KKR & Co. is starting a mental health services company that will offer in-person and virtual care as part of the private equity firm’s strategy of investing in growth-stage, healthcare companies.
Geode Health plans to own and operate clinics across the U.S. with a goal of making it easier and cheaper to access mental-health services for conditions including anxiety and depression, according to a statement that confirmed a Bloomberg News report. It’s led by Chief Executive Officer Gaurav Bhattacharyya, previously the CEO of Elite Dental Partners.
Geode joins upstarts and incumbents, such as LifeStance Health Group and Refresh Mental Health, looking to transform how people receive care for their mental health. Demand for such services is surging amid a global pandemic that’s killed more than 3.7 million people and shut down economies, causing many to reckon with mortality and job loss.
“In the mental health space, particularly in the aftermath of Covid-19, things have gotten worse and not better in a market where you don’t have a lot of scaled platforms,” Ali Satvat, KKR’s co-head of Americas healthcare private equity, said in an interview. Satvat also runs the firm’s global health-care strategic growth strategy.
Geode plans to expand nationally by acquiring mental-health practices and hiring psychiatrists, psychologists, therapists and nurse practitioners. Consumer-facing healthcare providers like dentists, physical therapy and mental-health practices have increasingly been consolidating to capitalize on economies of scale.
“It’s a highly fragmented market which gives us a lot of room for consolidation,” Bhattacharyya said.
Geode is targeting what it sees as a $100 billion market for mental health services. The market is “rapidly growing due to higher demand, more awareness around mental illness and less stigma around the willingness to seek help,” Bhattacharyya said.
KKR will help support the growth of the company with an investment being funded through its healthcare strategic growth strategy. KKR’s equity investments in the strategy normally range from $100 million to $200 million, according to people familiar with the matter who asked not to be identified because the information isn’t public. The firm has invested about $14 billion in the health-care sector over the past 17 years.