Autism Provider Cortica Secures $75M Funding Round, Acquires 2 Companies

Cortica Inc. has secured $75 million of investment and acquired two companies, expanding its footprint across the U.S. 

The San Diego-based whole-child pediatric autism and neurodevelopment care provider now operates 23 centers following its acquisition of Trumbull, Connecticut-based Springtide Child Development and Scottsdale, Arizona-based Melmed Center.

“What’s happened is a recognition that the future of autism care is whole-child and value-based,” Neil Hattangadi, CEO of Cortica, told Behavioral Health Business. “When we say whole-child, that means that ABA (applied behavior analysis) on its own is effective but insufficient, and there is a whole constellation of needs that a child and a family have that go beyond ABA.”

Advertisement

Cortica integrates several medical and behavioral services for children with autism and other neurodivergent conditions into central locations, simplifying patients’ and families’ lives and care journeys. It also, on average, across its patient population, provides much less ABA than other ABA organizations.

Springtide Child Development operates six centers in Connecticut and Massachusetts and offers a wide range of autism-related services. Melmed Center is a long-time developmental pediatric practice and research group.

Cortica now employs about 1,600 in California, Texas, Illinois, Arizona, New Jersey, Connecticut and Massachusetts. It was founded in 2014 as a private autism clinic by its Chief Medical Officer Dr. Suzanne Goh.

Advertisement

Deerfield Management and Optum Ventures led the round. New Cortica investors include RA Capital and Echo Health Ventures. Existing investors also participated in the round, including Longitude Capital, .406 Ventures, Questa Capital, Ajax Health, Aperture Venture Partners, and the Autism Impact Fund.

The investment and acquisitions are tied together by more than timing.

Deerfield Management and Optum Ventures were investors backing Springtide Child Development. They and other Springtide investors rolled their equity in Springtide into Cortica and provided investment capital, Hattagandi said.

“Springtide and Cortica share the same ethos and passion for serving children and families living with autism and neurodevelopmental differences,” Jia Jia Ye, Springtide’s founder and CEO, said in a statement. “Our entire organization is energized to come together as one company, enabling us to provide even more services and care to those who depend on us as trusted partners.”

Springtide and Cortica focus similarly on providing encompassing services while pushing for value-based care arrangements with payers. While most of the company’s revenue comes from fee-for-service arrangements, Cortica has secured value-based care deals from four health plans. One of its previously announced value-based partnerships is with Point32Health.

“Despite a very difficult [fundraising] macro environment, there is the recognition that autism is still a very highly prevalent, highly important, financially important condition for the country to solve and the solution is about a migration to being whole-child and being value-based,” Hattagandi said of raising this funding round.

Investment in behavioral health has cooled in a big way in the last two years or so.

Looking at just private equity, the number of deals dipped to 73 in 2022 compared to 104 the year before, according to Pitchbook. Looking at tech-heavy venture capital investment, the amount of capital invested dipped by 56% to $2.1 billion in the mental health space, according to Rock Health.

Further, economic anxiety and tightening capital markets precipitated by the Federal Reserve’s interest rate hikes have made for a more challenging fundraising environment compared to previous years.

The funding also comes as interest at all levels in autism increases. New research demonstrates higher rates of the condition in the condition as awareness and diagnostic sophistication improve.

Companies featured in this article: