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Pear Therapeutics Navigates Troubled Waters: A Dive into Its Bankruptcy Filing

Pear Therapeutics, a pioneer in digital therapeutics, has recently been navigating troubled waters. This article explores the recent developments in the company, including its decision to file for bankruptcy and its plans to auction its assets.


Struggling to Stay Afloat: Pear's Financial Woes

Pear Therapeutics has been dealing with financial difficulties, leading to several restructuring efforts within the last year. These efforts have not been enough to keep the company afloat. As part of these restructuring efforts, the company laid off approximately 92% of its workforce, which included the role of President and CEO, Corey McCann.

The Rise and Fall: Pear’s Journey in Digital Therapeutics

As a pioneer in digital therapeutics, Pear Therapeutics has developed software solutions to treat various diseases. These include a substance use disorder product, a solution for opioid use disorder, and a treatment for insomnia. Despite the significant increase in prescriptions for its digital therapeutics, Pear has struggled to convince insurers to cover their products, hindering the company's revenue growth.

Pear’s Offerings: A Closer Look

Pear's digital therapeutics have been prescribed and used by patients, potentially saving insurance companies money. However, broader coverage has been challenging to secure, stunting the company's progression.

The Insurer Hurdle: Pear’s Thwarted Commercialization Efforts

Pear has previously identified insurers as a significant barrier to commercialization. The company has argued that despite the clinical necessity, effectiveness, and cost-saving nature of their digital therapeutics, payors can still deny payment.

Navigating Financial Challenges: Pear’s SPAC Merger and Revenue Difficulties

The company's financial struggles have their roots in its 2021 SPAC merger, which did not raise the expected amount of funds. Pear Therapeutics also faced challenges with its revenue, which, despite an increase in 2022, saw a decline in the fourth quarter and continued into the next year.

The Search for Financing: Pear’s Unsuccessful Attempts

Pear Therapeutics attempted to secure financing throughout 2022 and the first quarter of 2023 but did not succeed. By the time it announced in mid-March that it had engaged MTS Health Partners as its financial advisor to explore strategic alternatives, the process was already underway.

The Auction Process: Pear’s Plan to Sell Its Assets

With the inability to secure additional financing from public or private markets, Pear has decided to auction off its assets under the protection of Chapter 11 bankruptcy. The company believes this option will maximize value for all stakeholders and avoid the immediate loss of value that would result from liquidating assets under a Chapter 7 bankruptcy filing.

The Role of MTS Health Partners: Pear’s Investment Banker in the Bankruptcy Process

MTS Health Partners, the investment bank engaged by Pear Therapeutics, will continue to serve as the company's investment banker throughout the bankruptcy process. They have sought bids for the company or its assets, with pharmaceutical companies, insurers, healthcare providers, technology companies, and pharmacies among those that explored a possible deal.

The Bankruptcy Filing: An Overview

Pear's bankruptcy filing signifies the start of a new chapter for the company. With the layoffs completed, 15 employees remain to handle the bankruptcy process. Christopher Guiffre, Pear's chief operating officer and chief financial officer, will take on McCann's duties. However, McCann will remain on the board and provide consulting services during the bankruptcy process.

The Road Ahead: Pear’s Asset Auction Timeline

A bid procedures hearing is scheduled for April 21. Subject to the bankruptcy court's approval, the deadline for bids for Pear's assets is May 1, followed by an auction on May 3.

Conclusion: A New Chapter for Pear Therapeutics

The bankruptcy filing and upcoming asset auction mark a significant turning point for Pear Therapeutics. While it may be the end of the company as we know it, it also represents a potential new beginning. Only time will tell what the future holds for this pioneer in digital therapeutics.

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