These are the 13 mental health startups that could IPO, make acquisitions, or get bought this year, according to analysts

Headspace Health has made several acquisitions since its 2010 founding, and analysts expect it to look for more deals this year.

Headspace merged with Ginger in October 2021, a deal that valued the combined company at $3 billion. Headspace's meditation and mindfulness exercises for consumers, plus Ginger's therapy and psychiatry provided to companies and health plans, have allowed Headspace Health to care for a wide range of patients.

This year, it's been notching deals to provide those services all in one to give employees access to Headspace's mindfulness content alongside Ginger's clinical care. It's also moving to bring more mental health services like coaching directly to consumers.

As Headspace Health looks to expand its offerings, Pitchbook senior healthcare analyst Aaron DeGagne said the company may look to partner with specialty mental healthcare providers or make more acquisitions.

The startup last bought Shine, a mental health app focused on BIPOC patients, in September 2022.

DeGagne wrote in a January Pitchbook note on healthtech unicorns that Headspace could consider deals in areas including "AI chatbots, substance use, youth mental health, and/or specialty care."

Modern Health provides personalized mental health treatment to employers, including coaching and therapy. DeGagne and CB Insights lead healthcare analyst Alexander Lennox-Miller said Modern Health could be a good acquisition target for the right buyer.

Lennox-Miller said it's unlikely Modern Health could snag the same valuation from its last fundraise in a deal today. The startup's February 2021 fundraise, a $73 million Series D, valued Modern Health at $1.17 billion.

Lennox-Miller pointed to Modern Health's headcount, which he said isn't growing, and noted the company hasn't any made acquisitions or raised fresh funding since 2021.

In statements sent to BI for this story, Modern Health executives argued its headcount isn't indicative of its performance.

"We believe Modern Health is in a better position than any other company in its field. The growth-at-all-costs mindset is no longer valid, and successful companies are focused on building sustainable and profitable businesses, which is what Modern Health is doing," Modern Health CEO Alyson Watson said.

"While others in our industry are struggling to raise capital due to burning unsustainable levels of cash every year, we expect to become profitable with what's on our balance sheet without requiring additional funding. Our growth speaks for itself, with a remarkable 600% growth rate from 2020 to 2023 and achieving cash flow positivity in Q1 of this year. As a result, we expect Modern Health to be the first in our space to reach profitability."

DeGagne said employer-focused mental health startups such as Modern Health have the potential for more profitable growth with "stickier" recurring revenue models.

He said pharmacy giants Walgreens or CVS Health might seek to pick up a mental health asset like Modern Health. However, as retailers like Walmart step out of healthcare entirely and Walgreens and CVS' healthcare businesses struggle, that possibility appears to be waning.

DeGagne suggested that other healthcare players, including public behavioral health companies like Talkspace or Teladoc's BetterHelp, could consider buying Modern Health to expand their employer businesses.

Modern Health made its first and only acquisition back in February 2021, therapist-matching startup Kip, just before announcing its Series D fundraise.

In a statement provided by Modern Health, Forrester senior analyst Jonathan Roberts said, "Modern Health is certainly a partner with its finger on the pulse. With triple-digit growth over the last 3 years and its recent cash flow positive quarter, Modern Health is well positioned to take on employee mental health at scale."

Investors and bankers identified Lyra Health in January as one of the seven healthcare startups most likely to IPO when the public markets reopen, Business Insider previously reported. And Lennox-Miller agreed that Lyra is a prime candidate for the next wave of healthcare IPOs.

"Their last valuation was almost six billion. It's time," he said.

The startup provides mental health services, including teletherapy and medication management, to employees at companies like Salesforce and eBay. Lennox-Miller noted that Lyra has seen solid traction and growth with its employer clients.

Lyra last raised $235 million in a Series G funding round in January 2022 at a $5.58 billion valuation, making the company too expensive for nearly all potential buyers, Lennox-Miller said.

He noted that Lyra doesn't have much of a history of buying other companies, either — the startup has only announced one public acquisition to date, snapping up employee assistance provider company ICAS World in January 2022.

