Digital musculoskeletal care firm Sword buys rival Kaia

US digital physical therapy specialist Sword Health has bought its competitor Kaia Health for $285 million, positioning it for expansion in Europe.

The merger of the two businesses brings together two companies with digital platforms designed to help people with musculoskeletal (MSK) conditions with physical therapy and pain management, although Sword's platform will dominate – at least in the US – going forward.

Assuming the transaction goes through, New York-based Sword will move Kaia's US customers – who number in the millions – onto its MSK programme, giving it an immediate boost in its American user base and building scale for its recent push into the provision of AI-enabled care services for organisations, as well as healthcare payers and providers, with its recently launched Sword Intelligence.

Kaia was originally set up in Germany, with headquarters in Munich, and has already secured reimbursement for its MSK offering through the country's digital health reimbursement pathway, which covers more than 70 million people.

In a statement, Sword chief executive Virgilio Bento said that combining with Kaia will "accelerate our already rapid growth in the US while also opening Germany as a major new market." The combined company will have a reach of more than 100 million people.

Both companies have secondary businesses outside of the MSK arena, so the combined company will also have an extended presence across digital health technologies (DHTs).

Kaia offers a programme called Breathe for people with respiratory conditions like chronic obstructive pulmonary disease (COPD), while Sword has also diversified with a mental health platform, Mind, which includes a wearable device used to detect the early signs of anxiety and depression.

Kaia's chief executive, Adam Pellegrini, said the takeover "represents a powerful next chapter for the mission we've spent over a decade building," adding that it will also help drive further expansion across Europe and "significantly expand our impact for the millions of patients who rely on Kaia today."

Bento also told Bloomberg that the company intends to seek additional financing in the first quarter of the year – with a target of $500 million – that will be used to fund additional expansion of the business and, potentially, more acquisitions.

To date, Sword has raised more than $500 million from leading investors, including Khosla Ventures, General Catalyst, Transformation Capital, and Founders Fund, and so far has resisted the temptation to go public via a stock exchange listing.