Sword Health to expand virtual mental health portfolio with Headspace acquisition
Sword Health, a company that provides AI-powered virtual physical therapy services, is looking to buy OrangeDot, the owner of the telemental health provider Headspace, in an all-cash deal. The latter revealed the acquisition in a regulatory filing with the Massachusetts Health Policy Commission.
The terms have not been disclosed. However, Axios reported that it could be worth as much as $300 million once the deal is finalized. The outlet added that, at the price, it means Headspace has fallen far from its $3 billion 2021 valuation.
According to the regulatory filing, the transaction is set to be finalized on Sept. 14. For now, there has been no official announcement about the deal made to the public. But if everything in the regulatory filing holds true, Sword Health will be taking full ownership of OrangeDot.
Last year, Sword Health launched its own AI-based mental health app, offering its members access to virtual behavioral health services. Dubbed “Mind,” the suite combines AI chatbots with care from licensed clinicians, allowing those in need of someone to talk to about mental health struggles access on-demand at any time.
The buyout of Headspace will potentially expand that offering. Headspace offers a host of behavioral health services, both consumer-facing and as part of employer health plans.
Central to the Headspace experience is virtual care sessions with licensed therapists and psychiatrists, depending on a person’s needs. Many of these providers are on staff full-time at the California-based company, which serves clients across the globe.
Jobs in the balance
In terms of workforce, sources vary on how many people are employed by Sword Health and Headspace alike. But combined, the two companies employ more than 1,000 people, including affiliated providers.
According to the regulatory filing, the merger could mean both companies will be hit with layoffs as part of an inevitable restructuring.
“Integration planning remains ongoing, and the combined company anticipates that there may be reductions in corporate staff where functions are duplicative between the two organizations,” the filing reads. “Any such workforce reductions are expected to be limited to corporate functions and are not expected to affect patient care, customer or payer relationships, or the availability of clinical services.”
More details may emerge in mid-September once the deal is finalized and the companies make a formal announcement.
Sword Health, founded in 2015, develops at-home physical therapy programs, specializing in patients with musculoskeletal conditions. Utilizing motion sensors, patients are guided through physical therapy virtually by both humans and AI.
It, too, serves patients worldwide.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.