Talkspace, a telebehavioral healthcare company, and Hudson Executive Investment Corp, a special purpose acquisition company (SPAC) sponsored by Hudson Executive Capital, announced that they have entered into a definitive merger agreement.
The combined company will operate as Talkspace and intends to be listed on NASDAQ under the symbol “TALK.” The transaction values Talkspace at an initial enterprise value of $1.4 billion (approximately 11x 2021 estimated net revenue of the Talkspace) and will provide the company with $250 million of cash, to be used as growth capital.
According to the Talkspace, for 2021, its estimated net revenues were $125 million, up approximately 69% from 2020 estimated net revenue. The company has raised over $100 VC funding to date from Revolution Growth, Norwest Venture Partners, Qumra Capital, Spark Capital, Compound Ventures, SoftBank, TheTime, and others
Co-founders Roni and Oren Frank will continue to lead Talkspace, along with President, COO, and CFO Mark Hirschhorn and the rest of the company’s highly experienced leadership team. Following the closing, Douglas L. Braunstein will serve as Chairman of the company’s new board of directors.
According to Talkspace, its psychotherapy and psychiatry product connects individual users with a network of licensed mental health providers through a web and mobile platform. With Talkspace, users can send their dedicated provider’s unlimited text, video, picture, and audio messages from anywhere, at any time. Providers engage with clients daily, five days a week. Talkspace also provides psychiatry services and prescription fulfillment, adolescent therapy, and couples counseling.
The company serves approximately 46,000 active members and more than 39 million people covered by employer or healthcare insurance agreements.
According to the company’s data, in the United States alone, it is estimated that more than 70 million people suffer from some form of mental illness and that less than half of people with a behavioral illness receive care because of cost, lack of access, or stigma. The COVID pandemic has further highlighted this growing and unmet medical need.
J.P. Morgan Securities acted as a lead financial advisor, and Jefferies acted as financial advisor to Talkspace. Latham & Watkins acted as legal counsel to Talkspace. Citigroup and J.P. Morgan Securities acted as capital markets advisors and placement agents. Citigroup acted as a financial advisor, and Milbank acted as legal counsel to Hudson Executive Investment Corp.
2020 was the biggest year for IPOs in digital health. Six companies went public, raising a total of $6.2 billion. Three companies – Specialists On Call, hims and hers, and MDLive have also announced plans to go public.