Telehealth company, Pelago, which treats a variety of substance use disorders using a cognitive behavioral therapy approach, closed a Series C round of funding last week for $58 million, bringing its total capitalization to $151 million.

Pelago delivers substance use treatment using smartphone applications and a large staff of trained therapists available remotely through the apps. Each user is diagnosed individually and a custom plan is created. The plan may require regular check-ins with counselors, coaches, nurses, or physicians. Video and audio chatting is enabled within the apps. Pelago also administers plans that involve medication through its apps.

Pelago’s website highlights their care for tobacco/nicotine use, problem alcohol use, and problem opioid use. Currently, they quote the following statistics:

Alcohol Use: 62% reduction in use within 30 days

Tobacco Use: 44% quit within 12 months

Opioid Use: 67% remain abstinent for 90 days

Pelago has experienced rapid growth since it closed a previous Series B round of funding for $64 million in 2019. It now has 750,000 users, revenue has increased 11-fold, and full-time staff has tripled from 51 to 150 people, according to TechCrunch. Pelago has expanded into services for adolescents and now offers adult and juvenile treatment programs in all 50 states.

Erin Brodwin, the author of Axios Pro: Health Tech Deals, writes that “funds will power clinical research and product development, including the recent introduction of an internally developed, AI-powered provider note-taking assistant.” Pelago says the AI will enable better session documentation and team sharing of results tracking.

Formerly known as QuitGenius, Pelago says they are “the leading virtual clinic for substance use management.” One of the ways Pelago has grown is through value-based care, where companies agree to refund a portion of their fees if program goals are not achieved. Pelago has gone “full risk,” meaning 100% of its contract fees will be refunded for failure to meet contract goals.

Pelago does not serve individual customers. Its plans are only available through employers, healthcare providers or insurance companies.

Written by Steve O’Keefe. First published April 4, 2024.

Sources:

“YC-backed Pelago, a virtual clinic for addiction treatment, raises $58M Series C,” TechCrunch, March 28, 2024.

“Pelago nets $58M Series C for virtual addiction treatment,” Axios Pro: Health Tech Deals, April 1, 2024.

“Quit Genius Goes All-In on Value-Based Care with Full-Risk Model,” Behavioral Health, July 27, 2022.

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