Our MBAs have been working overtime trying to cover all of the companies entering the public markets, so our lovely readers can separate the wheat from the chaff. And most of you know how chafed we’ve felt over the deluge of blank-check companies merging with pre-pubescent, pre-revenue startups that offer only suffering and sorrow for retail investors. Of course, we’re not alone in sounding the alarm over these special purpose acquisition companies (SPACs). One of the high muckety mucks at the Security Exchange Commission (SEC) recently said that the current SPAC model is as transparent as mud, allowing companies to promise the moon before they have even built the rocket to get there (see Astra Space as a literal example of this brilliant metaphor).
That’s one of many reasons why we’re intrigued by the proposed SPAC merger between Hudson Executive Investment Corp. (HECCU) and Talkspace, a telepsychiatry company that would offer investors the only pure play on virtual behavioral health. For starters, there’s actual paperwork on file with the SEC that provides real financial data and what could be described as optimistic but not outlandish projections on future growth, rather than just a flashy investor deck that looks like it was built by an intern at Robinhood. There are also meaningful and fast-growing revenues, though Talkspace is not yet profitable, which is to be expected from a company chasing dominance in an emerging market. And there’s a plan to expand market leadership internationally and into related sectors.
About Talkspace Stock
Founded in 2012, New Yawk-based Talkspace has netted $106.7 million in disclosed funding from more than a dozen investors, with SoftBank (9984.T) among the most immediately recognizable names on the roster. The last time the company raised capital was nearly two years ago in a $50 million Series D. Talkspace describes itself as a “virtual behavioral health” company with a “purpose-build technology” platform that connects members to a network of qualified mental health providers, including those with the power to dispense pills. The company has close to 3,000 providers on contract or staff, representing 21 different specialties, who are available 24/7 via various messaging channels and video chat. It offers direct-to-consumer plans for individuals, couples, and teens, as well as business bundles for companies and health insurers to provide employees and members.
We first covered Talkspace in our list of 10 telepsychiatry companies for mental health a couple of years ago. The arguments in favor of virtual behavioral therapy – increases in mental health problems like depression and anxiety, lack of insurance coverage for these conditions, insufficient number of therapists outside of neurotic-attracting cities like New York – have only strengthened since you know what. This is something we recently talked about with the rise of mindfulness meditation apps into billionaire-dollar businesses, so we won’t rehash too many of the depressing mental health statistics this round, except to note one very compelling one: The suicide rate in the United States jumped 30% from 2000 to 2016, according to data from the U.S. Centers for Disease Control and Prevention. Of course, 2016 happens to coincide with one of the worst events in world mental health history – the premiere of TikTok.
The Value of Virtual Behavioral Therapy
That begs the question: If mental health is so bad in the United States, can virtual behavioral therapy provide as good as or better treatment than traditional face-to-face talk therapy? The answer: More or less. Talkspace plays up a 2017 study published in the Journal of Telemedicine and e-Health that assessed outcomes for 57 people receiving treatment through SMS text messaging on Talkspace’s platform. Here are the results that the company highlights:
- 80% viewed Talkspace as more effective…