Inside the Giant Ginger-Headspace Merger, What It Means for Behavioral M&A

Ginger and Headspace made huge waves in the behavioral health space Wednesday when they announced plans to merge and form Headspace Health. The combined company will boast a comprehensive set of virtual mental health offerings and a valuation north of $3 billion, while allowing Ginger and Headspace to retain their respective brands underneath the Headspace Health umbrella.

The massive deal is made possible in part by private equity, which has been pumping record levels of capital into the behavioral health space and fueling industry-wide consolidation at record levels as of late. In the case of the Headspace-Ginger merger, Ginger is backed by the private equity giant Blackstone (NYSE: BX).

According to Ginger CEO Russ Glass, the company’s focus has always been on scale and how to achieve it.


“This is one of those mergers that is really all about growth,” Glass — who will serve as CEO of the combined company — told Behavioral Health Business. “We’re not doing this because we see cost synergies or anything like that. This company will continue to grow quickly and focus on meeting the demand of all the people out there that have mental health needs right now.”

The merger was born out of that demand.

Amid the pandemic, the need for mental health services has only accelerated, with nearly half of all U.S. adults reporting symptoms of depression or anxiety amid COVID-19. At the same time, Ginger and Headspace investors and clients were pointing out the synergies between the companies and suggesting they link up.


“Our enterprise clients … on the Headspace side were saying, ‘Hey, we love what we’re doing with you, but sometimes our employees need more, and we’d love it if you started thinking about coaching and therapy,’” Headspace CEO CeCe Morken told BHB. “And here we were talking with Ginger.”

While the duo started deal discussions back in 2020, things didn’t get serious until about three months ago, Glass said.

By joining forces, Headspace and Ginger will be able to offer a more comprehensive set of services. While Headspace provides digital mindfulness and meditation services to over 70 million users in 190 countries, Ginger specializes in providing coaching, therapy and psychiatry to members via text and video.

The combined company will offer the “world’s most accessible, comprehensive digital mental health platform,” according to a press release announcing the news.

Another point of difference for Headspace Health: It will focus heavily on the prevention of behavioral health issues, not just the treatment of them.

“The more we can focus on prevention, in our view, then the more we can keep people from needing as acute help, and that lowers the cost for healthcare for everyone,” said Morken, who will be Headspace Health’s president.

After the merger closes — which is expected to happen in Q4 of 2021 — Headspace Health will focus on its enterprise business first, Glass said, offering companies an end-to-end behavioral health and wellness platform that gives employees everything from prevention and wellness resources to higher-level mental health care. After that, the company will start to focus more on integrating offerings on the consumer-side, he said.

Eventually, global expansion is also on the docket for Headspace Health, Morken added, but “it’s not something we’re ready for yet.”

After the merger is finalized, Headspace Health will reach nearly 100 million people across more than 190 countries through its direct-to-consumer, enterprise and health plan businesses. It will boast more than 2,700 enterprise and health plan partners globally.

M&A impact

Before the Headspace-Ginger merger came to fruition, Glass somewhat foreshadowed the deal during a December 2020 conversation with BHB. He predicted the behavioral health industry would see increased market consolidation in 2021.

“I expect to see record numbers of acquisitions in this space as the large digital health companies (both public and private) recognize the need to add behavioral health to their offerings to deliver comprehensive care,” he told BHB at the time.

So far, the behavioral health space is on track to log a record number of transactions in 2021. In the first six months of the year, the industry has seen 119 deals, which is on track to beat out the previous annual record of 179 overall, which was set in 2020, according to The Braff Group.

Private equity buyers accounted for the vast majority of those. And if the massive Headspace-Ginger merger is any indication, that trend isn’t going away anytime soon, according to Kevin Taggart, managing partner of the healthcare mergers & acquisitions firm Mertz Taggart.

“This is a big deal,” Taggart told BHB. “And although it is a unique transaction, it illustrates private equity’s near-insatiable appetite for affordable, accessible mental health services providers. And it’s led by the biggest PE-firm in the world – Blackstone.”

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