Axios Pro: Health Tech Deals

September 26, 2023

Axios Pro Exclusive Content

Happy Tuesday, Health Tech readers!

Situational awareness: Erin is at the Rock Health Summit, where she is MCing Tuesday's awards dinner and moderating a Wednesday panel on health innovation.

1 big thing: Cartwheel circulates $20M Series A

School-focused telemental health provider Cartwheel raised $20 million in Series A funding, CEO Joe English tells Erin exclusively.

Why it matters: Just last month, three high-profile medical associations warned that emergency rooms were buckling under the youth surge in demand for psychiatric care.

  • "This is the crisis of our times, even in an era of COVID," says Menlo Ventures partner and Cartwheel investor Greg Yap.

Details: Menlo Ventures led the round.

  • New backer Reach Capital participated alongside previous investors General Catalyst, BoxGroup and Able Partners.
  • The Series A will be funneled into expanding Cartwheel's services to new states and to new schools in states where the company already has a presence.
  • English tells Axios the funding gives Cartwheel three to four years of runway.

How it works: Based in Cambridge, Massachusetts, Cartwheel provides virtual individual and group therapy, plus parent guidance and medication support, and accepts most commercial and Medicaid insurance plans.

  • Cartwheel offers its services free to uninsured students and those with Medicaid.
  • School counselors refer students to Cartwheel, which treats a wide range of behavioral health issues, from social skill building and school avoidance to grief, loss, anxiety, depression, suicidal ideation and self-harm.
  • It does not treat issues that generally require more of an in-person approach, such as primary substance use disorders, eating disorders or active psychosis.
  • The company uses a blended funding model: The majority comes from health insurers; the rest comes from school districts.
  • "It's really an in-network health care provider that partners with schools," says Yap. "Schools can help pay for this, but they can't afford all of it."

Zoom in: Cartwheel tracks student outcomes using a combination of satisfaction and accessibility questions plus standard anxiety and depression scales such as the GAD-7 and PHQ-8.

What they're saying: English grew up on a farm in upstate New York, where he began envisioning schools — and teachers, counselors and administrators — as playing a key role in the provision of mental health services for students.

  • "People looked to [my school] for a lot more than education. They looked to it for social services, a hot meal, and a roof in some cases, and certainly for health care and for mental health care," English says.

Flashback: English met Cartwheel co-founder and COO Daniel Tartakovsky at McKinsey, where they both worked as consultants.

  • Before starting Cartwheel, English founded a nonprofit focused on schools and emotional learning.
  • Tartakovsky was a mental health adviser to U.S. Surgeon General Vivek Murthy, where he contributed to the Surgeon General's 2021 Advisory on Protecting Youth Mental Health.

🤸🏻 One fun thing: The name Cartwheel is meant to represent joy.

  • "Mental health should be about helping kids experience joy, and envision and build toward a life that they're super excited to live," says English.

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