Why it’s Notable:
This deal could represent a saving grace for Talkspace, who has been experiencing declining share prices since its debut on the public market in 2021.Talkspace has recently received warning from NASDAQ that it is at risk of being delisted, giving the company until May 2023 to regain compliance with the minimum share price. Following the announcement that Amwell has made an offer to acquire Talkspace, its share price has already surged significantly by more than 40% to $0.81.
Talkspace was issued through a SPAC merger in the summer of 2021 at a valuation of $1.4 billion. The value of this potential deal with Amwell, worth $200M, however is but a fraction of this. Further, this deal is considerably lower than earlier purchase offers made to the company. If the current deal with Amwell goes ahead, Talkspace will have been devalued by almost 90% in less than two years.
Industry Implications:
The drop in stock price of Talkspace is part of a larger trend observed for publicly listed digital and telehealth companies. Following a soaring market in 2020 and 2021, this year the IPO market for healthcare tech companies has experienced plunging stocks, and public market valuations have been squeezed - possibly a result of rising inflation and the covid pandemic. A downturn in the number of companies going public has been observed in 2022, and this trend may continue as digital health companies may turn to alternative methods of funding in light of the flagging market for initial share sales.
Amwell already has a considerable foothold in the behavioral health space, following earlier acquisitions of Silvercloud and Conversa Health. This potential deal could help Amwell further expand its provider and patient network, giving it a larger share of the telebehavioral health market. The move would also expand the company’s offering with additional modalities of care, furthering its goal of providing a full continuum of care. This represents a trend in the telehealth industry where providers are increasingly looking to be all-encompassing solutions.