Virgin Pulse eyes $3bn merger with HealthComp

Virgin Pulse merger with HealthComp

Digital health and wellness company Virgin Pulse has said it plans to merge with HealthComp, a health benefits administrator, in a $3 billion transaction that would create a wide-ranging health technology and data platform for employers.

The resulting service offering would “improve health outcomes, lower costs, and empower members” of healthcare plans, according to the companies.

Virgin Pulse’s digital health platform revolves around Homebase for Health, a programme which uses artificial intelligence and behavioural science to help people take control of their mental, physical, and social wellbeing.

It was recently adopted by Cigna Healthcare for use by customers who receive health coverage through their employer. HealthComp, meanwhile, calls itself the largest independent health plan administrator for self-funded employer groups in the US and also provides analytics software to customers.

Joining together will allow the creation of an “innovative and flexible” health plan offering that covers plan design, plan management, payment integrity, health navigation, preventative care, and digital therapeutics – all delivered via Homebase for Health, said the two firms in a statement.

If it goes ahead, the merger could create “a new category in the health space that will change the way employers address the two-fold challenge of reducing costs and improving member outcomes,” said Chris Michalak, Virgin Pulse’s chief executive, who will take on the same role at the combined company.

The aim is to simplify a benefit structure that is plagued by “waste, friction, and preventable risk” leading to “unmet needs and escalating costs”, he added.

“Our two companies have a shared mission to improve individual outcomes by engaging users early and often and making health and wellbeing more accessible, affordable, and personal for all.”

The merger is expected to close before the end of the year, subject to regulatory approval, and if consummated will create an entity with more than 20 million members, representing around 1,000 self-insured employers across the US.

“Self-insured employers pay for almost half of the nation’s healthcare expenditures and now require more innovative and affordable solutions,” said Chad Harris, HealthComp’s CEO.

Both companies are private equity-owned, and existing investors New Mountain Capital, Blackstone, and Morgan Health will share ownership of the new company. New Mountain will be the majority backer.

Virgin Pulse has been steadily growing its Homebase for Health platform via a string of deals, including an agreement with Headspace that layered in psychiatry, therapy, clinical care, self-guided care, behavioural health coaching, and employee assistance programmes.