It takes two to make a thing go right

Enterprise customers are asking for simpler digital health platform solutions, and we saw two deals last week taking different paths to answer the call. Headspace and Ginger shared plans to merge—and the new $3B Headspace Health intends to offer a full continuum of mental health solutions, from meditation and wellness to high-acuity clinical referrals. Both companies sell into the employer market, and together they’ll be able to address a wider variety of mental health needs across employee populations. Almost simultaneously, virtual primary care provider K Health announced the acquisition of Trusst. Both K Health and Trusst focus on mobile chat, so the merger expands K Health’s offerings to employers through the same interface.

Three takeaways cribbed from Rock Health team Slack messages: First, digital mental health will stay red hot with employers as well as investors—investment in digital mental health startups has nearly reached its entire 2020 haul already, with $1.5B raised in H1 2021. Second, we expect continued consolidation as startups compete for a limited supply of mental health providers and vie for the same enterprise buyers. And third, these deals represent competing strategies in digital health’s platform wars: Headspace Health is a vertical integration play to be the solution for the full range of behavioral health services, while K Health’s move looks like the beginnings of a horizontal integration strategy to serve multiple clinical service lines with a common tech interface. Time will tell whether either strategy becomes a clear market winner.

The countdown to Rock Health Summit is on—and the agenda is now live! Ticket prices will increase on Wednesday, 9/1 so snag yours today.

+ a special shoutout to our sponsors:
Fenwick, Amgen, Tulsa Innovation Labs, Google, AWS, and Healthworx!


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