Digital health · Substance use care
Pelago
A virtual clinic treating tobacco, alcohol and opioid use disorders for employers and health plans, paid only when it hits agreed targets. It was Quit Genius until 2023. Its published evidence is real, and almost all of it was written by people it employs.
A pathway that was not there
Three medical students were assigned to a respiratory clinic in London. They watched doctors tell patient after patient to stop smoking, and then watched the appointment end there.
Maroof Ahmed later described the gap to a reporter: doctors telling people to quit without giving them any meaningful pathway to do it. He, Yusuf Sherwani and Sarim Siddiqui had met on the first day of medical school. They set out to build the pathway.
What they shipped was an app. Cognitive behavioral therapy in stages: work out why you smoke, learn what nicotine does, set a quit date, hold the line. By early 2018 it cost $4 a month, or $15 with a coach attached, and Y Combinator had put it through the W18 batch. At demo day it was an app “that delivers personalized therapy to help people quit smoking.”
The gap they aimed at
Substance use disorders are common, expensive and mostly untreated. Centers for Disease Control and Prevention research cited across Pelago’s materials puts the minimum direct cost at $15,640 per affected employee on employer insurance, more than $35 billion a year. Most of that sits inside general medical claims rather than anything labeled addiction treatment.
The alternatives are a residential program, an intensive outpatient program, or an employee assistance line that refers people elsewhere. Pelago’s argument is that a large middle exists where evidence based outpatient care, delivered remotely, does the job for a fraction of the money.
That argument has a sharp edge. Treating substance use as a chronic condition rather than a crisis is settled clinical thinking. Proving that one vendor bends one employer’s medical spend is a different problem, and it is measured almost entirely by the vendor.
Three doctors and a rename
Sherwani is chief executive, Ahmed chief operating officer, Siddiqui led product. All three are named as executive officers and directors on every Form D since 2020, and Sherwani signed all four.
The early money was European and small: a $2.6 million seed including Serena Ventures and Venus Williams. In March 2020 an $11 million Series A led by Octopus Ventures took the company past tobacco into alcohol and opioids. Gabriel Mecklenburg, co-founder of Hinge Health, joined the board in October 2019 and is still on the 2024 filing. Atomico and Kinnevik co-led a $64 million Series B in July 2021.
In June 2023 Quit Genius became Pelago. The studio A LINE built the identity around the word archipelago and the line “You’re not an island.” The point was to get the word quit out of the name, because a brand built on quitting excludes everyone not ready to.
From app to clinic to platform
The clinical model kept adding parts: physician led care teams, licensed counselors, at home breathalyzers and test kits, prescriptions through pharmacy partners, referral agreements with Recovery Centers of America and Banyan Treatment Centers. LegitScript certified the company in April 2022. Evernorth added its tobacco program to the Digital Health Formulary in 2019, and alcohol and opioid programs in September 2022.
The commercial model hardened alongside it. In July 2022 the company moved from half its fees at risk to all of them: miss the agreed clinical, engagement, satisfaction and operational targets and the client can claim back every dollar paid. In 2026 Pelago extended that structure across mental health and behavioral addictions, fronted by a voice AI called Sona that assesses each member and routes them, with a licensed clinician in the loop.
What is proven, and what is still claimed
| Evidence | What the record shows | Source type |
|---|---|---|
| Smoking RCT | JMIR Mental Health, Oct 6, 2020. 556 randomized, 530 analyzed. At 4 weeks post quit date, 7 day abstinence was 44.5% against 28.7% for very brief advice, risk ratio 1.55. The paper discloses: “The study was funded by the company that produced the Quit Genius digital therapeutic intervention (Digital Therapeutics Inc).” | Peer reviewed |
| The 52 percent figure | Releases from 2020 to 2022 cite a 52 percent quit rate. The paper reports 52.4% per protocol among completers and 44.5% by intention to treat. Marketing carries the higher number without the label. | Differs from the paper |
| Long term follow up | Nicotine & Tobacco Research, Oct 26, 2022. Consecutive 7 day abstinence at 26 and 52 weeks was 27.2% and 22.6% against 16.6% and 13.2%. Breath verified abstinence differed significantly at 26 weeks (p = .03) but not at 52 weeks (p = .16). | Peer reviewed |
| Alcohol RCT | NCT05748639, sponsor Quit Genius. Two arm randomized trial against medical management. Started Jan 1, 2023, enrolled 242 against 300 planned, completed Jul 15, 2025. No results posted as of Sep 23, 2026. | Public record |
| Return on investment | Telemedicine and e-Health, Oct 2025. Matched control analysis of 7,586 commercially insured adults. Among 1,172 treated, savings of $7,920,376 against costs of $1,747,452: 4.5:1, or $6,758 per participant. Authors are affiliated with UCLA and with Digital Therapeutics, Inc. | Peer reviewed |
