Issue 020

Welcome back to E&O Wednesdays, the enrollment-focused digital health newsletter from Exits & Outcomes — for paying subscribers only. This every-other-Wednesday issue digs into digital health companies that sell to self-insured employers as well as others that rely on enrollment-based distribution for their digital health programs.

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Half of Ginger-Headspace’s combined business will be B2B

Since it’s breaking news today, I figured I’d round up all the metrics that Ginger and Headspace shared today around their merger, which does not include any outside funding. Both companies had valuations between $1 billion and $2 billion before this announcement. Ginger weighed in at about a $1.2 billion valuation, while Headspace clocked in at a slightly heftier $1.8 billion. Interestingly, Ginger’s CEO Russell Glass will be the CEO of the combined entity. Headspace’s current CEO CeCe Morken will be named president. (Is it unusual for the smaller of the two companies’ CEOs to assume the lead in the post-merger company?)

While Headspace might be best known for its direct-to-consumer business, both Headspace and Ginger sell to employers. Ginger counts nearly 700 employers as customers. Among them: ViacomCBS, Delta Air Lines, and Sephora. Headspace boasts 2,100 employer customers, including Starbucks, Adobe, Hyatt, and Unilever.

Here’s a quick rundown of the numbers the two companies shared:

• Revenue (sort of): Combined “bookings” by end of 2021 are expected to get close to $300 million.
• Valuation: The companies say their combined valuation is $3 billion
• Reach: The combined company, to be named, Headspace Health, expects to reach 100 million people in 190 countries.
• Employer customers: While separately the companies had about 2,800 employer customers, the merger announcement states they have more than 2,700 employer customers as a combined entity, which suggests minimal overlap.
• Headcount: Headspace Health will employ more than 800 following the merger.

I was curious about the use of “bookings” instead of revenue so I asked the company why they chose that metric. Their answer revealed a little bit more about their consumer vs B2B revenue streams:

It’s fair to draw parallels between this deal and Teladoc-Livongo. There’s an opportunity to cross-sell services and market Ginger to Headspace’s tens of millions of app users. But because this combination involves two relatively equally-sized, private digital health companies, GingerHead is also reminiscent of the Doctor on Demand-Grand Rounds deal.

One of the things I wonder about the mergers of large private digital health companies is their effect on employees. In some ways it probably feels like a big exit — it gets covered as such in the press, for sure — but it’s usually not an exit for employees. Instead, everyone at both companies now moves to a bigger boat and forges on.

Of course, at almost $300 million annual bookings, the newly merged Headspace Health will be more than well-positioned to IPO. Have to imagine the plan is to get through integration swiftly and then set sights on an exit on the public markets.

One more thing… Headspace and Ginger granted an exclusive interview to Fast Company to break the news about their merger this morning. (Well worth reading it in-full here.)

This paragraph was particularly interesting as it confirmed that Headspace’s on-again, off-again, on-again prescription digital therapeutic plans are, indeed, off-again:

Big employer digital health stack: VMware

Digital health companies love to boast how many Fortune 500 customers they have. This recurring feature of E&O Wednesdays digs into a different Fortune 500’s (or similarly-sized employer’s) digital health stack. So far, in past Wednesdays issues, I’ve written about the digital health benefits stacks of 19 big companies:

• Walmart,
• Activision Blizzard,
• JP Morgan Chase,
• The Home Depot,
• Boeing,
• 3M,
• Chevron,
• BorgWarner,
• Bank of America,
• UnitedHealth Group,
• Costco,
• eBay,
• McKesson,
• Ford,
• Dell,
• AT&T,
• Disney,
• Novartis,
• and Red Bull.

This week, I dug into the digital health benefits that VMware offers its full-time employees.

Here’s what I found:

UnitedHealthcare administers health plans for most VMware employees, so the line-up of digital health benefits closely hews to the companies that UHG has incubated and picked as partners. One of the striking things about the benefits stack that VMware and UHC cobbled together here is that it excludes all chronic condition management programs. There are no diabetes prevention programs, MSK clinics, or hypertension coaching options presented to VMware employees. I wonder why that is?

