Foxo Technologies' Behavioral Health Subsidiary Surges: A Risky but Rewarding Gamble?

Foxo Technologies Inc. (FOXO) has staked its reputation on transforming healthcare access through innovation, but its latest milestone—a behavioral health subsidiary reaching critical operational benchmarks—has investors buzzing. Myrtle Recovery Centers, Inc., the company’s addiction treatment subsidiary, has treated over 400 patients and delivered 5,000 care days in just 21 months, signaling a potential breakthrough in a market starved for effective solutions. Yet, the path ahead remains fraught with financial and regulatory risks.

A Strong Start, but Can It Scale?
Myrtle’s Oneida, Tennessee facility, launched in August 2023, has become a linchpin of Foxo’s healthcare strategy. The 30-bed center specializes in inpatient detox, residential treatment, and outpatient programs for opioid use disorder (OUD), leveraging Medication-Assisted Treatment (MAT) and OBOT (Office-Based Opioid Treatment). With 400+ patients treated by May 2025, the facility’s occupancy rates suggest robust demand in rural East Tennessee, where opioid-related deaths have surged.

The subsidiary’s CEO, Robert Merritt, has emphasized its “exemplary care” model, which combines clinical rigor with community integration—a formula that could be replicated in new markets. Myrtle now aims to hit 10,000 total care days by year-end, a 100% increase from current levels, as it expands its geographic footprint. But scaling will require overcoming staffing shortages, regulatory hurdles, and competition from entrenched players.

Driving Foxo’s Revenue Growth—and Its Risks
Foxo’s CEO, Seamus Lagan, has positioned Myrtle as a linchpin for diversifying the company’s revenue beyond its core critical access hospitals (via Rennova Community Health) and biotech research (via FOXO Labs). The subsidiary’s success has already fueled a 129.5% stock surge, pushing shares to $1.46 in May 2025. Yet, Foxo’s $2.8 million market cap and history of operating losses—amplified by $100 million in long-term debt—raise red flags.

Analysts note that Myrtle’s expansion hinges on securing consistent Medicare/Medicaid reimbursements and private insurance contracts. However, the company’s technical “sell” rating from financial analysts underscores skepticism about its ability to manage debt while scaling operations.

The Bigger Picture: Behavioral Health’s Untapped Potential
The U.S. behavioral health market is projected to grow at a 6.2% CAGR, driven by rising addiction rates and bipartisan support for MAT programs. Myrtle’s focus on rural communities—where addiction treatment deserts are prevalent—aligns with this trend. The facility’s 5,000 care days already represent a 17% annualized growth rate since opening, suggesting strong momentum.

But success isn’t guaranteed. Foxo faces headwinds like:
- Regulatory uncertainty: OBOT programs require strict federal licensing, and reimbursement rates vary by state.
- Operational complexity: Expanding into new regions demands local partnerships and compliance expertise.
- Sustainability concerns: With $2.8 million in annual losses (as of 2024), Foxo must prove Myrtle’s margins can offset its broader financial struggles.

Conclusion: A High-Reward, High-Risk Play
Myrtle Recovery Centers’ milestones are undeniably impressive, offering a blueprint for addressing rural healthcare gaps. Its 10,000-care-day target by 2025, if achieved, would cement Foxo as a formidable player in behavioral health. However, the company’s financial fragility—$2.8M market cap versus $100M debt—demands caution.

Investors should weigh Myrtle’s potential against Foxo’s broader challenges. The subsidiary’s 5,000 care days represent a 15% utilization rate of its 30-bed capacity, suggesting room to grow. Yet, replicating this success across multiple facilities will require capital Foxo may not yet possess. For now, the stock’s recent rally reflects optimism, but long-term viability hinges on disciplined execution and debt management.

In a sector where demand outstrips supply, Myrtle’s model could pay off—but only if Foxo can navigate its financial shoals. The question remains: Is this a transformative leap or a risky gamble? The next 12 months will tell.