Iris Telehealth Acquires InnovaTel from Quartet Health

Iris Telehealth has acquired innovaTel, a now-former division of Quartet Health, in what could be the first of other acquisitions by the company.

Announced Tuesday, the deal marks a notable consolidation in the health care enterprise-focused digital behavioral health space. It gives Iris Telehealth additional scale via several overlapping markets it shared with innovaTel. Before the deal, Iris Telehealth operated in 42 states while innovaTel operated in 38 states, Andy Flanagan, CEO of Iris, told Behavioral Health Business.

Flanagan also said Iris Telehealth has been very active and will continue to be active in considering additional deals.

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“When we find a company that gets us deeper into a diagnosis or a demographic and their business model aligns with ours, we’re going to seek to see if there’s more to that than just a professional relationship,” Flanagan said. “We’re growing quickly, organically, profitably, and we are going to continue to also add inorganically to our scale. It helps everybody. So, yes, there will be more for sure.”

Iris Telehealth partners with health systems and government-defined health entities, such as certified community behavioral health clinics and (CCBHCs), community health centers (CMCs) and federally qualified health centers (FQHCs), to establish virtual behavioral health programs. Iris was founded in 2013.

Quartet Health pitches itself as a “value-based care behavioral health care enablement” company that works with health plans and health systems. Until the deal, a key part of the offering was providing telehealth services on top of software and data, care navigation and integrated physical health care services. Specifically, Iris Telehealth has acquired the standalone telehealth psychiatric practice Quartet Health. The latter company will continue to operate another separate medical group, a representative of the company told BHB.

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Quartet Health acquired innovaTel near the end of 2021, holding the company for three years. At that time, the company said the acquisition was key to accelerating speed to care and providing a comprehensive solution for caring for those with behavioral health conditions. It helped launch a serious mental health-focused Medicare program with the company Clover Health (Nasdaq: CLOV).

Iris Telehealth announced in September that it rolled out its “Virtual Clinic” and “Iris Insights” services. The former provides an all-ages, all-acuity virtual behavioral health service, while the latter integrates with a virtual clinic and collects and analyzes operation, clinical and financial data. It also named Glenn Wada, a long-time health care and software executive, as its chief growth officer in August.

“All the things we’ve learned over 11 years, we’ve poured into this management platform that we now are bringing along with our clinical services,” Flanagan said. “We’re really tying together the entire behavioral health operating model for FQHC, CMHCs and health systems. That’s really who we are.”

Flanagan described innovaTel and its leadership as long-time colleagues, saying that he met leaders at innovaTel in his early days as CEO of Iris Healthcare. He was appointed to the role in October 2020.

“I’ve always wanted to bring innovaTel into Iris; it just made so much sense,” Flanagan said.

In 2022, Austin, Texas-based Iris Telehealth has raised a $40 million Series B round. The same year, it was identified as one of the fastest-growing companies in the U.S., more than doubling its revenue in the three years ending in 2021.

While he declined to specify details, Flanagan said that Iris Telehealth was not bringing on an “unprofitable” company and that his company is always focused on “responsible” growth.

Many in the space expect that several drivers of dealmaking will ramp up in 2025, one of those being digital behavioral health companies that reach the end of their financial tethers. To a lesser degree than in the past, investors have still been interested in investing in behavioral health companies, even ones that are questionable going concern. Data show that mental health is still the top health care service that venture capitalists are investing in.

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