Kaia Health has raised $75 million in a Series C funding round to further develop its AI-assisted digital therapies, available via a mobile app focused on chronic pain related to musculoskeletal disorders (MSK) and chronic obstructive pulmonary disease (COPD).
The New York-based healthtech frontrunner attracted interest from an unnamed private equity fund that led the round, followed by existing investors Optum Ventures, Eurazeo, 3VC, Balderton Capital, Heartcore Capital, Symphony Ventures (golfer Rory McIlroy’s investment vehicle) and A Round Capital, which had previously participated in a US$26 million Series B round just last summer.
In the wake of the pandemic and the acceleration of telemedicine, but also the rise of work-from-home offices, the need for remote treatment has unsurprisingly given Kaia a significant boost in interest in its virtual treatments.
The application’s real-time feedback motion coach also allows for the treatment of neck, hip, knee, shoulder, hand/wrist and foot/ankle pain. Making it the optimal solution for treating conditions that are considered “elective care” during COVID-19.
Indeed, while chronic pain sufferers faced significant restrictions in access to physical care, Kaia increased its book of business by 600% in 2020.
How do you explain this growth?
The US healthcare cycle is heavily focused on the integration of these benefits in the corporate worl, which employers (Kaia’s key customers) typically opt for in January of each year.
With more than 50 employers and health plans already under its belt, the healthtech company expects a new wave of integrations next January, following the Series C funding round that made it possible. And while the latest round was unexpected, co-founder and CEO Konstantin Mehl explained that, given the situation, “the process was very easy”.
Indeed, the company was already planning to launch a funding round at the end of 2020, but this plan was accelerated by the pandemic and the increasing need for remote care that it has triggered. Mr Mehl also suggested that this can be explained by the fact that “the health system has been virtually closed for face-to-face elective treatment and chronic diseases are considered elective treatment”, which he believes is a mistake.
He also attributed the growing interest to the fact that many B2B partners are currently concerned about the significant backlog of surgeries that have resulted from the reprioritisation of the health system. “Before the pandemic, I think 20% of employers in the US were even interested in digital therapy, but that number went up to 100% immediately,” he said. Furthermore, with the healthtech sector experiencing unprecedented momentum, he concluded by explaining that Kaia did not need funding at the moment, but had met with investors and the process had been very easy.
Although Kaia has competition in the field, such as Hinge Health and Sword Health, which also focus on musculoskeletal conditions, and Physera, a virtual physical therapy provider that was acquired by Omada last year, the company currently leads the market, claiming that it covers by far the most lives in comparison. Indeed, its MSK digital platform is currently available to 60 million patients and is set to grow even further, with the company planning to allocate funds to more aggressively building its sales team. Mehl explained that the company’s main focus at present is to make its product available to relevant customers, while continuing to develop its computer vision, which remains its key strength.
Kaia’s goal is to enable patients to perform therapeutic exercises correctly themselves using computer vision that digitises medical treatments, making them accessible remotely.
Via the user’s smartphone, the application uses the camera to generate real-time posture tracking and provide feedback. Although no wearables are required, the healthtech visionary is currently exploring and developing the use of 3D data, compatible with high-end mobile devices, to provide users with such devices with even greater accuracy in its body-tracking models.
The AI-based tool already has the ability to provide the same level of correction as a personal trainer, directly from the user’s smartphone, explained Mehl, who added that Kaia will continue to develop this functionality with considerable investment in computer vision stemming from its Series C funding round.
Recently, the app also began offering its motion tracking feature as a way to monitor progress. Users could previously quantify their pain, which, while useful, was still a subjective measure. Now they will also be able to have an objective biomarker alongside the patients’ pain assessment by giving them regular tests that track their body movements.
“We have started to use movement tracking, in addition to the correction tracking function, as a biomarker. So we can measure the functionality of your body. We can now, for example, see which parts of the body are less flexible and that’s how we can measure the progression of the disease, instead of asking you what the pain level is today,” Mehl said of using the app’s innovative functionality. “Pain is the number one cause of work disability and the reason for that is that the functionality of your body decreases, so if we can measure that correctly, we can also escalate it to the right specialist doctor, for example,” he stressed.
The pain quantification feature is also available for COPD patients, by tracking them during a sit-to-stand test. The management of COPD has been particularly critical during the pandemic, as people with chronic inflammatory lung disease who contract COVID-19 have been found to have the highest mortality rate among COVID-19-infected patients, according to Mr Mehl.
At the same time, there is an urgent need for this type of care to be made available remotely, as pulmonary rehabilitation centres in the US were forced to close during the pandemic, due to the high risk of infection for patients. So, once again, Kaia’s application has provided an alternative for people with chronic diseases to continue their rehabilitation at home.
Kaia’s goal now is to focus on its marketing strategy to be able to target more people. Currently, the activation rate of the employer population is between 5 and 10%, depending on how the application is communicated to potential users. According to Mehl, the app has also been used by 15% of a company’s total population, although he stressed that such outliers are not unusual.
The company is now focusing on 5-10x revenue growth over the next 12 months, mainly driven by the promising partnerships in the pipeline. The remote care visionary also plans to expand into Germany where, in collaboration with the German government, it will start prescribing its app through GPs, with the aim of having 10,000 prescriptions made within a year. The plan will be launched as soon as the app is approved to do so under a national reimbursement system.