Virtual opioid use disorder (OUD) treatment provider Bicycle Health has achieved profitability after abandoning its “growth at all costs” mindset and streamlining its business model.
The company is now set for long-term, disciplined growth, including acquiring other providers, founder and CEO Ankit Gupta told Addiction Treatment Business. Bicycle will use funds from a new $16.5 funding round to execute this vision.
“The first few rounds of financing were essentially dedicated to growth,” Gupta said. “We shifted our focus towards really being disciplined in where we invest, how we invest, and making sure the unit economics of the business, across all lines of business, … are really positive.”
Changing the company ethos was one key to achieving profitability.
Innovation, necessary for launching a new business, is often at odds with cost control, Gupta said. Bicycle shifted from growing the business five to seven times its size annually to a more sustainable 50% growth year over year.
The Boston, Massachusetts-based provider shook up its business in several ways to act on its more maintainable mindset.
The company had to manage costs, which involved reviewing all of its contracts and focusing on the core of its business. Through this process, Bicycle invested more in certain states and ceased operations in others.
One element of its multi-pronged strategy was absolutely crucial. Bicycle renegotiated its payer contracts to ensure all its contracts operated on a bundled-payment basis.
When asked if Bicycle could have achieved profitability on a fee-for-service model, Gupta responded: “Absolutely not.”
“Every person is unique in what they need, how much they need and what kinds of services they need,” Gupta continued. “We needed to have this menu of services and patient centricity to help them navigate what makes sense for them in their recovery. That’s a really hard thing to create a fee-for-service model around. We don’t want to stop at bundles. We actually think a value-based model where we take certain risks on certain populations makes the most sense. I think we’re just halfway there in that journey.”
In pursuit of profitability, Bicycle ensured positive unit economics across its three business lines: cash-pay patients, commercially insured patients, and partnerships with jails and prisons. It also determined which service lines patients engaged with most, and slowly discarded others in favor of partnerships with other businesses. Most recently, Bicycle teamed up with virtual behavioral health provider Talkspace (Nasdaq: TALK) to facilitate access to mental health services.
Medication management, recovery coaching and drug testing were among the services Bicycle identified as being crucial to its business.
Achieving profitability required a combination of scale, discipline, investment and finding advantageous contracts with payers, Gupta said. It also helped that the best clinical outcome for OUD treatment, patient retention, is also the best business outcome.
Becoming profitable makes Bicycle less reliant on financing. This is of major importance in an uncertain market and changing regulations, Gupta said. Fundraising in the current economic climate is “extremely difficult,” Gupta said. For unprofitable companies, it’s “almost impossible.”
Still, the company’s $16.5 million funding raise was completed before it achieved profitability. Questa Capital led the round, with participation from SignalFire, Frist Cressey Ventures, City Light Capital, InterAlpen Partners, Valeo Ventures, Hustle Fund and JSL Health, the last being a new investor.
Bicycle will use the funds to invest in places with long-term payouts. That includes building more partnerships with health plans, improving its technology platform, increasing patient capacity and building out its clinical team.
Recently, Bicycle also grew its executive team, hiring Manu Kuppalli as its chief financial officer and Andy Thomas as its chief operating officer.
In addition to expanding its leadership and clinical team, Bicycle plans to grow through increased dealmaking. The company is already evaluating potential deals, Gupta said, and plans to use some of the $16.5 million raise, or perhaps additional funding, to acquire other providers.
Interested parties should not expect too many acquisitions from Bicycle, however.
“Although there are a lot of startups, there are not that many high-quality startups in this space,” Gupta said. “We’re staying really disciplined on companies that can be profitable at scale, with strong clinical outcomes, strong clinical teams, strong management teams, strong cultures and need support to get to the next level.”
While contemplating deals, Gupta has two key goals for the rest of 2025. He aims to expand the company’s Medicaid coverage, working with managed care plans to establish bundled payment or value-based contracts. Secondly, he plans to expand Bicycle’s work in the criminal justice system.