Milbank LLP is advising Hudson Executive Investment Corp. (“HEIC”) (NASDAQ: HECCU, HEC, HECCW), a special purpose acquisition company sponsored by Hudson Executive Capital LP, in connection with its entry into a merger agreement with Talkspace, the leading digital and virtual behavioral healthcare company. The combined company will operate as Talkspace and intends to be listed on NASDAQ under the symbol “TALK.” The transaction values Talkspace at an initial enterprise value of $1.4 billion and will provide the company with $250 million of cash, to be used as growth capital.
The transaction will be funded with HEIC’s $414 million of cash in trust (assuming no redemptions), a $25 million forward purchase from Hudson Executive Capital and an additional $25 million committed by Hudson Executive Capital to backstop redemptions. The transaction is further supported by an oversubscribed $300 million fully committed PIPE at $10.00 per share anchored by leading investors including the Federated Hermes Kaufmann Funds, Jennison Associates LLC, Woodline Partners LP and Deerfield.
Upon closing, it is expected that the company will have an enterprise value of $1.4 billion, or approximately eleven times the company’s 2021 estimated net revenue, and $250 million of cash on the balance sheet available to fund growth initiatives.
The transaction, which has been unanimously approved by the Boards of Directors of Talkspace and HEIC, is expected to close late in the first quarter or early in the second quarter of 2021, subject to receipt of HEIC stockholder approval, and the satisfaction of other customary closing conditions. Co-founders Roni and Oren Frank will continue to lead Talkspace, along with President, COO and CFO Mark Hirschhorn and the rest of the company’s highly experienced leadership team.
Established in 2012, Talkspace is the leading digital and virtual behavioral healthcare company. Talkspace promotes behavioral health as a lifestyle, not as a one-time event. The company provides access to an extensive network of certified, credentialed, and professional clinicians through two channels – direct-to-consumer and enterprise – and has leading brand awareness in digital behavioral health. Talkspace has seen robust user growth, with approximately 46,000 active members, and more than 39 million lives covered by employer or healthcare insurance agreements. For 2021, Talkspace’s estimated net revenue is $125 million, up approximately 69% from 2020 estimated net revenue.
The Milbank deal team was led by Global Corporate partners Scott Golenbock and Iliana Ongun and associates Bessie Qu, Alex Shapos and Tiffany Han. The Global Capital Markets team was led by partner Rod Miller with special counsel Sam Badawi and associates Tim Kirby and Mia Cromarty. Advice was also provided by Tax partner Max Goodman and associate Archan Hazra and Executive Compensation and Employee Benefits partner Mike Shah and associate Kelly Bartley.