In 2020, reverse mergers with special purpose acquisition companies (SPACs) popped up on a weekly basis, and it seems like that trend is spilling over into 2021. This week, Talkspace, a tele-behavioral healthcare company, announced it is going public after it merges with Hudson Executive Investment Corp. (NASDAQ: HEC), a SPAC formed by Hudson Executive Capital LP (HEC), Douglas L. Braunstein and Douglas G. Bergeron. Mr. Braunstein is the founder and co-managing partner of HEC and the former CFO and Vice Chairman of JP Morgan. Mr. Bergeron is a co-managing partner of HEC and the former Chairman and CEO of VeriFone, Inc.
The deal is valued at an initial enterprise value of $1.4 billion, plus an additional $250 million of cash to be used as growth capital, totaling $1.65 billion. Talkspace has an estimated 2021 revenue of approximately $127.3 million.
Talkspace’s signature psychotherapy and psychiatry product connects users with a network of thousands of licensed mental health providers through an easy-to-use and HIPAA-compliant web and mobile platform.
The combined company will operate as Talkspace and intends to be listed on NASDAQ under the symbol TALK. The transaction will be funded with HEC’s $414 million of cash in trust, a $25 million forward purchase from HEC and an additional $25 million committed by HEC to backstop redemptions. The transaction is further supported by an oversubscribed $300 million fully committed PIPE at $10 per share anchored by leading investors including the Federated Hermes Kaufmann Funds, Jennison Associates LLC, Woodline Partners LP and Deerfield.
You might recall in November when two other telehealth companies went public in a similar deal. Together, UpHealth Holdings, Inc., one of the largest national and international digital healthcare providers, and Cloudbreak Health, LLC, a leading telemedicine and video medical interpretation solutions provider, merged with GigCapital2 Inc. (NYSE: GIX), another SPAC. The combined company will have a combined pro forma enterprise value of $1.35 billion. The deal creates an integrated global platform serving four digital health markets: integrated care management, global telehealth, digital pharmacy and behavioral health.