Lyra has raised more than $900 million to date, more than any other mental health startup.

Lyra declined to comment for this story.

Acquired by Teladoc in 2015, BetterHelp has seen stunning growth over the years that's recently dulled.

The company's revenue decreased by 4% in the first quarter of 2024 compared to the prior year's, to $269 million, and lost 11% of paying users relative to 2023's first quarter.

It's struggled with rising customer acquisition costs, plus a deluge of criticism after the Federal Trade Commission found last year that BetterHelp had sold users' health data to advertisers.

BetterHelp fits the bill of a generalized mental health provider that could benefit from M&A right now, Lennox-Miller said.

As its organic growth slows, BetterHelp could buy another company to tack on some inorganic growth while expanding its user base or specialty care areas, he said.

BetterHelp didn't respond to a request for comment for this story.

DeGagne, Lennox-Miller, and Cassels all said they're watching the pediatric mental health market as more startups caring for kids and teens grab investor cash.

The incidence of mental health disorders like anxiety and depression in young people has been rising for years, reaching crisis levels in 2021. With a dearth of pediatric mental health professionals equipped to care for kids and teens, a number of startups are picking up steam to elevate those clinicians and connect children with more accessible care.

That environment also presents an opportunity for profitable growth, Cassels said, which will make these startups especially attractive to potential buyers.

Last year, Lennox-Miller said, about two-thirds of early-stage telepsychiatry funding went to pediatric and student-focused startups. Many rely on per-member or per-student contracts rather than direct insurance reimbursement, which makes patient volumes, and thus profits, more predictable, he said.

He highlighted UWill, Joon, and Cartwheel as startups providing mental healthcare to kids and teens, either directly or through schools, that could see buyer interest right now.

"That's a space I would expect to see activity, whether regular M&A, whether it's PE — there's too much opportunity there, and it seems like there's a lot of enthusiasm for those solutions right now," Lennox-Miller said.

In a statement to BI, Joon CEO Emily Pesce said the startup remains focused on building evidence-based care for teens and young adults.

"We find it inspiring to see strong interest from many angles — investors, healthcare partners, parents and young people," she said. "At Joon we listen closely to best understand how to partner, work with or serve all those who can help broaden our impact and effectively meet this need. 

Uwill and Cartwheel didn't respond to requests for comment for this story.

Spring, with its approach of applying AI to personalized mental healthcare, is a top pick by investors and bankers for the healthcare startups most likely to IPO, as BI reported in January.

The company sells its services to employers including Microsoft and The Hershey Company, as well as health plans. Its algorithms help match its patients to care like coaching, psychotherapy, and psychiatry.

Spring last raised a $71 million Series D round in April 2023, valuing the company at $2.5 billion and bringing its total funding to more than $370 million from top VC firms like Tiger Global.

Since its founding in 2016, Spring has made two public acquisitions, most recently buying self-guided mental health app Bloom in March.

While Lennox-Miller said Spring is more likely to be acquired than Lyra Health — Spring boasts a significantly lower valuation, plus a tech model that Lennox-Miller said scales more easily — the startup is still expensive enough to put it out of reach for most buyers, he said.

Spring declined to comment for this story.

Holmusk sits in an unconventional place in the behavioral health market — but its unique focus on data analytics could turn heads, Lennox-Miller said.

Based jointly in Singapore and the US, Holmusk is building a real-world data platform for behavioral health, bringing together disparate sources of mental health data with analytics tools for better research and patient care.

That's a hot area right now for investors and potential buyers alike, Lennox-Miller said. Holmusk has raised about $113 million to date, according to Pitchbook, most recently grabbing a $30 million strategic investment from electronic health record system provider Veradigm in October after landing a $45 million Series B in January 2023.

"The value of the data, by itself, could make them a potential acquisition target," Lennox-Miller said. "I think we're going to see a real rush to locking down that data."

Pharma and biotech giants, as well as large real-world data vendors, could be interested in snapping up Holmusk, Lennox-Miller said.

He said cloud-focused EHR players like Veradigm or even Big Tech players could also consider a deal like this to gain access to large behavioral health datasets to train new AI technologies.

