Meditation app Headspace is set to merge with digital mental health company Ginger Health under the combined entity Headspace Health. The terms of the deal were not disclosed. 

The pair plan to merge their products into one platform that will be focused on behavioral health and overall wellbeing. The goal of the combined entity is to cater to the consumer, employer and health plan markets. 

While there is some overlap between the companies, each has a different focus. Headspace is best known for its work in the direct-to-consumer space. It focuses on helping folks reduce stress through mindfulness and meditation, and offers a free-to-download meditation app, as well as a subscription service. While the company got its start in the consumer space, it also has employer benefits programs focused on mental health and wellbeing. 

Ginger offers on-demand digital mental health coaching and video therapy. The service is able to use AI and data science to help analyze care and assessments. Its clients include payers and employers. It is currently working with Cigna and the Medicaid program AmeriHealth Caritas District of Columbia.

After the merger closes, Ginger’s CEO Russell Glass will serve as the CEO of Headspace Health, and Headspace CEO CeCe Morken, will continue to serve as Headspace CEO and president of the combined company. 

“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,” CeCe Morken, CEO of Headspace, said 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.”

WHY IT MATTERS

Both partners will bring a number of clients, partnerships and technologies to the table. According to the merger announcement, Headspace Health will now reach 100 million people, and its business will stretch across the U.S. and into more than 190 countries. 

The companies are pitching this merger as a way to help tackle the mental health professional shortage. Only 26.9% of the need for mental health professionals in the U.S. is met, according to Kaiser Family Foundation data. 

“Headspace and Ginger have a shared recognition that the mental health crisis can’t be solved by simply hiring more therapists or moving care online,” Glass said in a statement. “Through this merger, we can uniquely tackle the full spectrum of mental health needs – from prevention to clinical care – all from one integrated platform.”

THE LARGER TREND

Both Headspace and Ginger have caught investor attention in recent years. In March, Ginger scored $100 million in Series E funding. This came just a year after the company closed a $50 million Series D round. 

The company has also made a slew of partnerships, including one with digital pharmacy Capsule that allowed Ginger patients to get same-day delivery for mental health medications. 

Headspace nabbed just over $100 million in its Series C funding round, which it closed in June 2020. The company also inked a deal with Netflix in 2020 for a new television show aimed at helping viewers meditate and practice mindfulness. 

Neither Ginger nor Headspace are new to the M&A space. In March 2020, Ginger announced that it had acquired fellow digital behavioral-health company LiveBetter’s technology assets. In 2018, Headspace purchased voice-enabled AI system Alipine.AI for an undisclosed sum.  

This isn't the first time that that a mental health company and a meditation company have teamed up. In October, digital behavioral-health company Lyra Health inked a deal with meditation app Calm to offer its customers Calm's services. 

The digital mental health space is booming. Rock Health reports that digital behavioral-health companies raked in $1.5 billion in the first half of 2021, and that they continue to be the number one clinical focus of investments.