In August, Ginger announced plans to merge with Headspace in a $3 billion deal. In a busy year for digital health mergers, it was unique in that it was a merger of equals between two mental health companies, one that provided therapy services and coaching with a meditation app.
In a Wednesday interview at CB Insights’ Future of Health conference, Ginger CEO Russell Glass told moderator Chrissy Farr that conversations between the two companies had started a year prior. But a sense of urgency around mental health during the pandemic and increasing competition spurred the two to come together.
Jeff Weiner, the founder and chairman of LinkedIn, made the initial introduction shortly after Ginger had raised a fresh round of funding. He had acquired Glass’ previous company, a B2B marketing platform called Bizo, and also was an investor in Headspace.
“It wasn’t until almost a year later when we started to look seriously at how this space would develop and recognized that this was a moment in time, in the history of the world, where mental health was so important to society that these two, three, five-year plans to scale felt too long,” Glass said.
The deal essentially involved the two companies bringing their cap tables together, with each having raised a little over $200 million. Glass said a couple of factors went into the decision. First, how could they expand quickly to reach more people who needed help? And second, he realized that as investors poured more funding into the space, and competitors grew, having a more comprehensive platform could be a differentiator.
The idea was to combine preventive tools, such as mindfulness routines and meditation skills, to help people proactively manage their mental health, while still having services for people who need care.
“That experience didn’t exist yet,” he said. “We felt like it was the right experience.”
Another important part of the deal was Headspace’s international presence. Almost half of its members are outside of the U.S., and it’s growing a burgeoning business-to-business market.
Looking to the future, the combined company (now called Headspace Health) is looking to provide more mental health services to teens, including making the app free for people ages 13 to 17. Glass said the company would also expand referral capabilities for more severe conditions and crisis response. Headspace Health currently contracts with R3 Continuum for crisis response, and may expand those services based on where it sees the most demand.
Ultimately, Glass said the company’s goal is to take as many people out of the in-person system as possible and bring them to its platform to free-up capacity for in-person care. He doesn’t plan to open up in-person clinics, but would look to partner with in-person providers.
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