| Savings in marketing | 2024: $9,367 per participant and 3.0x, from “the industry’s first ever substance use management medical claims analysis.” 2026: “nearly $12,000 in annual savings per participant.” A 2026 interview cites “returning $5.50 for every dollar invested, based on independent analysis.” Three figures, one published study, no named actuary. | Claim exceeds the record |
| Independent assessment | Peterson Health Technology Institute, Sep 2025. Reviewed 16 virtual opioid use disorder companies, Pelago among the prescribers. Retention about 13 days longer at six months, 150 against 137, and savings of roughly $400 per patient. | Independent |
| Pilot work | Single arm or qualitative studies on alcohol care with naltrexone, vaping cessation, opioid care with buprenorphine, and suicide risk screening across 252 clinic patients, 2022 to 2025. None are controlled comparisons. | Peer reviewed |
| Study count | Company materials cite 6 studies in 2020, 8 in 2021, 9 in mid 2022, 13 in 2024 and 16 in 2026. The list behind the count is unpublished. | Company-stated |
| Actuarial validation | No Validation Institute certification or other independent actuarial review of the savings claims found as of Sep 23, 2026. | Not found |
Read plainly: the smoking work is the strongest thing here, a registered and biochemically spot checked trial with a year of follow up showing a real effect that decays, as smoking cessation research usually does. Everything downstream is thinner. The alcohol trial that would extend that rigor finished more than a year ago and has posted nothing. The economic case rests on one paper written in part by the company’s own clinical affairs staff, and the figures in press releases have drifted upward from it rather than toward it.
What to watch
- Results from NCT05748639. The trial completed July 15, 2025 and the registry was updated that November with no results section.
- Whether any savings claim gets certified by a party Pelago does not pay.
- What the Drug Enforcement Administration decides about remote prescribing of controlled medicines.
- Evidence for Sona. The two studies cited so far are observational reads of member conversations.
- A Series D or an exit. The chief executive said in 2024 that the Series C might be the last raise before a public offering.
In their words
“CBT breaks down situations into three areas: your thoughts, your feelings and your behaviours.”
Maroof Ahmed, co-founder and COO, TechCrunch, 2018 · Interview
“People often feel a lot of fear around going to rehab.”
Yusuf Sherwani, co-founder and CEO, Forbes, 2024 · Interview
“While there have been great strides in the adoption of digital health, the industry faces a credibility crisis due to the lack of high-quality peer-reviewed research that back up many of the healthcare claims.”
Yusuf Sherwani, trial results release, October 2020 · Company release
“Quit Genius is bringing addiction treatment into the 21st century with digitally delivered care programs that, similar to what we have seen Hinge Health do for MSK, provide clear clinical impact, financial ROI and meaningful patient outcomes.”
Ben Blume, partner, Atomico, Series B announcement, 2021 · Investor, company release
“Based on the available literature and company-reported data, there is currently no indication that virtual solutions are reaching a disproportionate share of new-to-treatment patients or materially expanding overall access to MOUD.”
Peterson Health Technology Institute, in Fierce Healthcare, 2025 · Independent
“It remains unclear to me how these businesses will build sustainable profits.”
Aaron DeGagne, analyst, PitchBook, to Forbes, 2024 · Analyst
“There are ways of getting great engagement that don’t ultimately move the needle on outcomes.”
Yusuf Sherwani, StartUp Health interview, 2026 · Interview
Related companies
Sources
- Public recordForm D filings, Digital Therapeutics, Inc.
- Public recordForm D, Pelago Feb 2024 a Series of CGF2021 LLC
- Public recordClinicalTrials.gov NCT05748639
- Peer reviewedDigital therapeutic for smoking cessation, randomized controlled trial
- Peer reviewedLong-term effectiveness of clinician-assisted digital CBT for smoking cessation
- Peer reviewedEconomic impact of an employer-sponsored digital intervention, ROI analysis
- Peer reviewedDigital therapeutic with buprenorphine for opioid use disorder
- Peer reviewedImplementing suicide risk screening in a virtual addiction clinic
- IndependentPHTI assessment of virtual opioid use disorder solutions
- IndependentPelago clinches $58M to expand offerings for payers, employers
- IndependentPelago is reimagining rehab with $58 million in new funding
- IndependentYC-backed Pelago raises $58M Series C
- IndependentSUD provider Pelago pivots to behavioral health
- IndependentQuit Genius, backed by Y Combinator
- IndependentYC W18 Demo Day roundup
- InterviewA 9-Year Overnight Success Story
- Company$58 Million Series C funding release
- CompanyQuit Genius raises $64M Series B
- Company100% of fees at risk release
- CompanyBehavioral Health Platform launch
Profile researched and written by Healthcare Discovery. Last updated September 29, 2026.
