The pandemic has brought on challenges for individuals with substance use disorders and those in recovery with in-person drug rehabilitation centers forced to scale back operations or temporarily close. Overdoses topped 100K in the first twelve months of the pandemic, up 29%. Only 4.2M of the 20M Americans with substance use disorder receive help each year. With such an acute and growing crisis coupled with political sentiment moving towards harm reduction, removing barriers to treatment has moved to the forefront of the discussion. Ophelia is a digital treatment platform that provides telehealth services to opioid users by connecting them to licensed Medication-Assisted Treatment (MAT) clinicians. For opioid users, rehab fails 90% of the time without access to medication. Ophelia’s platform virtually connects providers to patients, who are able to secure prescriptions on the same day of the visit, from the privacy of their homes. Follow-up visits are scheduled to track progress, outcomes, and to hold users accountable. The visits are covered by insurance and the company offers out-of-pocket plans for the uninsured. Ophelia currently is approved to operate in 27 states with plans to expand to more localities.
AlleyWatch caught up with Ophelia CEO and Cofounder Zack Gray to learn more about how the accessibility the platform providers to users that are not currently engaged with the health care system, the company’s strategic expansion plans, latest round of funding, which brings the total funding raised to $68M, and much, much more…
Who were your investors and how much did you raise?
Ophelia raised $50 million in Series B funding. The round was led by Tiger Global, with participation from existing investors including Menlo Ventures, General Catalyst, and Refactor Capital.
Tell us about the product or service that Ophelia offers.
Ophelia is reinventing drug rehab by making evidence-based treatment private, affordable, and accessible via telemedicine. Our focus is Medication-Assisted Treatment (MAT) for opioid use disorder (OUD), the #1 cause of death for Americans under age 50. Ophelia’s technology platform reduces barriers for both patients and clinicians, targeting the 80 percent of Americans with OUD who cannot access treatment and the 50,000+ licensed MAT clinicians in the U.S. who are unable to practice today.
How is Ophelia different?
While other addiction treatment providers rely on referrals from hospitals or primary care providers, Ophelia is taking a different approach, recruiting patients directly online and creating a platform to mobilize unutilized clinicians. This is critical to reaching “the invisible 80 percent” of Americans with OUD who are unengaged with the health care system until a dangerous complication occurs.
What market does Ophelia target and how big is it?
Ophelia aims to (a) rebuild the addiction treatment industry in America and (b) expand the market to include the 80% of patients with substance use disorders who are unable to access treatment today. The average cost of outpatient addiction treatment is roughly $6K/patient/year, translating to a market size in excess of $50B in the U.S. alone.
What’s your business model?
Ophelia provides telehealth services to patients and is paid by their health insurer. For patients out of network with Ophelia’s contracted insurance partners, our service is available for a monthly out-of-pocket subscription.
What are your post-COVID office plans?
Ophelia is a remote-first company, but we have an office in Williamsburg, Brooklyn that is open 7 days a week for those who wish to use it (fully optional).
What was the funding process like?
We were preempted well before we had planned to raise money, so we had enough capital in the bank to walk away from a deal. As a result, I was able to dictate a quick process, with the stipulation that I’d return to operating the business within a few weeks unless we were able to reach terms. Fortunately, we were able to agree to favorable terms in a relatively short period of time.
What are the biggest challenges that you faced while raising capital?
We’re younger than most of our competitors. My challenge was to get investors thinking about a future in which our relative trajectories cross.
What factors about your business led your investors to write the check?
Differentiated strategy, strong medical leadership, and rapid growth across all stakeholders (patients, clinicians, payors) in a short period of time.
What are the milestones you plan to achieve in the next six months?
Ophelia will become a national provider in 2022, making its program available to patients and clinicians in more than 30 U.S. states.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
If an investor has agreed to speak with you, they likely already have a thesis on your business. More specifically, they’re probably already sold on the market and just trying to determine which company to bet on. Before you initiate the fundraising process, your job is to figure out: (a) whom they view as your competitors, (b) how you are different (and better), and (c) what you need to convince them of in order to pick you. In other words, don’t waste your time convincing them of things they already believe.
Where do you see the company going now over the near term?
Our near-term plans include (a) expanding our core program to more patients and clinicians across the U.S., (b) integrating with additional payors and partners, (c) further developing our clinician recruitment & training program, and (d) adding additional clinical services for OUD and common comorbidities.
What’s your favorite outdoor dining restaurant in NYC?
Fette Sau in Williamsburg.
