Sword Health is set to acquire Headspace as it expands further into behavioural health, according to public documents.
The acquisition is due to take effect on September 14. Details of the transaction remain limited and neither company had responded to requests for comment.
New York-based Sword Health began in musculoskeletal care and has since expanded into women’s health, cardiometabolic care and mental health.
Headspace, based in San Francisco, provides therapy, coaching, wellness apps and employee assistance programme services.
Both companies have a strong focus on business-to-business contracts. Sword Health works with employers, health plans, labour unions and health systems through an AI-powered platform, while Headspace serves employers and health plans alongside its direct-to-consumer offering.
Headspace employs about 598 people, including 418 full-time staff.
Public documents state that clinical services will not be reduced following the merger, although some corporate roles could be affected where the companies have overlapping functions.
“The combined company anticipates that there may be reductions in corporate staff where functions are duplicative between the two organisations,” the documents state.
The purchase price has not been disclosed.
“The aggregate purchase price for the transaction is a cash payment subject to customary post-signing adjustments, including adjustments for closing cash, indebtedness, transaction expenses, and net working capital,” the documents state.
“The merger agreement provides for an estimated closing adjustment followed by a customary post-closing true-up.”
Sword Health has previously identified mental health as part of its wider growth plans ahead of a possible IPO in 2028.
Its existing Mind service combines an AI therapist, a wearable designed to detect depression and anxiety and 24-hour input from clinicians.
The company has also indicated that partnerships and acquisitions could form part of its expansion into serious mental illness services.
Virgilio Bento, chief executive of Sword Health, previously said: “I want to IPO when we have the mental health solution itself right because I want to be focused right now on really making sure that we build a valuable mental health solution.
“I don’t want to be distracted by going public.
“We are quite focused on mental health and that’s why an IPO is not our goal in the short term.”
Sword Health was founded in 2015. Headspace in its current form was created through the merger of the Headspace meditation app and digital clinical provider Ginger Health in October 2021.
The combined Headspace business was valued at US$3bn at that time. The valuation of a combined Sword Health and Headspace business has not been disclosed.
Sword Health raised US$40m at a valuation of about US$4bn a little over a year ago, when it also launched its existing mental health offering.
According to Crunchbase, Sword Health has raised an estimated US$495m and Headspace an estimated US$321m.
