Optum Ventures, Deerfield invest $75M in autism startup Cortica
Cortica, an autism-focused startup, raised $75 million in a Series D funding round led by Optum Ventures, the company announced Monday.
Cortica also said it acquired Springtide Child Development, a firm that operates six applied behavioral analysis clinics in Connecticut and Massachusetts, and the Melmed Center, a developmental pediatrics clinical and research group based in Scottsdale, Arizona. Applied behavioral analysis, a therapy also known as ABA, provides one-to-one services primarily for children with autism.
Terms of the Springtide and Melmed Center deals were not announced.
Optum Ventures, the investment arm of UnitedHealth Group subsidiary Optum, previously invested in Springtide with New York City-based investment firm Deerfield Management Company. Cortica CEO Dr. Neil Hattangadi said Optum and Deerfield were rolling their equity into Cortica and investing in the combined entity.
The acquisitions are part of Cortica’s overall expansion plans, Hattangadi said. The company operates 23 autism centers in seven states.
“We expect to enter two to three more in the next 12 months, exclusively through value-based care partnerships,” Hattangadi said.
Cortica uses data analytics, an in-house scheduling software platform and clinical decision support tools to provide ABA, medical, counseling and developmental services to autistic children. It has in-home, telehealth and school-based programs.
Since its founding in 2017, the company has made value-based payment arrangements with health insurance companies like Point32Health in Massachusetts. Hattangadi said insurers, which are mandated to cover ABA, are interested in better outcomes and reduced spending.
“We’re no longer entering states just to enter them,” Hattangadi said. “It’s only in partnership with a health plan that’s inviting us there for a whole child, value-based care arrangement.”
Along with Optum and Deerfield, the round included new investors RA Capital and Echo Health Ventures. It also included existing Cortica investors Longitude Capital, .406 Ventures, Questa Capital, Ajax Health, Aperture Venture Partners and the Autism Impact Fund.
Rising autism diagnoses are causing increased demand for ABA. Autism prevalence affected 1 out of 36 children in 2020, up from 1 in 44 in 2018, according to data the Centers for Disease Control and Prevention released last month. Rates were higher among Black and Hispanic children.
Technology, especially telehealth, may be a solution to bridging this gap, which is why more applied behavioral analysis providers are testing this model while offering personalized services and rethinking reimbursement strategies.