Dive Brief:
- Universal Health Services has agreed to acquire virtual behavioral health company Talkspace for $835 million as the for-profit hospital giant looks to accelerate growth in its outpatient and mental health businesses.
- The deal should help UHS get around staffing shortages that have bottlenecked behavioral health services for existing patients, while bringing more consumers into UHS’ doors, executives said during an investor conference Monday morning after the deal was announced.
- Under the definitive agreement, UHS will acquire Talkspace for $5.25 a share, representing a modest 10% premium to Talkspace’s last closing price. The companies expect the deal to close in the third quarter this year.
Dive Insight:
UHS, one of the biggest healthcare providers in the U.S., has zeroed in on its behavioral health segment as the company looks to drive future growth — a strategy that’s been hindered by a lack of therapists and mental health clinicians for hire.
UHS’ inability to fill those positions has limited the amount of patients it can see, despite heavy demand for behavioral health services, according to executives. UHS’ behavioral health unit — the largest segment of the company’s entire portfolio — has been chasing a 2% to 3% annual growth target for adjusted patient days, but struggled to hit that goal last year due to challenges with labor and staffing.
However, bringing Talkspace on board should allow UHS to sidestep those issues, UHS CFO Steve Filton said during Leerink Partners’ annual healthcare conference Monday morning.
Talkspace has a network of roughly 6,000 behavioral health clinicians serving patients nationwide. That deep bench of providers will allow UHS to provide mental health services to more patients discharged from its facilities who require additional help, according to Filton.
The acquisition should also create new referral streams, as Talkspace providers will be able to nudge customers to UHS facilities if they need brick-and-mortar care.
As a result of the acquisition, UHS will be able to provide a full range of behavioral health services, including inpatient, intensive outpatient, partial hospitalization, therapy sessions and virtual assessments, Filton said.
“There’s really no other provider in the behavioral space that offers the continuum of services that we’ll now be able to,” the CFO said.
UHS is open to additional acquisitions in the virtual care space if the company feels they will help growth, Filton added.
Analysts said the deal makes sense, complementing UHS’ brick-and-mortar outpatient services, allowing UHS to get around its staffing issues and broadening the company’s access to potentially lucrative commercially insured patients who are consuming behavioral healthcare.
UHS anticipates Talkspace will generate about $280 million in revenue this year for its behavioral segment, and be slightly accretive to UHS’ adjusted earnings in its first year excluding one-time costs related to the purchase.
Talkspace was founded in 2012 and went public in 2021 during the height of the coronavirus digital health boom. Like many of its peers, the company struggled as the pandemic waned and demand for virtual care dropped off, leading Talkspace’s losses to mount and its stock price to plummet.
In response, Talkspace pivoted away from a direct-to-consumer business model and focused on selling to employers, health plans and other organizations, a strategy that’s driven the company’s growing profitability in recent years. As of the end of last year, Talkspace had access to more than 200 million Americans through their insurance provider or other benefit arrangements.
