White Plains, New York-based substance use disorder provider Forge Health has secured $10 million in new funding.
The capital is part of a $21.5 million funding effort that spans two separate efforts in 2022.
“We’re opening new clinics, both in-person and virtual, with our partners—accountable care organizations, payers, as well as employers—to enhance the value-based care relationship we already have,” Forge CEO Health and co-founder Eric Freeman told Behavioral Health Business.
Forge Health raised $11.5 million in convertible notes in April. These notes are being converted along with the new $10 million raised in the capital round. New York-based venture capital firm HC9 Ventures led both rounds.
The latest round included 31 investors and saw its first sale on Dec. 5, according to public filings.
Forge Health offers mental health and substance use disorder (SUD) treatment through a values-based model of care. It uses multidisciplinary care teams and patient analysis to streamline care for patients with multiple comorbidities.
A study by Forge Health found that its model could reduce hospital admissions by 75% and emergency room use by 62%.
So far, Forge Health has taken a prudent approach to its growth, focusing more on cementing its clinical practices for quality before seeking scale, Freeman said.
“In this market … a lot of other companies have really focused on growth over clinical quality, and there’s a very big difference between the two,” Freeman said.
But now the company is looking for scale with this latest round of funding.
Freeman considers Forge Health more mature than a typical company starting a Series A funding round. It has more than 150 employees, operates in eight states and has several value-based care contracts.
The company launched in 2016, but did not seek growth capital until it had established its model of care and found some degree of business success and stability.
Freeman said the Serie A round is not yet complete; other parties appeared on the scene that would put their total funding above $10 million. He did not venture to give a number of what he expected to be the total score of the round.
By mid-2023, Forge Health hopes to have 19 clinics. It lists locations in Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Virginia on its website.
There are a number of other venture-backed behavioral health providers that are founded around or have adopted value-based care. Other examples include Waltham, Massachusetts-based Eleanor Health and Miami-based Brave Health.
Forge Health launched with seed funding from San Francisco-based venture capital firm Montage Ventures. Since then, it has become one of the fastest growing companies in America.
The Inc. List 5000 shows that Forge Health’s revenue has increased by 800% from 2018 to 2022. It is ranked number 792 on the list.
The company also deepened its executive leadership with the addition of Timothy Wentworth as chairman of the board of Forge Health. He previously served as CEO of Evernorth, the health services division of Cigna Corp. (NYSE: CI), and as CEO of Express Scripts. HC9 Ventures connects Forge Health leaders with Wentworth. This development represents a maturing of the company, Freeman said.
“Attracting someone like Tim to come on board is because we’re doing things successfully from both a business model perspective and a clinical model perspective,” Freeman said. “Funding is now in place to enable us to continue to execute our strategy in a disciplined manner.”