Virtual visits from UHC’s site or the UHC app

UnitedHealthcare has partnered with the big telemedicine providers over the years American Well, Doctor on Demand, and Teladoc to power its virtual visits offering. It really goes out of its way not to mention them these days in its marketing materials. VMware employees can access virtual visits via the UHC app or on the health insurance company’s website: “Whether you’re at work, home, traveling, you name it—a Virtual Visit lets you talk with a doctor by video 24/7. If needed, a Virtual Visit doctor can treat and prescribe* medication for everyday illnesses like the flu, sinus infections, a cough and more. And, with a UnitedHealthcare plan, your Virtual Visits come at no added cost.”

Corporate wellness program from United’s Rally

UnitedHealth Group’s wellness incentives business is Rally. VMware and UHC pitch this to VMware employees like so: “Introducing Rally — an app that is designed to help you improve and maintain your health. After taking a quick Health Survey, Rally will offer personalized recommendations to help you move more, eat better, and stress less. Sync your tracking device, join a Challenge, and earn virtual coins that you can exchange for rewards for taking healthy steps every day.”

Grand Rounds for second opinions

VMware positions Grand Rounds as “your personal healthcare assistant” that helps employees “get an expert second opinion at no cost.” Here’s the rest of the pitch: “Whatever the member’s needs, we support them emotionally and logistically to get them to the right doctors, services, and information. Our care team goes above and beyond to help members in need of:

• Answers: Providing second opinions on medical issues from world-class doctors.
• Information: Telling them all there is to know about a condition or treatment.
• Support: Helping them make informed decisions about surgeries and more.”

A suite of other behavioral health telemedicine offerings: Talkspace, Sanvello, Ria

UnitedHealthcare also packaged together four other programs and services from its subsidiaries and partner companies under the heading of Behavioral Health Telemedicine:

• UHC Behavioral Health Virtual Visit Depression: This doesn’t appear to be different from the telemedicine offering above, but it focuses specifically on behavioral health issues. (It would also surprise me if this doesn’t make use of UHG’s AbleTo acquisition.) “Use a behavioral health virtual visit for needs such as: Anxiety, ADD/ADHD, Addiction, Mental Health Disorders and Counseling.”
• Talkspace App: This is clearly delineated from the option above because it’s focused on talk therapy and its pitched as on-going therapy, not a one-time virtual check-in: “With Talkspace online therapy, you can regularly communicate with a therapist, safely and securely from your phone or desktop. Make progress. No office visit required.”
• Ria Health App (Alcohol Treatment): “Telemental health practice that leverages technology and evidence-based care to deliver a suite of convenient, accessible, effective treatment of Alcohol Use Disorder (AUD).”
• Sanvello App: This UHC acquisition (used to be named Pacifica Labs) is more self-guided than the other options. “Sanvello is an app that offers clinical techniques to help dial down the symptoms of stress, anxiety and depression — anytime. Connect with powerful tools that are there for you right as symptoms come up. Stay engaged each day for benefits you can feel. Escape to Sanvello whenever you need to, track your progress and stay until you feel better.”

Maven for family planning “Maven provides on-demand virtual care, clinically informed content, and a supportive community for planning, starting, and raising a family. If you or your partner are thinking about or in the process of starting a family through pregnancy or other alternatives to parenthood — VMware offers you free, unlimited access.”

Rethink for parents and caregivers “Rethink is a benefit for VMware employees that gives your family 24/7 access to tools and resources to help you and your care team in understanding, teaching, and better communicating with your child. We specialize in helping care for children with learning, social or behavioral challenges and developmental disabilities.”

Well, that’s a wrap on the VMware stack. Some of these stacks are easier to figure out than others (so no promises), but let me know which company’s digital health benefits you’d like to learn more about by hitting reply to this email. And if you happen to work at a Fortune 500 company (and I know that’s a lot of you), then please send me your benefits information.

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