Lyra Health Review

In this review of Lyra Health, we dive into the business model of Lyra Health and evaluate it from the perspective of a VC. We identify the market gap and quantify the problem that Lyra Health is trying to solve. Post that we try to understand the potential growth opportunities for the company going forward. We will also try to evaluate certain exit opportunities for the company.

1. Lyra Health’s Innovative Business Model

The company signs up employers as its clients and offer their services to the employees. Lyra helps the employees to safely and confidentially begin their treatment and diagnosis to understand what kind of treatment they need to seek if they feel like they are suffering from any mental health problems. Therefore, it solves a huge problem for mental health patients w.r.t. those employees who don’t know whom to approach and where to start.

Lyra's business model

Multiple studies by US government agencies indicate that mental health patients are heavily undeserved. Approximately only 30% of the total patients get access to professional help. This poses a significant problem to the society that needs an innovative solution.

Lyra Health identified this problem and rolled out their services to conquer this market gap. Their business model involves collaboration with the firms directly. Instead of catering to individual patients, Lyra’s business model has proven much more effective in democratizing access to professional help for all sections of society. It ensures that employees under the coverage get quality access to the best professional help within their geographical network. They offer a safe space where employees can benefit from years of increasing pattern matching data that helps them get an idea about how to start the entire treatment process.

2. Lyra Health Review: Big Addressable Market

Lyra Health's addressable market

Lyra Health basically targets working class employees with no access to costly individual psychiatrist visits. They offer the best medical professionals in the industry to them as a part of their salary perks. Therefore, employers can actually offer Lyra Health as a part of their health benefits in the compensation.

For the conventional treatment methods, the average time between diagnosis and treatment for a person with anxiety is 11 years and for depression, it’s three years. The PCP after his/her primary diagnosis gives out a referral that the patient has to produce to find a therapist. The patient then has to find out a suitable therapist in his/her network on his/her own. This makes the entire process confusing and exhausting.

Therefore, we believe that the market potential for such a service can be huge. By being part of the Health benefits plan, Lyra Health actually earns from the different B2B channels. This can lead to larger revenue generation as compared to the conventional online telehealth platforms operating on a B2C model. The under served mental health patients present a huge market that every new digihealth platform is trying to capture.

Data of annual growth in mental health treatment

With increasing work hours, the number of mental health patients is only expected to increase going forward. The treatment costs for Mental health problems have been increasing during the last decade. These facts do indicate that the market gap as well as the potential for Lyra Health do exist. In fact, we believe that Lyra Health can well disrupt the entire aspect of treating mental health disorders.

3. Lyra Health Review: Quick Scalability

It has many competitive advantages over other Digihealth start-ups. The conventional digihealth and telehealth start-ups focus on the B2C model. Therefore, they have to spend a lot on acquiring clients by cutting down on the fees. Therefore, the customer acquisition cost (CAC) for such start-ups will be greater than Lyra Health’s B2B business model. This reduces the CAC as the businesses have to deal with other firms. Once that relationship gets established, then Lyra has the access to the entire workforce of that firm. Basically, it leverages on Economies of Scale to reduce the CAC.

With low CAC and quick access to a large number of potential patients, the scalability becomes extremely feasible. In fact, VCs love the fact that the start-up can scale up their business by pumping in the capital and operating on an “auto-pilot” mode. Such start-ups gain a lot of traction from VCs.

Similarly, Lyra Health also differentiates itself by having a high barrier to the quality of professionals operating in the network. Less than 5% of the applicants make it to the team of professional therapists. Further, they combine the entire patient engagement with a mix of calls, video calls, and in-person meets on a case-to-case basis. The software platform developed by Lyra ensures the smooth functioning of the same and cuts down the average wait time significantly. We believe that this point of differentiation can help in speeding up the scalability of the business. They get the best therapists in the geography and democratize access to them. This can attract multiple businesses in the future to work with Lyra and include their facilities in their employee’s health benefits.

4. Lyra’s Revenue Growth Potential

According to Forbes, Lyra Health did $50 million in revenues in 2019. COVID-19 Pandemic has only exacerbated the demand for their services. Consequently, it is expecting to cross $100 million in revenues in 2020. We believe that the earning potential can be huge going forward.

Lyra Health has been successful in developing a network of the best professional therapists on their platform. At the same time, they have rich customer data related to symptoms, treatment, testing, etc. All these data can be extremely valuable to further refine their offerings. In fact, Lyra can actually optimize the treatment and analyzing procedures for their medical therapists. Start-ups like Ro offer such facilities to the doctors in their network and charge them for that facility. Therefore, this can open a new revenue stream for Lyra going forward.

We do believe that Lyra Health can be a mainstay in the entire industry. With its highly scalable business model, we do expect the revenue to grow at a very high rate going forward. Also, there is potential for newer areas of revenue generation as well which can further boost the growth. With lower CAC compared to its peers, the company can easily prove profitable in the near future as well.

5. Lyra Health Review: Exit Opportunities

Exit opportunities for VCs invested in Lyra Health

The company recently achieved a valuation of $1.1 billion in its Series D round of funding of $110 million. Lyra Health can actually grow big enough and go for IPO in near future. COVID-19 led pandemic has only increased the demand for such a service among various firms. The remote operability of the service attracts various HR reps of the company to include their offering in their employee health benefits. Consequently, the company has projected to cross $100 million in revenues. With further reduction in CAC and an increasing scale, the company can start generating cash flows profitably and attract institutional investors. We genuinely believe that IPO can be a big exit possibility for VCs invested in Lyra Health

Lyra Health can also be a prime acquisition candidate for big healthcare players. Lyra Health has been successful in pulling away medical professionals from bigger healthcare facilities and simultaneously routing a big chunk of revenues towards them. Therefore, Healthcare facilities can choose to acquire the company and stay on top. Other potential suitors include software consultancy giants that are on an acquisition spree to boost their revenue growth. They offer consultancy services for the entire healthcare industry and the acquisition of such a company can add gravy to their offerings. We can actually imagine a lot of synergy getting accrued in such a deal. Therefore, we believe these routes to be some of the alternate exit opportunities for the VC investors in Lyra Health.


As a conclusion of our Lyra Health review, we believe that the company has a great business model as it is solving a pertinent problem in the society. Its monetization plan has ensured that the targeted customers have the ability to pay for the services and hence visible in the traction gained so far. Scalability and competitive advantages are crystal clear. Hence, the company reached the Unicorn status recently. Going forward, we believe Lyra to be an industry leader in this space and carve out a big name for itself.

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