Deal to Watch: Ethical Advertising of Rehabilitation Centers

Key Stats:

Summary

RehabPath has been selected as a “Deal to Watch ” by KingsCrowd. This distinction is reserved for deals selected into the top 10-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com.

Problem

Addiction is a global crisis. 107 million people worldwide suffer from an alcohol disorder, only one form of the broader global affliction; the World Health Organization reports that 27 million people worldwide suffer from opioid use disorders, and additional types of drugs, eating disorders, and other addictions also impact countless lives. 

With hundreds of millions worldwide seeking relief from addiction, many turn to the internet to locate rehabilitation centers and treatment providers. Rehabilitation centers are eager to advertise to these potential clients, spending over $1.8 billion on marketing each year in the United States alone (as reported by RehabPath). However, treatment providers’ eagerness to generate business and patients’ desperation to receive help make a poor match: it is exceedingly difficult to navigate hundreds or thousands of treatment options without harmful bias on the part of search engines and advertisers. 

“Google is the No. 1 referrer of addiction treatment in America – not health professionals,” said Greg Williams, executive vice president of the nonprofit Facing Addiction. This power often spurs disastrous results for addiction-stricken families and individuals. Sketchy or even illegitimate treatment centers purchase common misspellings of legitimate rehab center names, or create web content (blogs, websites, etc.) to optimize SEO and rank highly in search results. Moreover, some treatment centers listed online are merely phone banks attempting to generate maximum traffic. 

As unimaginable numbers of individuals worldwide attempt to navigate the treacherous journey of addiction, they face an insurmountable obstacle in locating a safe and effective treatment center from which to rebuild their lives.

Solution

RehabPath is a global network of rehabilitation facility aggregation websites, allowing users to browse treatment options in numerous countries and contact rehab centers directly from the site. RehabPath aims to provide a transparent, comprehensive directory of options for treatment through ethical advertising practices, directly countering the predatory advertising practices so common on Google and other treatment sites. 

RehabPath allows any treatment center to list on its relevant national site for free, and provides the treatment center’s contact information directly within their RehabPath listing to provide a direct link between treatment seekers and treatment providers. For monetization, RehabPath invites treatment centers to subscribe to enhanced listings, similar to how a restaurant can advertise on Yelp to become one of the top-listed options for searchers. 

RehabPath’s network of sites have generated 750,000 organic website visits in the last year, and have facilitated over 100,000 connections between patients and providers. RehabPath has forged advertising partnerships with major treatment centers and leading health professionals, and will generate over $30,000 per month in recurring revenue by the end of 2019. Since launch in 2017, RehabPath has earned $500,000 in subscription revenue.

The Team

RehabPath was developed under the umbrella of Blend Marketing, and the co-founding team both emerged from Blend. Ben Camp, RehabPath’s CEO, served as a marketing strategist at Blend concurrently with his first years on the RehabPath team. RehabPath’s co-founder, Jeremiah Calvino, is the founder of Blend Marketing and bankrolled RehabPath’s initial development. 

Ben and Jeremiah are supported by Olivia Mueller, Director of Research, and Bailey Griswold, Technical Lead. RehabPath is also being built by several part-time employees and contractors. 

Growth Plan

RehabPath has existed in some form for almost ten years, and is now building the capital reserves and momentum to invest in significant growth. Ultimately, RehabPath seeks to become a trusted global brand for patients and providers, facilitating more and more quality connections between individuals and treatment centers and generating more ethical revenue in the process. 

RehabPath plans to use the existing capital raise to continue their global development, specifically to scale up their presence in India. RehabPath is already present in India via its subsidiary site DeAddictionCentres.in, but hopes to grow its roster of paying customers and provide a more comprehensive vetting and verification system through in-person visits to providers. 

Beyond India (and future markets/languages), RehabPath looks to grow its broader platform by hiring in Business Development and Content. They also plan to refine their existing self-service platform for providers to increase margins by reducing hands-on staff time to facilitate advertisements. 

Why We Like it

• Undeniable magnitude of the paid rehab advertising scheme. The severity of the ethical problems surrounding addiction treatment and rehabilitation is so intense that the popular press has taken notice. John Oliver’s popular HBO news special Last Week Tonight covered the dismal state of rehab in a 2018 episode, and detailed the lack of trustworthy information on rehab available online. Several other major news outlets have similarly covered the space. RehabPath is clearly catering to a market in great need of a transparent and ethical solution, which bodes well for its ability to secure market share and generate revenue.

• Global reach. RehabPath is most accurately described as a network of global subsidiary marketplaces that aggregate treatment centers according to that specific market, including individualized listings, languages, and content as needed. RehabPath’s global reach could be considered a risk for the company, in that they are expanding on so many fronts that no one grows tremendously. However, the addiction crisis is undoubtedly worldwide, and countries outside of the US are likely more in need of trustworthy and comprehensive resources for locating treatment.
  
• High-quality subscription revenue. RehabPath’s business model relies on subscriptions from its treatment center partners, which is a much more stable and thus high-quality revenue stream than those of traditional digital advertising and content engines. RehabPath has demonstrated the ability to secure tens of thousands of monthly recurring revenue, largely driven from treatment centers’ organic assessment of their unpaid listing on the platform. Therefore, financial prospects for the company are strong, given future plans to expand customer bases in high-value countries and develop new markets around the world.  
  

The Rating: Deal To Watch

RehabPath is addressing a crucial issue of transparent and ethical advertising in the treatment and rehabilitation industry, taking a firm stance that desperate individuals and families seeking information about treatment should be able to access that information without predatory advertising undertaken by “treatment centers” with no record of providing quality treatment. 

It should be noted that RehabPath has had an unusual journey as the spin-out of a digital advertising agency, and is led by digital marketers rather than proven entrepreneurs. However, given that digital advertising, particularly search engine marketing, is a core focus of RehabPath’s business model, its leaders’ expertise is certainly helpful in building a sustainable revenue strategy. 

Drug treatment and rehabilitation is a valuable space for savvy content marketing, as was demonstrated in 2015 when American Addiction Centers (AAC) acquired Referral Solutions Group, a leading treatment content publisher, for $60 million. While AAC has faced some controversy, and the space at large operates in somewhat murky waters, the global addiction crisis is unfortunately unlikely to resolve anytime soon, leaving opportunity for RehabPath exit profitably. 

While an investor considering RehabPath should consider RehabPath’s founding team, global reach, and unclear exit opportunities in the space, RehabPath is overall a solid business enjoying high margins from quality subscription revenue. Moreover, the company is providing an ethical breath of fresh air into a devious industry, and has already affected countless lives through matches with quality treatment providers. Therefore, RehabPath is a Deal to Watch.