Talkspace mulls possible sale as consolidation heats up in the US telehealth market

  • Telemental health provider Talkspace is considering a possible sale.
  • And with a $1 billion valuation, telehealth giants like Amwell and Teladoc could open their arms as welcomed buyers.
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New York-based telemental health provider Talkspace is considering selling its online therapy platform, according to people familiar with the matter via Bloomberg Tech. The startup is valued at approximately $1 billion—if sold to another virtual care player, it could mirror the Teladoc-Livongo megamerger, marking further consolidation of the digital health space.

Talkspace's potential sale gives credence to our prediction that M&A activity will boil up as telehealth firms aim to stay competitive amid the virtual care boom—and telemental health will be a particularly active segment:

  • The pandemic incited an unprecedented wave of telemental health use, and this demand likely won't fade as the pandemic exacerbates the mental health crisis. Sixty-two percent of consumers said they'd prefer a virtual visit for their mental health—even after it's safe to book an in-office appointment, according to Amwell data. Telemental health options give patients more versatility in accessing the mental healthcare they need, which is becoming more relevant than ever, considering the US is in the midst of a growing shortage of mental health specialists.
  • Telemental health firms have been joining forces to pre-empt competition in a booming market. US mental health startups raised a record-breaking $1.37 billion in the first three quarters of 2020, already outpacing the total $1.06 billion invested in 2019, per PitchBook. In response to growing competition, telemental health players are joining forces to maintain momentum in a burgeoning market: Last month, telemental health unicorns Lyra Health and Calm combined their offerings to score more employer customers, for instance.

Telemedicine bellwethers like Amwell or Teladoc could open their arms to Talkspace in a move that'd create yet another virtual care giant—or an even more aggressive giant on the back of the Teladoc-Livongo merger. The Teladoc-Livongo megamerger shook up the digital health space as two health tech bellwethers came together to form the first digital health behemoth with a comprehensive range of offerings.

Both Teladoc-Livongo and Amwell offer behavioral health services, but Talkspace's wide footprint could act as a boon to their telemental health units: Amwell has a network of 350 therapists, and Teladoc has a network of 3,600 therapists—meanwhile, Talkspace boasts over 5,000 therapists and a user base of over one million. Amwell might want to acquire Talkspace to reap the benefits of absorbing its large patient and provider reserves.

On the other hand, Teladoc has been expanding its telemental healthcare arm recently, so it would make sense for Teladoc to scoop up Talkspace to tap its platform and resources while dissolving a major competitor in the telemental health space—effectively bolstering the digital health behemoth's upper hand in the red-hot digital health market.

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