Teletherapy firm Talkspace is going through a category motion lawsuit alleging it misled traders concerning the firm’s financials within the run-up to its merger with a particular objective acquisition firm.
The swimsuit, filed Jan. 7, alleges traders weren’t knowledgeable that Talkspace was seeing considerably elevated promoting prices in its direct-to-consumer enterprise, and it was seeing decrease conversion charges from these adverts. The category motion additionally claims the corporate had elevated buyer acquisition prices and decrease demand in its client enterprise than was revealed to traders, and it had overvalued earnings from its offers with well being plans.
“Talkspace, as a public firm, doesn’t talk about ongoing litigation. Nevertheless, we’ve got reviewed the allegations within the grievance(s) and don’t consider they’ve any benefit. We are going to defend the corporate vigorously,” a Talkspace spokesperson wrote to MobiHealthNews.
WHY IT MATTERS
In January 2021, Talkspace introduced plans to go public by way of a merger with a clean test firm, Hudson Govt Funding Corp. The deal closed six months later, offering the corporate with $250 million in development capital.
However the psychological well being firm has struggled financially since then. Its opening day inventory value was listed at $8.90; right now’s costs are hovering round $1.50 per share.
Talkspace’s cofounder and CEO Oren Frank and cofounder and head of medical providers Roni Frank stepped down from their roles in November as the corporate introduced “disappointing” third quarter outcomes.
A few week later, president and chief working officer Mark Hirschhorn resigned following an inside assessment of his conduct in reference to an organization offsite occasion.
THE LARGER TREND
Digital psychological and behavioral well being is a scorching area in digital well being, drawing loads of investor consideration. There are a number of firms that intention to rethink psychological healthcare within the digital age, together with Headspace Well being, SonderMind, Lyra Well being, Fashionable Well being and a wide range of different gamers.
Hitting the general public markets by way of SPAC can be a pattern amongst digital well being and well being tech firms. Final yr, digital prescription therapeutic firm Pear Therapeutics, child tech firm Owlet, digital well being chatbot Babylon, medical trial platform Science 37 and client genetics firm 23andMe all hit the general public markets by SPAC offers.
Nevertheless, many well being tech firms aren’t performing effectively after going public, in response to a report by Silicon Valley Financial institution. It famous that de-SPAC efficiency was -23% within the healthcare trade total, and -44% within the well being tech sector.
“The aggressive valuation premiums we’ve got seen within the well being tech personal market haven’t translated to the general public market,” the report’s authors wrote.