Everything I know about the behavioral health market in 2026

Behavioral health has been through an insane hype cycle — crash and rebound — over the past decade. Once the forgotten segment within our overly medicalized healthcare system, it's now the biggest driver of utilization in the $80B (and growing) virtual care delivery market. After years of pouring capital into the space — a staggering $12B+ since 2020 — we're entering an era of consolidation, exits and increasing competition among the scaled players.

There are breakouts in every category, generating hundreds of millions in revenue. And the question of the moment for companies in the space is:

How do I get even bigger without jeopardizing my core business?

In many ways, that's a great place to be — but it comes with its own challenges, which I'll outline in this piece. It’s based on dozens of conversations with payers, executives and leaders in this space, as well as years of investing in the category and advising several of the scaled players.

But first, a little history.

During the pandemic, when it finally seemed like telehealth would get the boost it needed as regulations relaxed and more patients opted to be seen outside the doctor's office, health-tech investors started hunting for opportunities. The most obvious category, in many people's minds, was behavioral health.

I — and plenty of other investors — felt buoyed by a preponderance of evidence showing that virtual mental health care could be as effective as in-person care. And it seemed that payers had come around to realizing the importance of mental health and its connection to so many other conditions. Another factor? Former AbleTo CEO and Optum exec Trip Hofer recalls “tremendous pressure” on payers from self-insured employers demanding better support for their employees during this period.

Policy-wise, momentum around opening up access to behavioral healthcare had been growing since the 1990s with the parity and equity laws, in addition to the Affordable Care Act.