Dive Brief:
- Amwell is in advanced discussions to acquire online therapy app Talkspace for roughly $200 million, according to a report from Israeli business publication Calcalist.
- The telemedicine company is in talks to pay $1.50 per share for Talkspace, Calcalist reported on Sunday. The price tag would represent a 150% premium over Talkspace’s share price at Friday’s close.
- The reported transaction reflects a sharp decline in Talkspace’s value since the therapy company went public last summer at a $1.4 billion valuation.
Dive Insight:
Online therapy company Talkspace offers counseling with a network of licensed therapists, selling services directly to consumers or through employer-sponsored health plans.
The New York-based firm went public through a merger with a special purpose acquisition company last year, but has struggled since then. Talkspace’s stock has fallen 93% since its initial listing at $8.90 when it entered the public markets in June 2021.
The SPAC deal valued Talkspace at $1.4 billion, and gave the company $250 million in working capital. However, Talkspace currently trades at a market value of less than $100 million.
Talkspace’s shares have faltered amid shaky financial growth and leadership overhaul. The digital health company lost its two founders and pushed out its chief operating officer last November, sparking reports that some firms with stakes in Talkspace were pushing for a merger or sale to stabilize the business.
Talkspace has also been accused of misleading investors before it went public by misrepresenting its financials and growth, and faces a securities fraud lawsuit filed earlier this year.
Since the beginning of 2022, the company has lost $61 million on revenues of $89 million, significantly lower than past revenue projections issued prior to its merger.
Talkspace conducted an extensive round of layoffs in the third quarter in a bid to curb costs, and expects it will make additional cuts this year, Douglas Braunstein, chair of Talkspace’s board who served as interim CEO until earlier this month, said on a Nov. 8 call with investors.
The company has rejected acquisition proposals in the past, according to reports — including from Boston-based Amwell.
It reportedly received a buyout approach from Amwell over the summer, but declined the expression of interest before any numbers were discussed, according to Seeking Alpha.
However, the company’s openness to a deal may have shifted since then, as its continued participation in the public markets becomes uncertain. On Nov. 18, Talkspace received a warning letter from the Nasdaq stock exchange that it’s in danger of being delisted, because its stock has been trading below the $1 amount required to be included on the Nasdaq for 30 consecutive business days.
A tie-up between Talkspace and Amwell could bolster Amwell’s efforts in telepsychiatry and mental health as it continues to build out its Converge telehealth platform, and works with CVS Health to create a new virtual care platform for its members that includes remote primary care and mental healthcare.
Both Talkspace and Amwell declined to comment on the acquisition speculation.
Talkspace’s shares jumped 35% in early morning trading Monday following the report.
