Pear Therapeutics, a digital therapeutics company, has filed for bankruptcy under Chapter 11 and announced plans to sell the business or its assets. The company provides software-based prescription therapeutics for substance use disorder, opioid use disorder, and chronic insomnia. Pear Therapeutics has all received approval from the US Food and Drug Administration (FDA). The company is no longer accepting new prescriptions for its products or providing refills. The filing also notes that CEO Corey McCann has stepped down, and 92% of the full-time workforce will be laid off.
Digital therapeutics company Pear Therapeutics, known for its software-based prescription therapeutics for substance use disorder, opioid use disorder, and chronic insomnia, has filed for bankruptcy under Chapter 11 of the US Bankruptcy Code. Pear Therapeutics is looking to sell the business or its assets to a new company so that its products can still be made available to patients. The company has also announced plans to scale down operations during the bankruptcy process and lay off 170 employees, or 92% of its full-time employees, effective April 7.
Pear Therapeutics’ products have received approval from the US Food and Drug Administration (FDA), providing cognitive behavioral therapy to help users combat the disorders. However, the company’s CEO, Corey McCann, MD, Ph.D., has stated that insurance denials and market conditions have contributed to the company’s demise. Market conditions have challenged many growth-stage companies, and insurance companies have the ability to deny payment for therapies that are clinically necessary, effective, and cost-saving.
Last July, Pear Therapeutics announced that it would terminate 25 employees, or 9% of its workforce, due to the macroeconomic environment. Later in the year, the company announced in its third-quarter earnings statement that 59 employees would be laid off, representing approximately 22% of the workforce. But in the same earnings report, the company reaffirmed its full-year revenue guidance of $14 to $16 million.
Last month, Pear Therapeutics announced that it was exploring “strategic alternatives to maximize shareholder value,” engaging investment bank MTS Health Partners, L.P. as its financial advisor. The company evaluated “a wide range of strategic alternatives” and “also significantly reduced operating expenses.”
Pear Therapeutics has shown that clinicians will readily prescribe prescription digital therapeutics (PDTs), patients will engage with the products, and the products can improve clinical outcomes, save payors money, and truly help patients and their clinicians. However, the company’s demise shows that market conditions and insurance denials can still take a toll on even the most innovative and promising companies in the digital health industry.