Behavioral health software company Dazos has secured a $25 million Series A investment from the B2B software growth capital firm Radian Capital.

Dazos President and co-founder Louis Devaleix exclusively told Addiction Treatment Business that behavioral health’s unique nature requires industry-specific software tools. He argued that generic business-enablement services require operators to spend too much time, talent and capital to make them useful. 

He and his co-founder, Dazos CEO David Farache, would know. They developed the idea for Dazos and its behavioral health-specific design and features while growing Harmony Recovery Group.

The two exited Harmony Recovery Group in a sale to Thrive Healthcare in early 2022. The deal was announced in November of that year. Dazos, to a degree, was incubated within Harmony Recovery Group and evolved to account for the challenges that other enterprise software for customer relationship management and claims collection caused for a growing company. Harmony grew from an outpatient addiction treatment provider based in Fort Lauderdale, Florida to an outpatient and residential mental health and addiction treatment provider with 10 locations in Florida, North Carolina, Tennessee, New Jersey and Massachusetts at the time of the sale.

The fact that Devaleix and Farache come from the behavioral health operator world was a vital consideration for Radian Capital.

Radian Capital is now a minority investor in the firm. 

“That experience matters; they understand firsthand the complexities associated with behavioral health workflows and the pressure providers are facing as demand increases, staffing remains tight, and legacy software solutions are both expensive and require highly customized implementations,” Weston Gaddy, partner at Radian Capital, told ATB. “Their experience is etched into the bones of the product.”

Dazos’ suite of services includes customer relationship management, a billing AI analyzer called Dazos IQ, a billing platform, automated marketing reports and a verification of benefits tool called iVerify.

“It gives you complete transparency into not only being more efficient and increasing admissions and increasing revenue but also following up on claims in real-time,” Devaleix said. “You can generate additional revenue on the front end by understanding where some of the reimbursement gaps were on the admissions side.”

Unlike generic business software or even health care-specific tools, behavioral health facilities often have marketing and patient-sourcing strategies and practices that set them apart. Often, individual facilities or companies that operate several facilities don’t see the payer referral, self-referral or walk-in partners of hospital systems. By contrast, behavioral health providers often have to juggle a combination of their advertising and marketing while fostering several referral relationships with other care providers in a given community.

“All of these marketing efforts need to be properly tracked, and that is where a suite of services needs to come in,” Farache said. “You need to be able to not only track your marketing efforts but make sure that nothing and no one is falling through the cracks.”

Today, the company’s customers are largely in the mental health and addiction treatment facility segments, with the exception of private mental health practices and hospitals. It also has a growing base of users in the autism therapy space as well. Its products are used in about 1,500 facilities in the U.S.

Dazos will use the capital to increase sales and implementation teams as well as develop new tools. Recently, Dazos rolled out a marketing campaign platform called iCampaign, which Devaleix called MailChimp for behavioral health.

Radian Capital’s confidence in the unique experience of Farache and Devaleix also pairs with the belief that the behavioral health industry is a compelling space to make investments.

Gaddy notes the expansion of the behavioral health industry as it addresses an ever-increasing population in the U.S. and the still-maturing nature of the industry that seeks to serve that population.

“While significant investment has been made in behavioral health EMRs … we believe we’re still in the early innings of robust CRM adoption,” Gaddy said. “At Radian, our philosophy is to support teams building software for a specific end market, creating a level of focus that leads to more robust products that solve much deeper pain points for customers. 

“Behavioral health is no exception — the industry has a number of unique communication needs spanning patient acquisition and intake through to discharge and recovery compared to other health care arenas.”