Good mental healthcare is hard to come by—even with insurance. More than half of people surveyed by the National Alliance on Mental Illness said when searching for a psychiatrist the doctors they called weren’t accepting new patients or did not accept their insurance. One-third of people couldn’t find any mental health prescriber who would accept their insurance. Despite federal laws requiring health insurers to reimburse mental health and medical services at the same rates, the unfortunate truth is many insurance networks have terrible coverage with outdated provider directories and unintelligible benefits.
Burlingame, Calif.-based Lyra Health, which just raised $200 million at a $4.2 billion valuation, is cashing in by filling the void: offering mental health benefits to large employers that actually work. News of the funding round was first reported by The Information.
Employers are so fed up with subpar mental health benefits that they are willing to pay extra for a hand-picked network of providers that will help their employees. Why? Depression and anxiety disorders lead to $1 trillion in lost productivity worldwide each year, according to the World Health Organization—and that was before the Covid-19 pandemic. Lyra offers its customers access to a curated network of both virtual and in-person mental health providers, along with a virtual platform that aims to help people get better faster through evidence-based methods like cognitive behavioral therapy. Now Lyra is looking to dramatically expand its offerings on a global scale post-pandemic.
“Our sense is that companies believe that mental health is an important topic today and into the future,” says Lyra Health cofounder and CEO David Ebersman, who previously served as the CFO of Facebook and before that Genentech. “Covid wasn’t the beginning of the mental health epidemic that we face. The pandemic highlighted this need that I think we’re experiencing and companies continue to take it very seriously.”
Today Lyra’s U.S. network includes more than 5,000 providers, and its global network, through a partnership with ICAS, will include 85,000 additional providers across 180 countries. “We pay great attention to the practices and the quality of the providers and really aspire to a world where we would be comfortable sending a friend or family member to any provider in our network,” says Ebersman. Its customers span a range of industries and sizes, including eBay, Genentech, Uber and VCA Animal Hospitals. Ebersman declined to give specific revenue numbers but said the company “significantly exceeded” an earlier estimate provided to Forbes of $100 million in revenue by the end of 2020.
The company’s latest capital infusion, led by investment firm Coatue Management with Sands Capital and other existing investors participating, doubles Lyra’s $2.3 billion valuation from a $186.7 million January 2021 funding round—and will be the biggest mental healthtech deal in 2021. The move comes amid a broader mental health venture capital funding boom, as investors poured $1.5 billion into companies to help address the psychological fallout of the pandemic. This means Lyra will now hold the first and second spots for largest deals in the space this year, following its round in January, according to private market capital data company PitchBook. Lyra has raised $680 million to date and first hit unicorn status in 2020.
“Mental Health is a global challenge,” Lucas Swisher, a general partner at Coatue said in a statement. “Rates of anxiety, depression, and general mental health challenges are increasing around the world, and we believe Lyra has the opportunity to offer care to a large portion of the population that historically has been unable to access it.”
Lyra developed an AI-enabled technology platform to match patients with the providers best suited to treat their specific needs. For conditions like anxiety and depression, it uses a blended care model that pairs virtual therapist visits with online videos and exercises to reinforce lessons between sessions. The company frequently cites a retrospective study of 385 Lyra patients published in the Journal of Medical Internet Research, which found its blended model helped 83% of participants improve anxiety or depression over a 6-week period. However, it was not a randomized clinical trial, which means the results suggest but can’t directly link Lyra’s platform to the observed improvement.
Lyra also offers mental health “coaching” which are sessions for patients with mild symptoms that do not rise to a clinical diagnosis as more of a preventative measure. While coaches are becoming increasingly common in mental health startups, critics worry about variability in training and effectiveness, since these coaches don’t undergo licensing programs like other mental health providers. By 2022, Lyra plans to offer coaching, therapy and medication across one global platform to all users.
VCA Animal Hospitals, which operates more than 1,000 locations in the U.S., Canada and Japan, first engaged Lyra in a pilot program in January 2020, as part of a broader push at the company to offer well-being programs to its more than 30,000 employees. “The veterinary profession as a whole has some really unique challenges,” says VCA’s director of associate well-being Johanna Baldwin,, including compassion fatigue and burnout. Veterinarians face higher rates of serious psychological distress and as many as one in 6 U.S. veterinarians have considered suicide, according to the CDC.
“The employee response has been overwhelmingly positive,” says Bennett, especially as the company works to make seeking mental health services more mainstream. Employees also appreciate Lyra’s ease-of-use. “You can find information easily about the providers and coaches, and then you can quickly do online scheduling,” she says, which is particularly important for employees working different shifts at 24-hour hospitals.
Lyra’s total contracted member base is around 2.2 million people globally, though not all those people are using Lyra’s services. The company said customers can expect around 10% of their employees to see a provider in the first 12 months and hopes to continue growing this number. “We’re excited to be in a position where we can invest in leveraging the scale we already have” and knowledge from working with hundreds of thousands of patients,” says Ebersman. Lyra will work towards “being the comprehensive solution that I think this part of the healthcare system deserves.”