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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.

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.

1 big thing: Cartwheel circulates $20M Series A

Illustration of a child surrounded by medical crosses receding into the distance

While most venture funding for behavioral health has historically been funneled toward employer-facing offerings, investors have been turning to a fresh crop of school-focused telemental health startups.

Daybreak Health, which partners with California schools and pediatricians to offer its telehealth services, last March collected $10 million in Series A funds.

Hazel Health, a provider of virtual pediatric mental and physical health services, last October raised $51.5 million in Series C1 capital.

Pediatric behavioral health company Brightline last March pulled in $105 million in unlabeled funding.

2. State of play: School-focused telemental startups

Illustration of an overhead projector illuminating a square that says State of Play

Online pharmacy Alto Pharmacy has raised $120 million in new funding at an $800 million post-money valuation, the company confirmed to Axios' Kia Kokalitcheva.

Why it's the BFD: Alto is among the many late-stage startups to take a valuation cut in the current market.

The company was reportedly valued at over $1 billion when it raised $250 million in a round led by SoftBank in 2020. It's unclear what valuation it had when it raised again in January 2022.

Talks toward a merger with a special purpose acquisition company that would have taken the company public in 2021 fell apart, per Reuters.

Flashback: CEO Alicia Boler-Davis revealed this past May during Axios' BFD event in San Francisco that the company was already in talks to raise new funding.

She also noted the company is on the lookout for more acquisitions, following its purchase of NowRx last year.

3. The BFD: Alto Pharmacy raises $120 million 

Illustration of a pill with the dividing line in the shape of a dollar bill sign.

Savoy Life, a virtual care platform for long-term care facilities, is emerging from stealth mode with a $3 million pre-seed from Red Cell Partners, founder Peter Emigh tells Aaron exclusively.

Why it matters: Savoy focuses on serving rural markets, which have a dearth of long-term and post-acute care resources.

What's happening: Savoy will use the funding to roll out its initial products, spanning three service lines, Emigh says.

Savoy On Demand offers move-in support for residents of LTC facilities and their caregivers, including nursing assessments, advanced care planning, medication reconciliation, and compliance support.

Savoy Clarity uses remote health monitoring devices to detect rising risks among residents, while Savoy Care is a concierge service that pairs LTC centers with nurse care managers.

What's next: Savoy will launch a pilot in 12 LTC communities in California and Washington in Q3 of this year.

Emigh says the company will be generating revenue later this year, declining to disclose additional details.

"We will be cash-flow positive pretty quickly with the model we are building, as we are driving profitability and real customer traction," he adds.

Savoy plans to raise more funding again next year, he notes.

What they're saying: "We want to fix the giant disconnect for seniors in the home and in the health care system," says Emigh.

"Our country is short 3.2 million health care workers, with clinical staff on short supply, so we want to bring a better solution to empower the caregiving operations to meet the need of the moment," he continues.

We got the team together and now we want to fund investments to make the model more scalable," he says.

State of play: With the impending silver tsunami, investors continue to pour dollars into caregiving, long-term and acute care solutions.

Blooming Health, a tech platform connecting community-based aging care providers with older patients and their caregivers, raised $4.2 million in seed funding.

Family First, a Boston-based employee benefits company that helps families with caregiving needs, raised $11 million in Series A funding.

Private equity backed WellSky, acquired Experience Care in a bid to solidify its post-acute foothold.

4. Savoy Life emerges with $3M pre-seed

Illustration of a physician's hand holding a stethoscope coming out of a laptop screen.

Want more health tech deals? Check out the Axios Pro Deals Tracker beta.

• Adela, a Branford, Conn.-based blood testing platform for minimal residual disease monitoring, raised $48m from F-Prime Capital, OrbiMed, Deerfield Management, Decheng Capital, Labcorp and RA Capital Management. https://axios.link/3t9XazX

• Take Command, a Dallas-based personalized health care benefits provider, raised an unlabeled $25m round led by Edison Partners with participation from insiders LiveOak Venture Partners and SJF Ventures. https://www.takecommandhealth.com/

• NorthStar Care, a Seattle-based provider of virtual substance use disorder treatment, raised $6m in seed funding co-led by Tony Robbins and Starting Line. https://axios.link/461I3aj

• Genstar Capital is seeking a buyer for TekniPlex, a Wayne, Pa.-based maker of health care and consumer products that could fetch more than $4b, per Bloomberg. https://axios.link/3EV1cPb

• Arlington Capital Partners acquired Exostar, a Herndon, Va.,-based provider of secure collaboration and risk management solutions from Thoma Bravo. https://www.exostar.com/

5. Deals o' the day

• Tara Sullivan left a role as director of new ventures at Redesign Health to become a senior associate in health care venture at Flare Capital Partners. https://www.flarecapital.com/

• Tom Ormondroyd left a post as CEO at Millennia Patient Services to become CEO at Silversmith Capital Partners-backed MediaLab. https://www.medialab.com/

• Julia Rosen, former CTO of Centura Health, was appointed information officer at Kain Capital-backed PERA Holdings. https://www.kaincap.com/

6. It's Personnel

💉 As Ozempic use grows, so do reports of possible mental health side effects — NPR

🏥 Employers are getting more creative on benefits — Axios

🤖 Can AI help doctors come up with better diagnoses? — WSJ

⚕️ Why do we wait to get healthy until we're sick? — Forbes

7. Your daily dose

Illustration of a weekly pill dispenser box with a newspaper called "daily dose" in each compartment.

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.

🐶 Aaron is back to dog sitting this week, this time a 1.5-year-old Doberman pinscher. 

✔️ Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your colleagues, friends and family to sign up.

September 26, 2023

1 big thing: Cartwheel circulates $20M Series A