Autism Care Startups See Rising Investment, Navigate Insurance Hurdles

After a few rocky years, investors are beginning to pour capital into the autism service industry.

In the first two months of the year the autism therapy industry has seen a slew of deals. For example, in January Already Autism landed private equity investment and then purchased multiple providers including CABS Autism and Behaviour Specialists and Commonwealth ABA.

Additionally, Ascend Capital Partners bought Unison Therapy Services and Nautic Partners announced the acquisition of Proud Moments ABA.

“The capital from private equity mid-market to the large names, whether lessons learned or scars be damned, are really flooding back in, looking for opportunities,” Chris Male, co-founder and managing partner at Autism Impact Fund (AIF), said during a recent Autism Business News webinar. “I think lower leverage and better valuations will help them. But we’ve seen a tremendous amount of activity early on. It is a lot of inbounds, a lot of inquiries, and trying to find the right groups and providers. So I think you’ll see a lot of activity, and we will hit those highs.”

AIF is a venture fund that invests in companies focused on innovating solutions to care for people with autism, neurodevelopmental disorders and mental health issues.

Overcoming past challenges

Despite the continued interest in the autism sector, the industry has seen some high-profile stumbles over the last few years. For example, in 2023, The Center for Autism and Related Disorders (CARD) filed for bankruptcy just five years after it was sold to Blackstone at a $700 million valuation. Additionally, autism startup Elemy went through at least four rounds of layoffs and dissolved its direct care business in a pivot to become a pure-play software platform.

“Pre-COVID, there was a view that you could not lose money in autism services, and I think you saw a lot of people coming in because it was like a sure thing, and then COVID happened, and that wasn’t the case, and you had situations like CARD etc.,” Brad Zelinger, founder and CEO of Stride Autism Centers, said on the webinar. “But with that behind us and this renewed sense that you can have a successful investment in ABA, I think there is going to be a lot more activity for companies similar to Stride.”

Stride Autism Centers provides ABA therapy to children with autism ages 2 to 6. The provider has locations in Illinois, Iowa, Nebraska and South Dakota.

Still, some insiders say sophisticated investors can see the nuances of the space and understand the value of investing in the space.

“I believe that the dealmaking will continue to be strong in 2025 from the provider perspective,” Helen Mader, CEO and co-founder of Behavior Frontiers, said. “What I’ve seen is that the investors, who’ve done their homework and really solidified their thesis around ABA, they’re still looking for strong ABA providers to back so at this point, the sophisticated providers who really have strong data analytics in their operations are going to succeed. And for example, at Behavior Frontiers, we embedded software across all our departments, including priority care, which I mentioned, which enables us to have real-time access to all of our metrics and KPIs that inform decision making.”

Founded in 2004, Behavior Frontiers provides ABA services for children with autism and other developmental conditions. It provides center-based and home-based services in 65 regions and 12 states.

Payer hurdles

While investors and providers are keen to get back into dealmaking, new challenges in reimbursement have also weighed on the space.

Payers have proposed new ways to curb ABA hours. For example, Indiana Medicaid recently proposed an ABA cap of 30 hours weekly for no longer than three years.

“In our experience when working with payers and state Medicaid plans, they are becoming increasingly concerned about the general cost of ABA,” Jeff Beck, CEO and co-founder of AnswersNow, said.

AnswersNow is a digital health startup that provides ABA services on a virtual platform. In 2023 the company closed an $11 million Series A funding round.

Payers are taking a closer look at quality metrics.

“The payers are starting to pay very close attention, and what are they paying for, and where are the outcomes,” Male said. “So I think you’re going to see a lot of that pushback to being more comprehensive in driving better outcomes.”

While payers may be taking a second look at ABA hours and rates, many providers aren’t concerned, citing the need for services and family advocacy.

Despite increased scrutiny of ABA treatment hours and reimbursement rates, many providers remain confident, citing strong demand for autism services and consistent support from families advocating for coverage.

“ABA is a medically necessary treatment. It also falls under mental health parity laws, so there is protection around this service,” Mader said. “Parents with children with autism are a very strong, unified community, and they have a history of fighting for their children’s rights, such as with groups like Autism Speaks. They’re not just going to sit back and let insurance companies make arbitrary decisions about their children’s therapy.”