Wells Fargo Strategic Capital has led a $24 million growth equity investment in Array Behavioral Care, betting on the long-term growth and adoption of telepsychiatry everywhere from the hospital setting to home.
Health Velocity Capital also joined as an investor, while multiple existing shareholders contributed to the financing. Health Velocity brings a wealth of telemedicine and behavioral healthcare experience, having previously backed companies including Teladoc, MDLive, Livongo and Ginger.
In connection with the transaction, Rodney Altman, managing director within Wells Fargo Strategic Capital’s healthcare group, and Marty Felsenthal, partner at Health Velocity, will join the company’s board of directors. Wells Fargo’s Robert Rein will join as a board observer.
For WFSC, a division of Wells Fargo & Co, Array aligns with two trends it has examined for some time: the migration of healthcare out of the hospital and closer to the patient, and increased utilization in behavioral healthcare.
While Rein originally got to know Array through an investment by a firm at which he previously worked, it was through Altman’s first-hand experience that the country’s real shortage and access to psychiatrists became apparent.
“When I came on board [in October 2019], not only were we tracking it but I became increasingly interested based on what I was seeing in the emergency department,” said Altman, who still practices as a part-time physician in the emergency departments of Stanford University Medical Center and Kaiser Permanente Medical Center.
“I often see patients who would benefit from psychiatric consultations in the emergency department, particularly where access to psychiatric care is not as readily available,” said Altman, who led the transaction for WFSC. “What we [Array] provide is access to high-quality psychiatrists and mental health workers and a better means to distribute that care. We solve a distribution problem.”
Array Behavioral Care, formerly Insight + Regroup, was formed through the 2019 merger of InSight Telepsychiatry and Regroup Telehealth.
Headquartered in Mount Laurel, New Jersey, the company provides telepsychiatry solutions and services across the continuum of care through three divisions: OnDemand Care provides emergency departments with psychiatric consults; Scheduled Care supports outpatient mental health centers in underserved communities; and AtHome Care offers psychiatry and behavioral health services directly to individuals in the home.
Here to stay
CEO Geoffrey Boyce told PE Hub he sees opportunities across all three business lines, although is particularly bullish on the OnDemand and AtHome Care arms – the latter, which, for obvious reasons, saw tremendous growth in 2020 as a result of the covid environment.
Using tech to augment the delivery of what is a scarce resource presents a tremendous opportunity for growth, he said. “There’s no shortage of demand for the services that we offer. We’re building what could become one of the largest behavioral healthcare practices out there.”
Array, Boyce said, anticipates 30 percent top-line growth this year. “This intersection of telehealth and behavioral health in a covid world makes perfect sense,” the executive said.
“When you look at tele-behavioral health, it is probably the best use case out there relative to other forms of telehealth, because it just makes so much sense. It doesn’t require some of the hands on [medical care] that other parts of healthcare does.”
Even if some “situational demand” caused by the pandemic is poised to drop off, Boyce and Altman believe the growing demand and adoption of telepsychiatry will stick.
As Altman put it, the problems that are addressed by Array predate covid; the health crisis is a tipping point leading more individuals to get comfortable using telemedicine.
“Demand may increase more in some areas than in others during the pandemic … but overall these problems existed before,” Altman said.
For example, patients in community settings have long been challenged in finding or accessing a psychiatrist, while there has always been a compliance problem – missed appointments, he investor said.
“There’s no doubt that’s still a problem, but that problem is mitigated to some degree when patients can get to their therapist or psychiatrist through telemedicine.”
Early investors in Array Behavioral Care include Harbour Point Capital, HLM Venture Partners, OCA Ventures, OSF Healthcare, Impact Engine, FristCressey Ventures, Hyde Park Angels and Wasson Enterprise.
WFSC, which provides long-term capital in the form of debt and equity investments, invests in everything from late venture capital and growth equity to lower mid-market and special situation opportunities.