Fisher Wallace Laboratories is offering equity at an $80 million valuation. That price seems somewhat high for the company’s current level of revenue. Fisher Wallace brought in $4.3 million in revenue in 2020, which yields a revenue-to-valuation multiple of 18x. That revenue multiple is far above average for the fitness and wellness industry. An $80 million valuation is also steep in comparison to other growth stage startups raising capital online at this time. While Fisher Wallace’s product is promising, this valuation is not favorable for investors.

Fisher Wallace Laboratories is offering an innovative solution in the behavioral health market, which is large. That market in the United States alone was valued at $90.5 billion in 2020 and is expected to hit $132.4 billion by 2027 with a steady compound annual growth rate of 5.3%. 

Within this market, Fisher Wallace Laboratories is competing against a number of other treatments, namely traditional therapy and antidepressants or anti-anxiety medication. Those methods of treatment are by far the most common. It could take years for Fisher Wallace to compete with their hold on the market. However, the company benefits from certain tailwinds. Mental health is becoming a more common topic in the public sphere, with much less stigma and more openness to treatment than ever before. As the younger generation (which has experienced worsening mental health due to COVID-19) grows up and begins seeking their own treatment, a device like the Fisher Wallace Stimulator could find a growing market of eager buyers. As such, Fisher Wallace faces a positive market outlook, but it will likely take a long time for the company to see full market adoption. 

Fisher Wallace Laboratories seems to be the product of a family business inherited by Charles “Chip” Fisher, who currently serves as the company’s co-founder, chairman, and director. Fisher served as a sales executive at IBM and ultimately acquired the intellectual property behind the Fisher Wallace Stimulator. Beyond those details, Fisher’s background is a bit of a mystery. 

Along the way, Fisher joined forces with current Fisher Wallace co-founder and CEO Kelly Roman to expand the company. Before serving as the Fisher Wallace CEO, Roman was a business development professional and authored a graphic novel. Though Fisher Wallace indicates on its raise page that Roman has experience in healthcare marketing and clinical trial strategy, it’s unclear how he actually obtained that experience. His LinkedIn lists only short-term roles in business development for non-healthcare companies. 

The most clearly credentialed member of the Fisher Wallace executive team is Jennifer “Fer” Wang as the chief marketing officer, who just joined the company a couple of months ago. Wang has almost two decades of marketing and social media experience. She most recently served as the senior vice president of strategy and creative at Likeable, a large social media agency. 

Overall, the Fisher Wallace team doesn’t seem highly credentialed in the healthcare space. Although both Fisher and Roman are Harvard graduates, their prior careers don’t provide very relevant experience in this industry. The Fisher Wallace Laboratories team leaves something to be desired in terms of applicable expertise and entrepreneurship qualifications. 

The Fisher Wallace Laboratories’ Fisher Wallace Stimulator competes primarily against mainstay mental health treatments, including talk therapy and medications. Both of those methods have serious flaws. Therapy is extremely expensive. Without insurance, the average session costs anywhere from $65 to $250. Plus, finding a therapist is so burdensome that many patients simply never make it to their first appointment. Medication isn’t much better. It’s not abundantly clear that antidepressants are actually effective, and they can cause serious side effects. 

By contrast, the Fisher Wallace Stimulator is relatively inexpensive, easy to purchase, and effective, with minimal side effects. Patients can buy their own stimulator without a pre-existing prescription because the Fisher Wallace checkout page uses a telehealth partnership to create the prescription right then and there. Treatment with the stimulator takes just 20 minutes a day, which can be spent watching TV or doing other activities. And the Fisher Wallace Stimulator is effective. The majority of patients report a persistent decline of symptoms after two weeks, as evidenced in clinical research trials. 

Overall, the Fisher Wallace Stimulator is a major disruption in the treatment of anxiety and depression. The technology is patented, which provides Fisher Wallace with further defensibility. The Stimulator already has FDA clearance, and the company is now seeking FDA approval for its use in treating major depressive disorder. That approval would likely make it easier for the device to reach a wider audience as doctors would be able to recommend it with full confidence. Fisher Wallace has strong differentiation with a highly disruptive medical technology.

Prospective investors might notice a few not-so-bright spots in Fisher Wallace Laboratories’ performance history. The company touted $4.7 million in revenue from 2018. Revenues then declined sharply down to $3.9 million in 2019 with some recovery to $4.3 million in 2020. Although 2021 revenue isn’t reported, the Fisher Wallace raise page doesn’t boast about any strong year-over-year growth. The company is losing more money at the same time, with its net income going from a loss of $540,000 in 2019 to $1.8 million in 2020. It’s also worth noting that the Fisher Wallace Stimulator has apparently been FDA cleared since 1991, according to this clinical trial record. If that’s the case, why haven’t these neurostimulators taken off and become the default treatment for depression and anxiety? Fisher Wallace clearly isn’t a fast-moving, fast-growing business.

