In a sign of the red-hot market for telemental health care, Talkspace announced Wednesday it would go public via a merger with special purpose acquisition company Hudson Executive Investment Corp in a $1.4 billion deal.
Talkspace, which offers therapy through text and video chat, has become among the best-known virtual therapy startups thanks to eye-catching advertising campaigns fronted by Olympian Michael Phelps. The company sells its services directly to consumers and through company-sponsored health plans. In a presentation shown to investors this morning, the company said it has served over 2 million people total since it was founded in 2012 and that it currently has 46,000 active members treated by 2,600 providers in all 50 states.
Talkspace raised $50 million in a Series D round in May, as it was becoming clear the coronavirus pandemic would have a long-lasting effect on mental health and how care is delivered. Like other telemental health startups, it has reported a surge in use as the pandemic has kept people home and put more pressure on their mental health.
“We are not happy that we grew the company with that tailwind because no one wants to benefit from such a huge global pandemic,” Talkspace co-founder and CEO Oren Frank told STAT. “But the silver lining for us, you know, is that … we have had an extremely busy year doing everything that we can do in order to facilitate the help that we can.”
Since 2019, the number of direct-to-consumer users has grown from 20,000 to 28,000. In a striking figure that shows increased employer interest in telemental healthcare, the number of people covered by health plans has grown from roughly 2 million at the beginning of 2019 to over 39 million today.
Even outside the context of pandemic, telemental health presents tremendous business and public health opportunity, with large numbers of people unable to access care and a shortage of providers to treat those who seek help. Talkspace hopes to meet the demand by using technology to help reach more people more effectively.
According to Frank, the company’s technology and design serves the three-pronged function of “getting more people to therapy, extending tenure through far better user experience, and optimizing the decision-making of the provider of the network to show strong clinical outcomes, which is really the purpose of the exercise.”
Talkspace uses only “licensed, certified, and credentialed providers” for its services, said Frank. The company claims it often achieves better outcomes than ordinary face-to-face therapy and boasts peer-reviewed studies backing its findings.
President and chief operating officer Mark Hirschhorn said in an investor call Wednesday that going forward, the company hopes to expand beyond its core psychotherapy offering to a wider swath of wellness services, including sleep treatments. It plans to pursue these and other targets via mergers and acquisitions.
Talkspace will trade on the NASDAQ stock exchange under the ticker symbol TALK. The deal is expected to close around the end of the first quarter of 2021.