Talkspace purchased Lasting, a startup specializing in couple's therapy
- Talkspace acquired Lasting, a startup specializing in couple's therapy.
- We predicted consolidation would tick up as the virtual mental health surge persists, and we anticipate a higher volume of acquisitions by frontrunners in the space.
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With Lasting under its roof, Talkspace has broadened its suite of offerings to include direct-to-consumer (D2C) app-based couple's counseling services.
Talkspace has had a busy couple of years, even before the pandemic-induced virtual therapy boom gave way to 70% growth in clients for the startup in May alone: It landed a deal with UnitedHealth's Optum that gave it access to 2 million potential customers on the heels of a $50 million funding round in June 2019, for instance.
Talkspace's acquisition confirms our prediction that consolidation would be inevitable as competition heats up in the booming telemental health space:
- The pandemic propelled interest in virtual mental health forward—and we don't expect its popularity to wane when the coronavirus dust settles. In the first half of 2020, US digital behavioral health startups secured $588 million in funding—surpassing 2019's total of $539 million, according to Rock Health. Investors placed their bets in these vendors as patients began turning to digital therapy in droves as the pandemic negatively impacted mental health and mass office closures kept them from seeing specialists in person. And we think mental health services will see a sustained shift to virtual-only regardless of the pandemic's trajectory: 62% 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.
- We expect vendors leading the telemental health pack to keep scooping up smaller entrants to meet rising demand and broaden their offerings into niche markets and specialties. For example, Talkspace's purchase of Lasting gives the former an easy inroad into couple's counseling, Lasting's only offering. Talkspace president Mark Hirschhorn said that Lasting is "the first of many additions" for the startup, and we expect other quickly growing vendors—like Ginger—to more aggressively pursue M&A.
But telemental health vendors will still have to compete with telemedicine providers offering all-encompassing care, including digital behavioral health services. Some of the biggest names in telehealth—like Amwell and Teladoc—gave nods to their mental health units as core elements of their overall boosts to consumers and revenue in Q3 2020.
And these companies might be more attractive options for consumers and payers alike—since a patient could get all of their care needs covered using a single vendor. But that's not to say we think Talkspace will be overshadowed by this competition—the sheer size of demand means there's room for many players.
The majority of US adults have reported declining mental health conditions amid the pandemic, and 65% of traditional behavioral health organizations have had to turn patients away—and digital solutions can help fill that gap.
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