Digital Health Startup Raises $12 Million To Provide Virtual OCD Treatment

When Stephen Smith was a sophomore in college, he started having anxious thoughts about his relationship with his girlfriend. Pretty soon he started worrying about other things, to the point where he couldn’t focus on anything else. Over and over again, as he tried to study or go to football practice, he couldn’t—these pernicious thoughts kept coming back, laden with a fear that something terrible was going to happen. 

Smith spent months trying to find answers about what was going on in his mind, just so he could get his life back. He saw five different doctors. He got five misdiagnoses. He got five treatments for the wrong thing. He ended up spiraling so badly, he says, that he had to drop out of college and move home. One day, while searching his symptoms online, he came across other people with similar thought patterns. That’s when he realized it wasn’t anxiety or depression, he had obsessive compulsive disorder, or OCD. 

Millions of Americans—more than 2 percent of the adult population—suffer from OCD, but there are only a limited number of therapists trained to practice one of the most effective treatments for the condition, known as “exposure and response prevention.” Smith, who returned to college in 2015 and even played NCAA football, is on a mission to bring the therapy that changed his life to people virtually through his company NOCD. To fulfill that mission, the Chicago-based digital health company announced it had raised a $12 million Series A round on Thursday. 

“We’re telling the OCD community, no matter where you live or how much money you make, [you can have] good access to effective care,” says NOCD’s CEO Smith, 26, who launched the company in 2017, the same year he graduated from college. The company’s chief medical officer is Dr. Jamie Feusner, a psychiatry professor at UCLA and director of the UCLA OCD Intensive Treatment Program. 

In pop culture, OCD is typically characterized by outward facing actions, like someone washing their hands multiple times or checking the locks on a door, but for many people, the obsessions and compulsions are occurring mentally. The internal nature of the disease is one of the challenges in diagnosing the disorder. NOCD aims to stop the cycle with virtual treatment options and also by creating an online community of people with OCD. 

The online platform the company has created, which is available via smartphone, includes virtual visits with therapists who specialize in OCD and have received additional training from NOCD on providing effective virtual “exposure and response” therapy. Between sessions, there are exercises for patients to reinforce what they’re learning in therapy, as well as a place to chat with peers. 

NOCD is one among a growing number of digital behavioral health startups that have launched in recent years. Teladoc and Amwell, the two largest telemedicine players, have been buying up companies, including BetterHelp and Aligned Telehealth, as therapy and medication management offer a steady stream of recurring revenue compared to one-off urgent care appointments. Lyra Health, which provides behavioral health benefits for large employers, hit a billion dollar valuation this year. 

But it was NOCD’s focus on a particular disorder, rather than the broader behavioral health category, that attracted investors. “The company clearly has carved out the number one leadership position for this,” says Dave Tamburri, Managing Partner at Health Enterprise Partners, which led the round, and who joined the company’s board of directors. Another draw for investors was the clinical data. There was a 47% reduction in OCD symptoms during ten weeks of treatment using NOCD, according to preliminary outcomes of 276 patients. Another key metric for Tamburri is the number of patients who keep coming back to the platform. Sixty-eight percent of patients that begin NOCD therapy complete six consecutive sessions, he says, which is “considered the minimum to drive meaningful reduction in OCD.” Those results have brought back return investors, including 7Wire Ventures, Chicago Ventures and Hyde Park Angels to this round. NOCD has raised $17.8 million to date. 

The company already contracts with several major health plans, including UnitedHealthcare, Cigna and several statewide Blues plans. One of the latest customers to sign on is Horizon Blue Cross Blue Shield of New Jersey. The draw for health insurers is the possibility of treating a challenging disorder faster. “When you look at OCD [patients], their medical costs are three times higher than that of a person with depression,” says Suzanne Kunis, Horizon’s vice president of Behavioral Health. 

Kunis and her team have reviewed more than 200 companies that are innovating to solve challenging healthcare problems. While evidence-based treatment was one of the most important criteria, the insurer also liked NOCD’s specialty training for providers and digital tools to support  adherence. “One of the things that I loved the most was the fact that they have peer support, which really is huge in any aspect of behavioral health and has been so unrecognized for so many years,” Kunis adds. 

With the Series A funding, Smith and the NOCD team are looking to grow and scale operations to all 50 states. This has become even more important in light of the Covid-19 pandemic, which has exacerbated anxiety and depression for some people. “We’re stepping on the gas,” says Smith. “We’re gonna keep doing that until we’ve tried to help every single person in the market.”

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