However, Fisher Wallace Laboratories has performed very well over its decade in business. The company holds a patent on its wearable neurostimulator device. The FDA has already cleared the Fisher Wallace Stimulator for use in treating depression, anxiety, and insomnia, so investors know the company already has a viable product on the market. Clinical trials have revealed the effectiveness of the Stimulator, and Fisher Wallace continues to conduct groundbreaking research, such as a current trial with the Seattle Police Department to assess the effect of the device on police officers’ mental health. Plus, Fisher Wallace has generated more than $30 million in lifetime revenue and sold 80,000 stimulators. Although the company’s revenue faltered in 2019, it appears to be getting back on track, and Fisher Wallace boasts growing traction.

Fisher Wallace Laboratories is a fairly risky investment. Any medical device company carries its fair share of risk, given the dependence on government regulation. Lengthy research and development times can also seriously hamper go-to-market potential. Fisher Wallace’s financials also add risk. The company posted declining revenue between 2018 and 2019, and 2020 revenues still weren’t back up to 2018 levels. Fisher Wallace’s net loss also ballooned in 2020 from roughly $543,000 in 2019 to more than $1.8 million in 2020. These financial struggles might point to Fisher Wallace’s need to raise successive rounds of crowdfunding. This capital dependence also adds risk.

Fisher Wallace Laboratories raised an initial round of crowdfunding in March 2020 at a valuation of $15 million. Its second round of crowdfunding in October 2021 was priced at $40 million. The current round’s valuation has doubled to $80 million. It doesn’t seem as though Fisher Wallace has made a great deal of progress in between any of these rounds. 

The company’s most recent round in 2021 touted the upcoming launch of a new version of the neurostimulator, with improved design and a new tracking app. The current 2022 round claims essentially the same thing. It appears some progress has been made in developing prototypes of that new design, but otherwise the pitch remains the same. 

As of 2022, Jennifer “Fer” Wang has joined the team as chief marketing officer, and she brings with her decades of marketing experience that could help the Fisher Wallace Stimulator reach a broader consumer base. It does appear that Fisher Wallace has successfully activated the direct-to-consumer revenue model, which was a bit more theoretical at the time of its last round. As a result, Fisher Wallace seems to be regaining the footing it lost between 2018 and 2019, with revenue increasing from $3.9 million in 2019 to $4.3 million in 2020. The company’s revenue in 2021 is still unclear, so it remains to be seen whether this trend continues.

There are some concerns potential Fisher Wallace Laboratories investors should consider. The Fisher Wallace Stimulator was originally cleared by the FDA in 1991, according to this clinical trial record. It’s been 30 years. If the Stimulator is truly the obvious solution for depression and anxiety, why isn’t it used by millions? The long history of the Stimulator also points to questions around Fisher Wallace Laboratories’ founding and what the company has been up to for so long. While revenue performance has been decent (if occasionally declining) in recent years, one might expect a supposedly revolutionary medical device company to be bringing in more than $4.3 million in annual income after so many years in business.

In addition, prospective investors should note that Fisher Wallace is marketing its product directly to consumers but lacks the brand polish that one might expect for a cutting-edge consumer healthcare company. Fisher Wallace seems to be moving in a positive direction with its new headset design, and its intent to launch a tracking app. But it’s worth asking why it’s taken so long for the brand to come around to savvy consumer marketing. 

While there are some questions about Fisher Wallace Laboratories’ operational history and ability to market to consumers, it’s undeniable that the Fisher Wallace Stimulator is an exciting advance in mental health treatment. Clinical trials and compelling customer testimonials attest to the fact that the Stimulator can markedly reduce depression and anxiety symptoms. In the midst of today’s mental health crisis, the Stimulator has the potential to save lives.

In addition, Fisher Wallace owns all of the intellectual property behind its Stimulator product, plus FDA clearances and pending FDA approvals. While Fisher Wallace seems to lack consumer marketing pizazz the company recently brought on a new chief marketing officer. The company clearly understands the importance of strong marketing and has taken steps to improve its branding. However, even Fisher Wallace’s proprietary assets alone could make it a valuable target for acquisition by a larger pharmaceutical or healthcare brand.

Fisher Wallace Laboratories sells a potentially lifesaving mental health treatment product. The Fisher Wallace Stimulator is a neurostimulator that reduces the symptoms of depression and anxiety with just 20 minutes of painless treatment per day and no serious side effects. This device has tremendous potential to counter the current mental health crisis, particularly when Fisher Wallace improves its design and adds telehealth capabilities to appeal to the modern consumer. 

Investors should note that Fisher Wallace has had some revenue struggles in recent years, and an $80 million valuation is too much of an increase since its last fundraising round given relatively limited progress. The team also lacks industry and entrepreneurial expertise, which could hamper the company’s progress.

However, Fisher Wallace is on the cusp of exciting milestones like FDA approvals and the launch of a redesigned product. These steps forward could propel Fisher Wallace into the mainstream as a game-changing mental health treatment approach. The wellness market is quite large, and the company’s device is clearly superior to current treatment options. Due to its strong intellectual property, Fisher Wallace could make an attractive acquisition for a larger, legacy healthcare company. Therefore, Fisher Wallace has been rated a Deal to Watch. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written on April 22, 2022.