Ginger and Headspace, two leading digital health companies focused on mental health, have agreed to merge to create a $3 billion combined company known as Headspace Health.
The companies said Headspace Health will employ more than 800 people and serve more than 2,700 enterprise clients and health plans around the world, with combined bookings by the end of 2021 close to $300 million.
Ginger CEO Russell Glass will take on the role of CEO of Headspace Health while Headspace CEO CeCe Morken will take on the additional role of president of the combined company.
San Francisco-based Ginger has raised more than $220 million in funding, including a $100 million Series E round in March. The company specializes in on-demand mental health care through behavioral health coaching, therapy and psychiatry delivered through a smartphone.
Headspace, based in Santa Monica, California, was one of the first popular meditation apps on the market and has raised around $216 million.
According to the World Health Organization, close to one billion people around the world have a known mental health need, a number that Glass said demonstrates the scale of the global mental health epidemic. The situation has only worsened with the impact of the Covid-19 pandemic.
"We're at this crisis point and our feeling was that Ginger has this very unique, differentiated approach," Glass said. "But is there a way to scale this even more? And we recognized that preventative care, the ability to get people into routines to build resilience so that they don't get sicker was going to be a critical part of this equation."
The idea, according to Glass, was to provide customers a full spectrum of mental health services ranging from the meditation and mindfulness functions provided by Headspace to the higher-acuity coaching and therapy provided by Ginger.
Ginger and Headspace will initially operate as separate brands under the Headspace Health umbrella with a focus first on integrating the two companies' products for enterprise customers.
The deal comes amid a backdrop of growing consolidation in the digital mental health space, which has partly been driven by the desire for enterprise customers to focus their efforts on platforms providing a spectrum of services.
"By bringing these together and creating the most accessible, comprehensive digital mental health experience with one purchase, with one contract, with one set of analytics and reporting, with one contact for feedback and account management, a company can now support their own employee base," Glass said. "That's a powerful and I think highly resonant message for our enterprises."
Part of Ginger's model is developing personalized treatment plans for users through predictive analytics, an approach that Glass says will be supercharged by the inclusion of data from Headspace. One potential area of growth for the company is in working with youth, which have seen record-rates of mental illness driven, in part, by the pandemic.
"Our hope is that together we are not only democratizing mental health care for adults, but can can get our youth started earlier, understanding and building routines that will support them for their whole lives," Glass said.
As for a potential IPO or SPAC merger? Glass said the "goal is to support as many people around the globe as we can and if going public helps us do that, it's certainly a route that we'll look carefully at."
The merger is slated to close in the fourth quarter, given customary closing conditions.
