As COVID-19 continues to wreak havoc on the economy, funding for digital behavioral health companies has remained robust, largely because the nation’s mental health has worsened amid the pandemic. For Lyra Health, a mental health care benefits startup with unicorn status, not only has the company weathered the headwinds of the economic downturn, but thrived in them as well.
Based in Burlingame, California, Lyra Health is a digital technology company that helps workplaces connect employees and their families to behavioral health services, partnering with behavioral health providers to make it possible.
Lyra’s platform helps members identify the particular services that are available and that they are best suited for through an algorithmic process known as intelligent matching technology, which pairs users with therapists, coaches or physicians specializing in mental health or addiction treatment care. Lyra’s growing list of corporate clients includes eBay (Nasdaq: EBAY), Morgan Stanley (NYSE: MS), Uber (NYSE: UBER) and Zoom (Nasdaq: ZM).
While Lyra has grown steadily since its founding in 2015, 2020 was quite the breakout year for Lyra, which more than doubled its customer base to over 2 million members and raised about $185 million across two different funding rounds. That funding helped push Lyra’s total valuation above $1 billion, making it one of a very few unicorns in the behavioral health spaces.
Lyra shows no signs of slowing down in the new year. Recently, multinational risk manager Willis Towers Watson (Nasdaq: WLTW) announced an agreement with Lyra to make the company a preferred provider of services to employees of Willis Towers Watson’s clients. Additionally, the company raked in another impressive funding haul in January, raising $187 million in a Series E round led by the venture capital firm Addition, along with participation by Baillie Gifford, Durable Capital Partners, Fidelity Management & Research Co. and other previous investors.
Also on Lyra’s agenda this year is nailing down more large employer clients, expanding its provider network and tackling some of the systematic problems in behavioral health, according to Andrew McCarthy, Lyra’s head of corporate marketing. Behavioral Health Business recently spoke with McCarthy, to learn more about the company’s 2021 growth targets and unicorn status.
You can read the conversation with McCarthy below, which has been edited for length and clarity.
BHB: We’re talking to you not long after Lyra had another remarkable funding round. In its announcement of the round, the company also talked about its investments in virtual mental health care services, as well as plans to grow its provider network and develop new partnerships with global organizations. Can you tell us more about that?
McCarthy: We were in a really strong position in 2020 after our Series C and Series D rounds. Investors were becoming increasingly aware of the scope and depth of the transformation of behavioral health care. And there was a lot of interest in Lyra, because when folks looked around, they saw that we are the [kind of] company that’s tackling the systemic problem in mental health care.
If you look from tip to tail, the challenge begins with access to providers. Better than 80% of providers that you would get through your traditional health care plans are only available on paper. It’s really difficult just to find a provider that’s going to be available for an appointment, [or] … a provider that’s offering the kind of services you need.
The Series E funding really allows us to further accelerate a number of areas that we’ve already been focused on. We serve these very large, US-based, multinational organizations, and one of the problems they’re trying to solve is how to deliver mental health care to a global employee population. That is a component of our goals around expanding our provider network, both in numbers and diversity. Especially as 2020 proved that things like racial trauma are very important [in] mental health care, we’re making sure that we’re delivering a network that has the diversity to match the population.
In 2020, we saw about 98% of our member provider interactions moved to telehealth. We want to expand those options. We are working on accessibility, which just means that anyone who needs care can get into Lyra Health, regardless of any differences and abilities that they have.
Are you able to quantify those goals? For instance, does Lyra have a target number on how many members and employers it wishes to add, and by how much it wants to grow its network?
We’ll keep those [numbers] to ourselves right now. But if you look at what we did in 2020, it gives a good sense of both the need and the opportunity. We roughly doubled our employer partners in 2020, and finished the year around 75 partners. We similarly expanded members with access to care to over 2 million.
You can expect the trajectory to continue in 2021. The need in mental health care continues to be significant, and we’re really optimistic about the level of engagement that large employers have in looking at mental health care as something they need to address in new ways.
You mentioned issues like racial trauma that resulted in the social unrest in 2020. Along with the pandemic, has that created more of a sense of urgency with Lyra as far as achieving its own objectives?
One of the things that we saw in the early part of 2020 as COVID unfolded was a sense of urgency for delivering mental health care from significant employers. Most benefits are rolled out in a Q4 timeframe as part of an open enrollment scheme at large organizations. Our typical cadence in working with these large organizations would be to have initial conversations at the beginning of the year, but really work into implementation in the latter part of Q3 and into Q4.
What we saw in the first half of ‘20 was organizations coming to us having very rapid conversations, and then wanting to bring Lyra online for their organizations within a couple of weeks after choosing us as their mental health care provider. That type of acceleration has been really inspiring to see. It obviously put a lot of pressure on Lyra to expand our provider network more quickly and to build out our capabilities for scaling in 2020, and so we’ve had to respond and accelerate in response to that combination of awareness and demand.
When we looked at spring to fall from 2020, when compared to the months prior, there was an 80% increase in weekly engagement with our provider network. And there was a 30% uptick in thoughts of suicide. Not only did we see an escalation of need, but also the severity has really grown in a way [so] that accessibility has become more of an urgent issue than ever before.
What trends do you predict in 2021 for behavioral health care?
The number one thing is continued interest in new partnerships to drive better solutions for people [accessing] mental health care, and we’re continuing to see a lot of interest from large enterprises. In 2020, we saw almost instantaneously a shift [to] telehealth and telecare counseling. Obviously, as things open up, there will be people who want to meet in person, but it’s going to be a slow movement back to more in-person activities.
We have an established platform where people are increasingly comfortable to interact with applications that help them find a provider, [and] to interact with applications and exercises that are actually part of their care journey. If there’s a positive take away from 2020, it’s going to be around that awareness [with] these large organizations and the acceptance in the general population for new methodologies and new approaches [to care]. People will be more comfortable with accessing care in new ways, and we’re certainly hopeful that that’s going to mean more people get the care they need.
What makes Lyra unique from other similar providers in this space?
We’re trying to tackle transforming the mental health care system overall, and that is a very significant challenge. That starts with really building a provider network, focusing on quality care, redefining access and transforming how mental health care is paid for, so that we can build and expand that provider network.
There are many startups who are looking at pieces of the challenge, and we’re really working to address it comprehensively, which is a big undertaking. You see that in the buildout of our provider network and in the buildout of our platform, which was really about redefining access. It’s built on the foundation of really tackling a systemic problem in mental health care.
Lyra has now reached unicorn status with its billion-dollar valuation and is firmly in the stage of funding considered to be a last stop before an IPO. What’s next? Might there be more funding rounds in the future? Is the company actively exploring going public?
We’re in a really strong financial position right now. [With] an IPO, obviously it’s a wonderful milestone for any company, and it has a lot of benefits not only from a financial standpoint but from a visibility standpoint. We certainly look at it as a wonderful opportunity.
That being said, our focus right now is [on] solving the broken behavioral health system, and we have a very strong financial position that’s going to allow us to continue to expand our investments. The focus right now is on building a great company to solve those problems, working with our customers, and through them, all of our members. That’s our plan for the foreseeable future.