Pelago Announces $58 Million Series C Funding to Strengthen Leadership in Substance Use Management
March 28 2024 - 9:00AM
Business Wire
- Investment follows strong employer and health plan demand as
substance use management moves from niche solution to essential
benefit resulting in 287% revenue growth in 2023 and 100% client
retention
- Growth follows 500% increase in substance use disorder-specific
RFPs from employers and payers in the past twelve months
- Platform covers more than 3.4 million eligible lives
Pelago, the leading digital clinic partner to U.S. businesses
and health plans for substance use management, today announced $58
million in new funding on the strength of customer growth and
validated ROI, bringing total funding to $151 million.
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The additional capital raised will help Pelago accelerate its
product roadmap, extend its continuum of care and advance clinical
research efforts. Existing investor Atomico doubled down to lead
this Series C investment on the back of Pelago's impressive growth,
with participation from all existing investors Kinnevik AB, Octopus
Ventures, and Y Combinator plus new investors Eight Roads and
GreyMatter Capital. As part of this latest round, Atomico Partner
Laura Connell will join the Pelago board.
“I’m so proud of the work we have done to improve lives and
expand access to substance use care that works. We empower
employers and payers to bring our solution to their members
struggling with tobacco, alcohol or opioids, from prevention to
treatment and recovery,” said Pelago CEO and Co-Founder Yusuf
Sherwani, M.D. “We’re addressing a gap in the market left by
employee assistance programs and mental health benefits providers
who are unable to detect and treat substance use disorders.
Customers are resonating with our solution as evidenced by a
tenfold growth in revenue and eligible lives since our Series B two
years ago.”
Pelago was founded on the premise that substance use is a
treatable chronic condition. The company is addressing the rising
rates and costs of substance misuse head-on through its 100 percent
fees-at-risk model that delivers improved outcomes and demonstrated
ROI. In the industry’s first ever substance use management medical
claims analysis, Pelago's substance use management program reduced
medical claims on an annual basis by $9,367 per participant
compared to a control group, delivering a 3.0x ROI. More than 80
percent of cost savings realized in the Pelago analysis were
attributable to lower medical spend, with the remainder tied to
lower behavioral health costs.
“Yusuf and the Pelago team are building the category-defining
company in substance use management and in doing so, addressing one
of this generation's most urgent healthcare needs,” said Atomico
Partner Laura Connell. “Their visionary leadership in the substance
use management space, in offering treatment as an employee benefit
to the world's most forward-thinking companies, is reflected in
their exceptional growth, testament to the significant and rapidly
growing demand for better solutions. Pelago's ability to expand and
accelerate access to best-in-class substance use care results in a
major improvement in clinical outcomes and costs with clear and
material ROI for employers. Atomico is incredibly proud to have
supported the Pelago team on the journey thus far and to be
doubling down on our partnership now.”
With rapidly rising healthcare costs, employers and health plans
are laser-focused on value, cost-savings, and performance-based
care for their employee and member benefits. According to recent
surveys from consulting firms Mercer and WTW, costs for workplace
health plans in 2024 will jump more than 6 percent. Moreover,
recent Centers for Disease Control and Prevention research has
reported the annual minimum direct cost of substance use disorders
(SUDs) at $15,640 per affected employee enrolled in
employer-sponsored insurance, totaling more than $35 billion
annually.
In non-specialized SUD treatment settings, research shows up to
89% of adults with SUDs may go undetected, resulting in delays in
treatment, relapse and increased costs. And for those that do
receive SUD treatment in mental health settings – the treatment
itself is not the specialized SUD treatment they need. All the
while, the consequences in terms of hidden financial and
productivity impacts remain buried in medical claims and
absenteeism, dramatically impacting a company’s bottom line in the
form of costly health problems, inpatient and outpatient care, poor
utilization management and lower productivity.
“As a company that provides our employees with a broad range of
health, life and voluntary benefits, Live Nation Entertainment is
proud to offer Pelago’s value-based, substance use management
benefit,” said Emily Munroe, Director, Benefits for Live Nation
Entertainment. “I congratulate Pelago on its funding raise, and I
look forward to a continued strong relationship with their entire
team.”
Pelago offers integrated substance use management to employer
and health plan populations, with specialized treatment for
tobacco, alcohol and opioid use disorders along with support for
adolescents. For more information, visit www.pelagohealth.com.
About Pelago
Pelago partners with enterprises as the leading virtual clinic
for substance use management among their employees. We are
transforming substance use support – from prevention to treatment –
delivering education, management skills, and opportunities for
positive change to members struggling with substance use, most
commonly tobacco, alcohol or opioids. Our solution gives employers
the means to offer on-demand, personalized support to workers
seeking to live healthier lives. Pelago’s cognitive behavioral
therapy (CBT) and medication-assisted treatment (MAT) programs
deliver convenient, accessible and effective support that
seamlessly integrates with health plans, pharmacy benefit managers
and wellness platforms. Tens of thousands of members enroll in the
Pelago program each year, and more than 3.4 million now have access
to the digital clinic.
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Bruno Solari bruno@solcomms.co 303-335-9180