UnitedHealth's Optum is in advanced talks to acquire remote mental health provider AbleTo for about $470 million

Key Points
  • UnitedHealth's Optum division is in talks to pay about $470 million, or around 10 times forward revenue, for New York-based AbleTo, according to people familiar with the matter.
  • Virtual therapy providers like AbleTo are seeing booming growth as the coronavirus forces people indoors and leads to skyrocketing unemployment.
  • AbleTo raised money last year from Optum's venture arm. 
Traders work at the post where UnitedHealth Group is traded on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

UnitedHealth Group's Optum is in advanced talks to acquire virtual therapy provider AbleTo for about $470 million, according to people familiar with the deal, at a time when telehealth is more in demand than ever. 

The transaction would value AbleTo, a 12-year-old company based in New York, at about 10 times forward revenue, said the people, who asked not to be named because the deal hasn't closed and terms could still change. Optum, the division of insurer UnitedHealth that provides technology-enabled services, has been growing through acquisitions, including  the purchase of DaVita Medical Group for almost $5 billion and patient-monitoring start-up Vivify Health.

Like other providers of remote health services, particularly in the area of mental health, AbleTo is seeing increased demand as people across the country deal with the medical and economic fallout of Covid-19. AbleTo's main service is covered by some insurers, and the company also offers free tools from a link at the top of its website, labeled "Coping with Coronavirus: Resources from our clinical team." The link takes users to a page full of tips and videos for managing stress, supporting employees and using telehealth.

"Mismatch between supply and demand for mental health services is massive and growing, making virtual care models that scale a winning value proposition," said Tom Cassels, president of Rock Health, a venture firm dedicated to digital health. "Without the stigma associated with in-person visits, barriers to care-seeking on the part of patients may free up latent demand for service grow."

Cassels was speaking of the market broadly, not of this specific deal.

Representatives from UnitedHealth Optum and AbleTo declined to comment.

UnitedHealth and AbleTo know each other well. Last year, Optum's venture arm made a "significant" strategic investment in AbleTo, after the company previously raised money from investors including Bain Capital Ventures and Aetna (now owned by CVS), a UnitedHealth competitor in the health insurance market. 

Stephen Renfro, a partner at Optum Ventures, said in the press release at the time that "AbleTo is changing the way people access and experience behavioral health care, and we look forward to working with AbleTo to drive further innovative solutions."

The connection between the companies is even deeper for AbleTo CEO Trip Hofer, who was a senior executive at Optum from 2006 to 2012. Hofer joined AbleTo in 2018, after serving as president of Accordant Health Services, a unit of CVS Specialty. 

The Optum business covers the noninsurance areas of UnitedHealth, including pharmacy benefits, data analytics, consulting, clinics and surgical centers and home care.

UnitedHealth has faced lawsuits for unfairly treating customers who need mental health coverage. A federal judge ruled last year that the company's behavioral health division discriminated against patients in need of mental health and substance abuse treatment. 

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