Mental health startup Headway has raised $70 million in a series B round, just six months after its $26 million series A.
The company has attracted big-name investors—Andreessen Horowitz (A16Z) led the round with participation from Thrive, GV (formerly Google Ventures) and Accel. The latest funding propels Headway to a $750 million valuation, according to the company.
The infusion of fresh capital reflects the burgeoning demand for affordable mental health care and investor interest in Headway's approach to addressing accessibility and affordability issues, according to Headway CEO and co-founder Andrew Adams.
“While given the capital efficiency of our business we’re privileged to still not have spent a dime of the $26 million series A we raised in the summer, we couldn’t pass up the opportunity to add A16Z’s healthcare and startup expertise to the team," he said in a statement.
Headway aims to build a new mental health care system in the U.S. to make it both easier for patients to find a therapist and easier for therapists to accept insurance, Adams told Fierce Healthcare.
Adams co-founded New York City-based Headway to address accessibility and affordability issues for mental health care services. An estimated 26% of Americans ages 18 and older—about 1 in 4 adults—suffer from a diagnosable mental disorder in a given year, according to Johns Hopkins Medicine.
The main barrier to affordable care is that almost 70% of therapists do not accept insurance because of the administrative burden and the time commitment required, especially for the 85% of therapists who are solo practitioners. This drives up the cost of therapy, rendering it inaccessible to many Americans desperately seeking support, according to Adams.
Headway developed a full-stack therapy marketplace that deals with the messiness of insurance, building out a first-of-its-kind behavioral health network of therapists who accept insurance. The company's platform lets its users find therapists who match their preferences and book directly on the site and provides transparency about what they'll owe with their in-network insurance plan.
For therapists, the company handles the full process to join an insurance panel and offers free software with full claim management support, payments and scheduling.
Headway works with Aetna, Cigna, United Healthcare, Oscar and Oxford and continues to invest in its insurance partnerships.
Using Headway, patients can book an appointment directly with a therapist within five days, compared to the 30-day average with an insurance directory, according to the company.
Since launching in 2019, Headway reports that it has enabled more than 3,000 therapists, psychologists and psychiatrists to accept insurance and facilitated around 300,000 therapy appointments.
The company has experienced massive growth in the past year as the demand for virtual and in-person mental health services has skyrocketed during the COVID-19 pandemic. Headway's net revenue jumped 800% year over year, and its team grew five times over in the past year, Headway executives said.
The company plans to use its available capital to build out its team, with the goal of expanding to 300 employees by the end of 2021. Headway is particularly focused on recruiting talent across sales, engineering, product and customer experience roles. The fresh capital also will be used to build its network infrastructure to support its rapid growth.
The shift to predominantly virtual care makes it possible for therapists to expand their practice to more patients, Adams said. At the peak of the pandemic, about 97% of patient appointments were teletherapy, the company's data show. That is starting to taper off as now 89% of appointments are teletherapy.
"How many sessions will go back to in-person? That's an interesting question, but we can facilitate both worlds. We're building out a national network of therapists. We aren’t just building one hub here and one hub there," he said.
Headway also has expanded beyond its headquarters in New York to 10 additional states with a broader goal of scaling across the country. The startup is currently facilitating 30,000 appointments each month and anticipates scaling that volume significantly as it brings on therapists in new states, company executives said.