Eyeing a possible IPO in 2028, Sword Health is centering its newly launched behavioral health service as a key growth lever. The company may soon explore partnerships and acquisitions to create an offering that targets serious mental illnesses (SMI).

Nearly 1 in 20 adults across the U.S. – 5.5% of the population – are diagnosed with an SMI like schizophrenia, severe bipolar disorder and major depressive disorder with psychotic episodes. SMIs are complex conditions that behavioral health providers don’t always want to treat, which is exactly why Sword Health is looking into it, the company’s CEO, Virgilio Bento, told Behavioral Health Business.

Traditionally, the New York City-based digital health provider has focused on digital-first physical therapy programs for pain management. As the company has grown, expanding into mental health made sense because physical health, particularly in relation to pain, can often go hand in hand, Bento said. Adding on SMI care in some form would only bolster that.

“Severe mental illness is a very difficult problem to solve, and is very complex,” Bento told BHB. “I think AI tools may attempt to have a good impact on it in the short term.”

Unlike Sword Health’s newest offering, “Mind” – which integrates an AI therapist, a wearable device to detect depression and anxiety and incorporates input from clinicians 24/7 for responsive care – any foray into the SMI space by the company would likely involve a partnership or acquisition, he said.

“That’s not an area where we are looking to build something. There, we are looking to partner because it’s a very complex problem,” Bento said. “We will likely do some acquisitions to accelerate our growth, but SMI is one area we are focused on firmly.”

The company did not comment on specific partnerships or acquisitions it is looking at related to SMI care at this time. Sword Health also did not specify a timeline for when an SMI offering might come to fruition.

As Sword Health positions itself for a possible IPO in 2028, Bento said that in the meantime, its focus will be on strengthening mental health offerings. It’s also a reason the company will not aim to IPO sooner despite its recent $4 billion valuation, he said.

“I want to IPO when we have the mental health solution itself right because I want to be focused right now on really making sure that we build a valuable mental health solution,” Bento said. “I don’t want to be distracted by going public. We are quite focused on mental health and that’s why an IPO is not our goal in the short term.”

For its mental health solution, Sword Health will apply the same outcomes pricing model used across its pain management offerings, where organizations will only pay when patient results show improvement across the Patient Health Questionnaire-9 and the Generalized Anxiety Disorder 7-item scales.

“For each member that an organization enrolls, we are only able to bill if the member has a significant improvement in the reduction of depression or reduction of anxiety,” Bento said. “It’s very, very different from the current traditional model… We only get paid if we have a meaningful clinical improvement in the mental health condition. The AI tool allows us to keep providing care until we get to the right level of outcomes.”

Doing it this way, “sets the right level of incentives for us to focus on what matters, which is not driving revenue, but improving the clinical outcomes,” he added.