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Pelago nets $58M Series C for virtual addiction treatment

Illustration of a statue of Atlas holding a pill instead of the world.

Illustration: Shoshana Gordon/Axios

Virtual substance use treatment company Pelago raised a $58 million Series C led by Atomico.

Why it matters: Getting treatments to patients remains an obstacle following pandemic-fueled record deaths from drug overdoses, alcohol and suicide — and research suggests virtual approaches might help.

Zoom in: New backers Eight Roads and GreyMatter Capital joined, alongside existing investors Kinnevik AB, Octopus Ventures and Y Combinator.

  • Funds will power clinical research and product development, including the recent introduction of an internally developed, AI-powered provider note-taking assistant.
  • Atomico partner Laura Connell joins Pelago's board.

How it works: Formerly known as Quit Genius, New York City-based Pelago offers its virtual substance overuse therapy programs to employers and payers on a 100% fees-at-risk basis.

Flashback: The round follows the company's $64 million Series B in 2021.

Between the lines: "Telehealth facilitates care for many patients who have difficulty attending in-person appointments due to logistical and psychological barriers," write researchers in a 2021 study in the Harm Reduction Journal.

The other side: Challenges with virtual addiction treatment include reaching people in remote, non-internet-connected areas and ensuring people are receiving the full suite of care services.

Stunning stat: Although overdose death rates have climbed for the last 20 years, barely one-fifth of the approximately 2.5 million Americans with opioid use disorder receive medication.

The big picture: Virtual addiction treatment deals rose alongside so-called deaths of despair, with several East Coast companies gathering significant mid-stage rounds during the pandemic in 2021 and 2022.

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