Over the past two years, the uncertainty and fear due to the impact of Covid-19 has had a severe impact on people’s mental health and wellbeing. With the NHS near breaking-point and unable to cope with the increased demand, never has additional investment been so vital. 

In 2021, a total of 822,000 cases of work-related stress, depression or anxiety were reported in the UK. With the aftermath of the pandemic and the changing nature of work, there is a growing focus on the ongoing wellbeing obstacles facing employees. This coupled with the Great Resignation has presented corporates with a stark need to implement the right support systems for struggling employees. 

As a result, the health and wellbeing sector has become increasingly attractive to potential investors. Deal volumes in the sector rose by 56% in the twelve months to November 2021, with notable deals including the US$200mn financing of Lyra Health, a provider of mental health care benefits for employers, from private investment partners.

Due to the pandemic more investment is needed for mental healthcare 

There is widespread demand for comprehensive mental health solutions, yet, the public healthcare system is fragmented and under significant pressure, compounded by the fact there are few independent providers of scale in the UK. The corporate arena is an area of major growth for occupational and mental health programmes and one which can provide much needed support to the health service. For example, earlier this year Marlowe Plc acquired Optima Health, a provider of technology-enabled occupational health services to build out its existing business.

The pandemic has presented many challenges which have compounded stress-related mental health issues for individuals - resulting in mental health accelerating up the corporate agenda. A recent study showed that although employees generally felt their workplaces had taken positive action to improve physical health since the start of the pandemic, only 25% said the same about the support for mental wellbeing. 

Investment in initiatives that support staff and bolster mental wellbeing is critical, not just for employees, but for employers too, as research, conducted by Deloitte found that poor mental wellbeing costs £45bn per year in high turnover, presenteeism, absenteeism, and impaired productivity.

Healthcare apps, AI and Zoom are being used to treat patients

Widespread disruption caused by the pandemic means the NHS has a significant backlog issue, with wait times now stretching to as long as 18 weeks, for non-urgent treatments. This is driving demand for the outsource and insourcing markets, due to a capacity overspill. As such, there is a move in private companies towards the use of Private Medical Insurance (PMI) to expedite access to treatment and in turn PMI providers are increasing their spend on preventative care with a particular focus on health and wellbeing. To meet these increased challenges, mental health service providers need capital investment to scale and professionalise, be it organically or through M&A.  

In response, mental health providers have explored alternative methods of support to those in need such as embracing digitisation by offering Zoom therapy, or using AI technology to provide personalised treatments. Investors have also become increasingly interested in the E-health market, with mental health apps like Mind and Calm attracting eye-watering levels of investment and increased opportunities to partner with firms such as Amex.

The conversation around mental health is ever growing, as awareness initiatives and charities continue to encourage and promote people to speak about their mental wellbeing. Businesses have seen record-levels of stress and burnout from employees, and mental health providers have had to accommodate this dramatic rise in demand. The rapidly evolving sector is extremely attractive to investors and it’s critical to unlock this investment to ensure that mental health services are fit for purpose. 

Byline by Karen Dawaf Harron, Director at Arrowpoint Advisory