Holmusk didn't respond to a request for comment for this story.

SonderMind, which matches patients to therapists for virtual or in-person counseling, could be one of the generalist mental health startups to struggle in a tighter market, Cassels suggested.

The startup hasn't publicly announced more funding since July 2021, when it raised $150 million Series C at a valuation "well north" of $1 billion. SonderMind has also conducted at least two rounds of layoffs since then, most recently slashing 17% of its workforce, or 49 of its 281 employees, in January.

Lennox-Miller said SonderMind might be forced to reset its Series C valuation according to new market standards, and could even seek a buyout.

He suggested that Amazon could buy SonderMind, or a company like it, to augment its purchase of One Medical with mental health services.

SonderMind has also made a few acquisitions, most recently buying tech assets from the now-defunct mental health startup Mindstrong in March 2023. CEO Mark Frank told Axios in 2022 that the company sees itself as a "natural consolidator."

SonderMind didn't respond to a request for comment for this story.

Digital therapeutics startups have particularly struggled in the market downturn with issues such as provider adoption and insurance reimbursement. Some of these companies may look to merge with competitors or get bought right now to push forward without investor cash, DeGagne said.

He pointed to Big Health and Freespira as potential M&A candidates. Big Health provides software for conditions including insomnia and anxiety, while Freespira's tech treats panic attacks and post-traumatic stress disorder.

"It just doesn't make sense to have 20 different digital therapeutics vendors with one to two products each," DeGagne said.

Akili, whose stock has been on a rollercoaster ride since the ADHD-focused digital therapeutics company went public in August 2022, might seek to make an acquisition or merge with another company in the longer term, DeGagne said.

Cassels pointed to OxfordVR's merger with BehaVR in December 2022. OxfordVR was developing therapeutics for several mental conditions including psychosis, but ultimately struggled with a small total addressable market for its tech, said Cassels, who was an investor in OxfordVR.

"I think the folks who are most likely to need to consolidate are folks working in serious mental illness because, from an investment perspective, they're still battling," he said.

In a statement to BI, a Big Health spokesperson wrote, "Big Health has established itself as one of the leading digital therapeutics companies, and we are operating in a dynamic and still nascent space. We have a strong path forward based on our evidence-based portfolio of offerings, including Sleepio and Spark for depression, as well as our recently established partnership with Grow Therapy to further drive adoption."

"We've seen mounting interest from health plans as they recognize the need for broader behavioral health solutions that address the barriers many patients face in accessing care," said Freespira CEO Joseph Perekupka in a statement to BI. "Sector consolidation creates an opportunity for payers to provide a comprehensive platform of enhanced behavioral health solutions to their members from a single partner."

Demand for addiction care is surging, and a crop of early- to mid-stage startups focused on substance use stands to benefit.

DeGagne said larger mental health players like Headspace Health could look for an acquisition among smaller substance-use startups to meet that growing need. Lennox-Miller suggested private-equity firms might look to make acquisitions in substance use too, potentially even rolling up multiple smaller startups to create a larger care network.

Eleanor Health is one of the best-funded startups in the space, last grabbing a $50 million Series C led by General Catalyst in January 2023.

It's had some hiccups in the past year, however. Eleanor's founder, Corbin Petro, announced in August that she was stepping down as CEO. And Lennox-Miller said the startup's headcount has fallen since its Series C raise.

He said that the challenges confronting substance-use startups could dissuade potential buyers. Those challenges mirror the struggles faced by digital therapeutics companies, he said, such as Pear Therapeutics, which went bankrupt in April 2023 after failing to secure significant insurance reimbursement.

"Those issues about reimbursement, payment, and showing value to their customers are there for all of them," Lennox-Miller said. "All of the factors leading to an acquisition are the factors that could dissuade other companies from buying them."

Eleanor Health didn't respond to a request for comment for this story.

Virtual addiction treatment clinic Pelago is another player buyers could be interested in. The startup may be less likely to consider a buyout, however, after nabbing a $58 million Series C in March.