by Heather Landi | Aug 25, 2021 8:30am

Marking the first mental health megamerger, teletherapy startup Ginger plans to merge with meditation app Headspace in a deal that will expand their combined reach to 100 million consumers.

Ginger and Headspace entered into a definitive agreement to merge to create Headspace Health in a deal that values the combined company at $3 billion.

Headspace Health now boasts more than 2,700 enterprise and health plan customers with combined bookings by end of 2021 of nearly $300 million, the companies said. The combined company now has the world’s largest mental health data set, which will be leveraged to deliver highly personalized care, executives said.

The merger comes during a time of unprecedented global need for mental health services as the COVID-19 pandemic exacerbated existing behavioral health challenges.

The two companies aim to provide a full range of mental health services, from coaching, therapy and psychiatric care to basic resilience-building techniques like meditation.

RELATED: Ginger banks another $100M to ramp up partnerships with health plans, government payers

According to the World Health Organization, close to 1 billion people worldwide live with a mental health disorder, and more than 75% of people worldwide with mental, neurological and substance use disorders receive no treatment for their condition at all. In a recent study, nearly half of adults in the U.S. reported symptoms of depression or anxiety during the pandemic.

The two companies aim to significantly scale access to research-backed, high-quality, affordable care through a virtual platform, they said in a press release.

The combined mental health services will reach consumers in more than 190 countries through direct-to-consumer business and 2,700-plus enterprise and health plan partners around the globe. 

“We are witnessing a mental health crisis unlike anything we’ve experienced in our lifetimes, yet the majority of mental healthcare today is neither broadly accessible nor affordable,” said CeCe Morken, CEO of Headspace, in a statement. “Together, as Headspace Health, we will address the systemic challenges of access and affordability in a fundamentally different way by creating the world’s most holistic, scalable, and effective mental health and wellbeing company.”

RELATED: Ginger’s digital mental health services are coming to members’ teenage dependents

Headspace, founded in 2010 by Andy Puddicombe and Richard Pierson, offers an app for mindfulness and mental training.

Founded in 2010 at the Massachusetts Institute of Technology by Karan Singh, co-founder and chief operating officer, Ginger offers behavioral health coaching, therapy and psychiatry right from a smartphone.

Ginger reached unicorn status in March following a series E $100 million funding round that boosted its valuation to $1.1 billion. The startup also recently expanded its services for users aged 13 to 17.

Both companies say they rely on research and evidence to drive the development of their products and services to deliver tools and interventions rooted in behavioral science.

In more than 25 studies published in peer-reviewed journals, Headspace has been shown to produce favorable outcomes of interventions, including reduced stress, improved focus, increased resilience and reduced burnout. A randomized controlled trial showed that people who engaged in mindfulness meditation through Headspace daily for 30 days reported reducing their stress levels by a third.

Ginger’s on-demand, team-based care model, which includes behavioral health coaching, therapy and psychiatry, has been shown to produce an average of 59% improvement in anxiety and 70% improvement in depression.

Ginger also has built a massive mental health data set through its Mood Matters study, having conducted research with eight of the top 10 academic medical centers in the U.S. and over 40 medical institutions nationwide. These data, combined with Ginger’s internal studies and data-driven quality assurance program, help Ginger continually improve the high standard of care it delivers, at scale.

RELATED: Solera Health partners with Headspace to expand mental health tools for payers, employers

Ginger and Headspace both have an impressive roster of employer clients. ViacomCBS, Delta Air Lines, Sephora and nearly 700 other leading employers work with Ginger to provide on-demand mental health care to their employees.

Headspace counts Starbucks, Adobe, Hyatt and Unilever among its 2,100 employer clients through its Headspace for Work service.

And the meditation app has forged innovative partnerships with household entertainment and technology brands such as Netflix, Apple, Spotify and BBC Studios, including a recent integration with Microsoft, which enables people to bring meditation and mindfulness into their workday through the Microsoft Viva Insights app in Teams.

Both digital health companies have made inroads with payers. Ginger is reimbursed as a virtual in-network benefit through fully insured, self-insured and government-funded programs, such as Cigna and AmeriHealth Caritas District of Columbia, a Medicaid program.

Headspace partners with Bright HealthCare and Solera Health, which distributes Headspace to leading regional health plans through its mental health and stress solution. 

Upon closer of the merger, Russell Glass, CEO of Ginger, will take on the role of CEO of Headspace Health. CeCe Morken will remain CEO of Headspace and take on the additional role of president for the combined entity.

The deal is expected to close in the last quarter of 2021. Read More On