In this weekly series, CNBC takes a look at companies that came on the first Disruptor 50 list 10 years later.
In 2013, the idea of an app for mental health care might have seemed new, if not monumental, in the form of a global challenge for a disruptive start-up. But times have changed. A global pandemic that led to a massive increase in mental health challenges, and the acceleration in the adoption of technology-based health care, is causing start-ups like Ginger.io to do more than ten years ago to work ahead of their time.
Globally, the World Health Organization estimates that approximately 1 billion people live with a mental illness, and that the vast majority of them in low- and middle-income countries, where mental, neurological and substance abuse disorders do not receive treatment at all. The imbalance between supply and demand for mental health care has increased since the Covid-19 pandemic. A Lancet study estimated that 53 million more cases of major depressive disorder and 76 million more cases of anxiety disorder globally by 2020.
Ginger.io, which grew out of a MIT Media Lab team focused on aggregating and analyzing health data, appeared on the initial CNBC Disruptor 50 list in 2013 to lead the way in creating a data-driven, on-demand digital mental health ecosystem. It became a unicorn in 2021 after a $ 100 million round of funding led by Blackstone.
At the time of the agreement, Ginger reported revenue that had tripled year over year for three consecutive years and more than 500 employer customers, including Paramount, Delta Air Lines, Domino’s, SurveyMonkey, Axon, 10x Genomics and Sephora, and trades with concierge firm Accolade for corporate healthcare and emerging online pharmacies Capsule.
The company said demand for its services had tripled during the pandemic, but as the scale of the mental health problem has grown, the start-ups tackling it have also had to scale. In late 2021, Ginger merged with an app-based company that many people looking for some peace of mind under Covid had come to know: the meditation app Headspace.
The $ 3 billion merger of Headspace Health and Ginger was part of a larger consolidation trend in the digital healthcare industry and the movement of various healthcare technology companies to build a complete suite of services under a model known as value-based care. Other original CNBC Disruptors – Castlight Health, which merged with Vera Whole Health, and Audax (now part of healthcare giant UnitedHealth’s technology-based company Optum) – were among a recent wave of deals among some of the best-known healthcare technology startups. Virgin Pulse and Welltok. Distinction by buying PlushCare. Grand Rounds and Doctors on Demand. Teladoc and chronic care company Livongo.
The combined Headspace-Ginger unit reaches nearly 100 million lives across 190-plus countries through direct-to-consumer businesses and 3,500+ business and healthcare plan partners.
“The increase in demand is staggering,” said Russell Glass, CEO of Headspace Health. “You’ve gone from 20% off [U.S.] population with a need for 40%, so a doubling of those with acute anxiety, depression or other mental health needs. ”
Headspace Health customers include Starbucks, Adobe, Delta Air Lines and Cigna.
“Mental health is clearly a global challenge,” said Karan Singh, COO of Headspace Health. And it’s a challenge that includes business complexity, from varying rules around the world to language-based needs. “Everyone can use a different language to describe things they go through, but it’s something that most everyone goes through,” Singh said.
In the United States, as the pandemic continues and the rules evolve, Headspace Health faces the challenge of getting lawmakers to see telecommunications health in the same category as traditional health care.
The Biden administration focuses on mental health among other health priorities, including plans to reduce restrictions on practicing across multiple states, a step that Glass said is long overdue and critical in building a mental health infrastructure that is fair economically, racially and geographically.
“Resolving this crisis should and can be our next JFK lunar moment,” Glass said.
“I think we’ll need some structural changes to ensure that some of the gains we’ve seen over the last few years actually continue,” Singh added.
Virtual care has become a powerful and effective way to access care, and many people prefer it over personal care, or at least having the opportunity.
“The cat is out of the bag,” Glass said. “As consumers realize how amazing telecommunications health is, and as public authorities hear more and more from these consumers, we will see changes happen.”
Glass compares Headspace’s current regulatory battle with that of Uber, citing how consumer preferences inspired regulatory changes.
But the digital healthcare space faces more acute market challenges, questioning its post-pandemic playbook, highlighted by this week’s disastrous earnings results from Teladoc, which included a write-down of more than $ 6 billion related to its acquisition of Livongo. Some of the most prominent names that have been published in the context of digital health have seen their public market values decimate over the past year, including Teladoc, Hims and Hers Health and American Well, as core telecommunications services become the brand and market opportunity among business buyers and insurance companies that are willing to pay more for a complete line of digital healthcare, seems less secure.
Headspace Health sees room for both competitors and more deal-making.
“We want to transform mental health care to improve the world’s health and happiness. We do not want to do it alone,” Glass said. “A healthy competitive environment is crucial to achieving what we want to achieve.”
Earlier this year, Headspace acquired Sayana, an AI-powered wellness company, which further increased the breadth of services and the scope of care in its portfolio.
As it seeks to increase access to psychiatric services, the ultimate goal is to drive costs down.
“How do we take costs out of care? How do we keep people from needing higher levels of care?” said Glass.
Singh gave the answer. “Focus on prevention. In the end, it’s the only way out of this,” he said.
–By Zachary DiRenzo, specifically for CNBC.com
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