Digital health consolidation continues as startups realize that scale matters, especially if you are selling to cash-strapped providers, as is the case with BehaVR and OxfordVR.
The two virtual reality mental and behavioral health companies announced a merger Tuesday without disclosing the financial terms of the deal. The hope is that one single platform will leverage the strength of both companies and offer care for the full spectrum of mental health needs. The merger is supported by $13 million in Series B funding.
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Nashville, Tennessee-based BehaVR offers care for anxiety, mental wellness, pain management and maternal health. Oxford, England-based OxfordVR is primarily focused on serious mental illness, such as PTSD, bipolar disorder and schizophrenia. Through the merger, OxfordVR’s products will join BehaVR’s platform, providing services for a whole range of mental health conditions.
“We have very complementary products, from lower acuity products through serious mental illness,” said Aaron Gani, founder and CEO of BehaVR, in an interview. “It just made a lot of sense to bring those two together.”
Deepak Gopalakrishna, CEO of OxfordVR, agreed.
“It makes both companies stronger … We now have a broader base of products, which means that we can treat a larger percentage of the population that exists,” Gopalakrishna said in an interview.
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Gani will be the CEO of the conjoined company, and Dr. Daniel Freeman, scientific founder and chief scientific officer of OxfordVR, will join the leadership team. Gopalakrishna will continue to be involved in the company, but has not determined his role yet. It may involve working as an advisor or a consultant of the company, he said.
The $13 million Series B funding round was led by Optum Ventures and Oxford Science Enterprises, and included participation from Confluent Health, Accenture Ventures, Chrysalis Ventures and Thornton Capital. In total, the companies have raised over $40 million.
Due to the current economic environment, it was not easy to secure the funding, Gani said.
“It took a lot of work, but we were committed to it and I’m delighted to say we’ve made it happen,” he said.
The combined company plans to use the funding to continue pursuing its pipeline of products that are candidates for clearance through the Food and Drug Administration. The product that is the furthest along in the process is OxfordVR’s gameChange, a prescription-only virtual reality cognitive therapy treatment. It gained FDA Breakthrough Device designation in June, and is intended for adults with schizophrenia spectrum disorders and aims to reduce anxious avoidance and paranoia. A clinical trial on gameChange found that patients with severe symptoms experienced a 49% reduction in avoidance of anxiety, a 41% reduction in paranoia and a 21% increase in quality of life.
Both companies primarily sell to providers, but there is no reimbursement yet for digital therapeutics. However, a bill has been introduced to the Senate that would require the Centers for Medicare and Medicaid Services to provide guidance on coverage of prescription digital therapeutics for Medicaid and the Children’s Health Insurance Program.
Other virtual reality companies in the mental health space include Virtually Better and Amelia Virtual Care.
Photo: Anna Frank, Getty Images