The demand for teletherapy services is soaring, particularly as employers look to better support workers during the COVID-19 pandemic.
For employer-focused startup Lyra Health, business is booming. The company, which provides mental health benefits for large employers, has added more than 800,000 new members since the start of the pandemic.
The Burlingame, California-based startup has now joined the ranks of other health technology unicorns on the heels of a $110 million Series D funding round disclosed this week.
Lyra Health projects it will hit more than $100 million in revenue by the end of the year, and the latest funding round brings its valuation north of $1 billion, according to a company representative.
The company offers an array of in-person and remote behavioral therapy that helps to remove barriers to accessing high-quality mental health care, according to Lyra Health founder and CEO David Ebersman.
The company landed a Series C financing round of $75 million back in March and has raised $292 million to date.
The latest funding round was led by Addition and joined by Adams Street Partners and existing investors, including Starbucks chairman emeritus and former CEO Howard Schultz, Casdin Capital, Glynn Capital, Greylock Partners, IVP, Meritech Capital Partners, Providence Ventures, and Tenaya Capital.
Ebersman, formerly the chief financial officer at Facebook, founded Lyra Health in 2015 along with Dena Bravata, formerly chief medical officer at Castlight Health and Venrock partners Bryan Roberts and Dr. Bob Kocher. The goal was to make it easier for employees to find and get treatment and use technology to make it smarter, more personalized, and effective.
"We have definitely found over the last five years that more employers are prioritizing mental health as something that they want to address and to offer effective services to their employees. That tailwind existed before COVID, but what happened this year was a significant acceleration in that momentum and recognizing the realities of the mental health care needs of employees," Ebersman told Fierce Healthcare.
The need is clearly there as 83% of U.S. employees today are experiencing mental health issues, according to a study led Lyra Health and the National Alliance of Healthcare Purchaser Coalitions.
In the U.S., close to 48 million people, or 1 in 5 adults, experienced mental illness in 2018, according to the National Alliance on Mental Illness.
Both employers and investors are showing an increased interest in virtual mental health services, Ebersman said.
Globally, investors have poured over $1 billion into mental health and wellness startups so far in 2020, according to a CB Insights report.
For employers, there is a greater sense of urgency to offer support to workers.
Companies want to roll out mental health services for employees immediately rather than waiting until January 1 which is when many companies typically launch new health care benefits, Ebersman said.
"That's been a great opportunity to make a difference in people’s lives sooner and support people through the challenging times of 2020," he said. "But it's also a great operational challenge to launch new customers and add members beyond what we had planned and expected. We’re excited that we are able to rise to that challenge."
Lyra Health saw an opportunity to take advantage of the current spotlight on mental health care to invest aggressively in improving its tech-enabled mental heath treatments.
The company plans to use the financing to partner with more customers and expand and diversify its provider network.
The financing, on top of the Series C round completed earlier this year, positions Lyra to take advantage of the burgeoning market opportunity and urgent need for better mental health solutions, the company said.
The company offers its services as a benefit to employers including Morgan Stanley, Zoom Video Communications, eBay, Uber, NetApp and Genentech.
The number of employees and family members with access to Lyra’s services has grown from 50,000 to more than 1.5 million over the past two years, the company said.
The company is on track to surpass a milestone this month by delivering the one-millionth session of care.
The company is also focused on expanding its enhanced teletherapy offering, called Lyra Blended Care, which pairs video therapy sessions with personalized digital lessons and exercises based on cognitive behavioral therapy (CBT) principles.
The company plans to continue the expansion of Blended Care to serve Lyra members—including couples and adolescents—who are experiencing a range of mental health challenges.
The company also announced Kerry Chandler, chief human resources officer at the global entertainment and sports company Endeavor, will join Lyra Health's board of directors.