Digital behavioral health company Headspace has announced a $105 million debt financing round from Oxford Finance.
The Los Angeles-based mental health provider said the new financing will enable it to be opportunistic in investing in areas where there is a market need.
“For instance, we’re hearing demand from our customers, health plan partners, and members for continued investment in our enhanced enterprise offerings, like in-person clinical care, more robust substance use disorder (SUD) support, and our next-generation [employee assistance programs] EAP,” Russell Glass, CEO of Headspace, told Behavioral Health Business in an email. “So, we’ll be looking at those areas in the coming months as potential areas for deeper investment.”
While Glass said he has no M&A updates, he didn’t rule out the potential for that avenue in the future.
“We’re regularly evaluating options that will help us address the mental health crisis in an accelerated fashion and at scale,” he said. “If that means pursuing an acquisition, we’ll certainly consider it.”
Headspace Health was formed in 2021 when digital meditation platform Headspace merged with virtual mental health company Ginger in a deal valued at $3 billion. It now works with more than 4,000 employers in 200 countries.
Since the merger, the company has rolled out a unified enterprise mental health and well-being offering to members. Its integrated care product offers Ginger’s on-demand coaching, therapy and psychiatric services, as well as Headspace’s meditation and mindfulness services.
Before the merger, both Headspace and Ginger had raised significant capital. Headspace announced a $100 million Series C funding round in 2020. Meanwhile, Ginger raised roughly $220 million before the merger.
While Headspace has a history of fundraising, digital health funding, on the whole, has declined over the last few years, according to Rock Health.
Still, this debt financing has been months in the making, according to Glass.
“We began conversations with Oxford Finance back in January as we looked at ways to proactively reduce risk given the current economic landscape,” Glass said. “We saw great alignment with their team and overall approach to healthcare investing, so we made the decision to choose them as a strategic partner. We’re really grateful for their confidence in our vision and what we’re trying to achieve at this pivotal point in our company’s evolution.”
This new financing comes less than a month after the company announced it would lay off 15% of its staff.
“These changes will equip the company for the future and pave a strong path to profitability,” Glass previously wrote in an email to BHB. “We’re deeply grateful for the employees we said goodbye to and are committed to supporting them through this time of transition.”