Exclusive: BehaVR, Fern Health merge to spawn RealizedCare
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.