Elizabethtown, Kentucky-based BehaVR is merging again, this time with help from an European investor.
The virtual reality health care startup has merged with New York City-based Fern Health, according to a news release. Terms of the deal were not disclosed.
The transaction combines BehaVR’s digital therapeutics software with Fern’s virtual chronic pain-management program to create a value-based care-management platform for chronic pain, according to the release.
Fern’s parent company — Aachen, Germany-based research pharmaceutical firm Grünenthal — is a strategic investor in the combined company, which has been branded as RealizedCare and will be led by BehaVR CEO Aaron Gani.
Details of Grünenthal’s investment were not disclosed. However, in an interview with Business First, Gani said the investment makes Grünenthal RealizedCare's largest investor, with about 20% ownership in the new company.
The equity investment is in the mid-seven figures, he said. As part of the deal, Grünenthal CEO Gabriel Baertschi will join RealizedCare's board of directors.
Grünenthal bills itself as a “global leader” in pain management and related diseases, according to the release. The company has operations in 28 countries across Europe, South America and the U.S., and its products are available in more than 100 countries.
Grünenthal employs 4,400 people, with revenue of 1.7 billion Euros in 2022 — roughly $1.85 billion in today's dollar.
Gani said the merger will not impact BehaVR’s Elizabethtown operations nor the company's offices in Nashville, Tennessee. BehaVR has about 40 employees and Fern has 20.
Founded in 2016, BehaVR uses virtual reality, cloud computing and machine learning combined with neuroscience to develop treatments to help people make improvements to their health, in areas such as stress reduction, maternal health and addiction recovery.
The company was founded by Gani and counts former U.S. Senate Majority Leader Dr. Bill Frist and Louisville-based venture capitalist David Jones Jr. as early investors.
While BehaVR has grown since its founding, changing clinical practices and the lack of direct reimbursement for virtual care in the U.S. have been roadblocks, Gani said, which is why the opportunity to create a managed-care platform through a merger with Fern was appealing.
"We've been building these assets for five years. We've proven that they're powerful, they're effective, they work and they're safe. But it's very challenging to get them out into the hands of patients," Gani said. "We decided to go back to our roots in managed care. ... Let's embed these digital therapeutics into something that the industry recognizes and kind of knows what it is and knows how to buy it. ... It's just a more advanced, more modern version of care management."
RealizedCare will work with health insurers, employers and value-based care providers to identify, asses and engage patients with chronic pain, according to the release. The combined company’s platform will guide patients through their care, provide digital interventions, connect them to other with chronic pain and provide referrals to clinicians.
Patients will also be assigned a pain coach and receive a care plan featuring pain education, mindfulness practices and gamified exercises.
"We are thrilled to join RealizedCare and to enable this new offering, which supercharges the scalability and economic viability of traditional care management programs," Fern CEO Brad Lawson said in the release. "This is a completely different care experience for chronic pain patients that should mean better managed pain, fewer analgesic injections, fewer trips to the ER, fewer unnecessary surgeries, and ultimately, an improved quality of life."
The merger comes almost one year after BehaVR merged with Oxford, England-based OxfordVR, raising a $13 million round of funding. Terms of that merger were not disclosed.
BehaVR was one of KY Inno's Startups to Watch in 2022, after it landed a major development and commercialization deal with Sumitomo-Dainippon Pharma for three new novel Prescription Digital VR Therapeutics for anxiety and depression.
Gani said RealizedCare will continue to work with Louisville-based Confluent Health, which was an investor in BehaVR and with which it signed its first commercial collaboration in 2018.
"It's really now all about taking this digital care-management framework and starting to really scale it up with payers, with self-insured employers and with innovative, value-based providers like Confluent Health," Gani said.
