As employers grapple with the fallout of the coronavirus pandemic, there’s a reckoning taking place in human resources departments around the country: the need for better mental healthcare for employees. Around one in four U.S. adults suffer from a diagnosable mental health condition and depression is one of the leading causes of disability worldwide. Lyra Health, which provides mental health benefits for large employers, became the latest healthcare technology startup to hit unicorn status on Tuesday, following a $110 million Series D round.
The Burlingame, California-based company expects to hit more than $100 million in revenue by the end of the year, and the latest funding round brings its valuation to $1.1 billion, according to a company representative. Around 50 million people in the U.S. have a mental health condition, and the Covid-19 pandemic is exacerbating two of the most common: anxiety and depression. Lyra, which offers an easy-to-use digital platform to connect people with mental health providers, has around 1.5 million members so far, adding more than 800,000 people since the start of the pandemic.
Lyra cofounder and CEO David Ebersman says customers are looking to launch the platform right away, instead of waiting for the typical January 1 fiscal year cycle for health benefits. “Because of Covid, economic uncertainty, and conversations around racial injustice, people are really struggling even more, and it’s an important time to invest in a service that really will be there for their employees when they need it,” says Ebersman, who previously served as chief financial officer of Genentech and Facebook. Untreated mental health conditions can lead to lower productivity and morale that can affect the overall work environment.
The $110 million Series D raise comes on the heels of a $75 million Series C closed in March. Lee Fixel’s new venture firm Addition led the round and was joined by Adams Street Partners, along with existing investors, including former Starbucks CEO Howard Schultz, Casdin Capital, Glynn Capital, Greylock Partners, IVP, Meritech Capital Partners, Providence Ventures and Tenaya Capital. Lyra also announced that Kerry Chandler, chief human resources office at the global entertainment and sports company Endeavor, would join the board of directors. Lyra has raised around $275 million to date.
Lyra is an alumnus of this year’s Forbes Next Billion-Dollar Startups list and is the third company from the 2020 list to cross the $1 billion dollar valuation mark, along with AI-powered sales startup Gong and human resources software automation company Rippling.
One of the biggest challenges in the $280 billion behavioral health market is access, given that “only a fraction of the people that actually need care, get it,” says Thomas Bremner, partner at Adams Street Partners. “You need to use technology to drive scalability without also losing the kind of personalization and the human touch,” says Bremner. That’s where one of Lyra’s flagship products comes in: Blended Care.
Lyra’s solution combines one-on-one video sessions with digital exercises to reinforce cognitive behavioral therapy lessons. One of the keys to the company’s success is using clinical measurement tools to establish improvement over time. A study published in the Journal of Medical Internet Research, led by Lyra’s director of clinical product Anita Lungu, recorded a significant decrease in anxiety or depression symptoms after 5 sessions among 385 patients, although it did not include a control group. While a randomized controlled trial would be needed to truly determine clinical effectiveness, the study suggests that Lyra’s teletherapy model could potentially achieve faster results than the typical 12 to 16 weeks of standard treatment.
Using technology to solve healthcare problems is a natural fit for Ebersman, who spent fifteen years in various executive roles at the biotechnology Genentech, including chief financial officer. He later jumped to Facebook, where he served as CFO, as well as a board member for Castlight Health. In 2015, Ebersman cofounded Lyra Health with two Venrock partners and Castlight investors, Bob Kocher and Bryan Roberts, as well as Dena Bravata, Castlight’s chief medical officer. Kocher and Roberts continue to serve on the board, while Bravata left the company.
Five years later, Lyra is rapidly expanding, and by the end of this month expects to have delivered it’s one-millionth session. The company counts a wide range of industries among its client base, ranging from Morgan Stanley to Zoom Video Communications.
One such customer is Genentech, which began partnering with Lyra in October 2018. Since then, a spokesperson says the biotech has seen a sevenfold increase in the use of its employee assistance program. “We intentionally named our program Lyra Mental Wellness to help reduce the stigma around seeking mental health care,” the company said in a statement. “Just as they have access to an acupuncturist or physical therapist, we encourage our employees to consider Lyra part of their holistic care team.”
While the regular Lyra health benefit offers services for the whole family, the next step will be using this latest funding round to expand the Blended Care model to include services both for adolescents and couples. “We want to be able to offer targeted and effective approaches to everyone,” says Ebersman. This means international expansion and investment in more clinical services, as well as expanding the company’s market segment beyond large employers and aiming at government and commercial health plans.
Before the pandemic, the trends were shifting in favor of both increased use of telemedicine and behavioral health services, but no one could have predicted just how rapid the acceleration would be. “The average person when starting care in 2020 is feeling more anxious and more depressed than we’ve seen in any prior year,” says Ebersman. But on the flip side, both employees and employers are asking for help. “It feels different right now,” he says. “The moment is now to offer better mental health services.”
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