsome solutions," Gani says. "We think they are a perfect complementary piece to what we already have."

  • Alongside products focused on mental wellness, the company is researching a pain prescription therapeutic candidate in collaboration with Confluent and studying an opioid use disorder candidate with funding from the National Institute on Drug Abuse.

Catch up fast: BehaVR merged with virtual reality behavioral health peer OxfordVR last year with support from a $13 million Series B.

  • On how VR and the partnership between BehaVR-OxfordVR comes into play, Gani said that this offering delivers care for chronic pain and the emotional distress that typically accompanies it, predominantly via VR programs.
  • "Pain coaches and a community of other people with chronic pain will support the members through their care journey, but the VR interventions are at the core of each member's care plan."
  • The company had a post-round valuation of around $140 million and has raised a total of around $30 million, according to Gani.
  • Its Series B raise has runway "into 2025 or mid 2025," he says.

What's next: Despite an oversaturated market likely to be flooded with potential acquisitions, RealizedCare doesn't plan to scoop up fire sale assets, Gani says.

  • "Our pipeline of digital therapeutics is robust and we will continue to look for add-ons where and when it makes sense," he adds.

Of note: RealizedCare's product pipeline also includes gameChange for agoraphobic avoidance, along with depression interventions in partnership with Sumitomo Pharma.

💭 Aaron's thought bubble: With myriad startups struggling, market conditions are ripe for M&A — particularly for well-capitalized businesses.

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