As more companies buy up mental health apps, two fast-growing businesses are joining forces.
Digital health unicorns Headspace and Ginger will combine to form a $3 billion entity, they announced on Wednesday.
The deal would combine Headspace’s app-based meditations and exercises with Ginger’s text-based coaching and teletherapy visits. Headspace CEO CeCe Morken said the two companies would be a good fit because their services and cultures complemented each other.
“What we recognized was we were missing the portion of what if somebody needs to talk to somebody and needs more help than what we provide?” she said in an interview with MedCity News. “We looked at the various companies that were out there and we really liked what Ginger was offering. Their focus was also on making it affordable for everyone, and that was important to us.”
Although mental health apps were already a big investment target before the pandemic, more companies have jumped to adopt these tools in the last two years. Part of the reason that Headspace considered the deal was because of interest from their enterprise clients, Morken said.
Headspace piloted the idea by offering access to therapists through its platform. In the first 10 weeks, it saw a 1,253% increase in attended sessions with Headspace Care therapists, compared to people who accessed therapy through the pilot company’s EAP provider.
“We were very pleasantly surprised with the results,” she said.
Although the combined company will be called Headspace Health, it’s structured as a merger of equals. Both businesses have been around for about a decade, and they’ve raised similar amounts from investors. Headspace has raised a total of $216 million to date, while Ginger has raised about $220.7 million, according to Crunchbase.
The two companies will simply combine their cap tables, and no additional money will be exchanged. Morken will serve as president of Headspace Health and Ginger CEO Russell Glass will become the new company’s CEO. They’ll each get an equal number of board seats.
Headspace Health is expected to have a total of 800 to 1,000 employees, and more than 2,700 enterprise and health plan customers. The deal is expected to close later this year.
Although Headspace and Ginger are still fine-tuning how their platforms will work together, they’re looking to train Ginger’s therapists on the Headspace platform and identify existing clients that might be interested in each other’s services. With Headspace’s global reach, there will also be an opportunity to expand Ginger’s footprint.
“It is really important to us that we keep both offerings very robust, because they both solve different needs,” Morken said.
The two companies aren’t the only ones to team up. Several digital health companies have recently expanded their mental health services, often through acquisitions or partnerships. Last month, Amwell bought SilverCloud health, which offers mental health and wellbeing programs. And in 2020, teletherapy startup Lyra teamed up with meditation app Calm.
Photo credit: Bohdan Skrypnyk, Getty Images