Hi friends,

Wysa acquired April Health last week.

What’s the deal all about? Will it work?

What does it tell us about the state of the market? And what does it mean for you?

That’s what we get into in today’s article.

We discuss:

• Deal background: what do you need to know about Wysa and April

• Terms: What we know about the deal terms

• Deal thesis: Why this deal got done and the motivation for each business

• Will it work: The bull case, the bear case and my verdict on whether this deal will create value

• What it means: The implications of this deal for the broader market and what can we learn from it

Let’s get into it.

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Deal background

To understand why this deal happened and what it means, we first need to understand what these companies actually do. Skip this section if you know this shit already.

Wysa:

• Founded: 2016

• Employees: ~170

• Product: AI-powered mental health chatbot with a self-care toolkit and more recently, optional text-based human coaching and clinical programs. Recently launched Wysa Assure (a version of their chatbot that helps insurers manage risk) and Wysa Copilot (a hybrid therapy platform used by clinics to provide human therapy alongside Wysa’s digital products).

• Business model and customers: Wysa’s main customers are businesses and health plans, accounting for over 80% of revenue. Wysa also has a freemium consumer app with over 6M downloads.

• Funding raised: ~$30M

• Other details:

  • Used in 95+ countries

  • Has over 11 million covered lives

  • Received FDA Breakthrough Device designation in 2022 for its AI as a mental health adjunct for chronic pain patients.

April:

• Founded: 2022

• Employees: ~7

• Product: Integrated behavioural health service for primary care clinics. Allows PCPs to easily refer out to their team of virtual therapists and psychiatric consultants. That team collaborates with the PCPs to manage patients’ mental health within the Collaborative Care Model (CoCM).

• Business model and customers: April partners with primary care clinics to provide embedded behavioural health teams. Clinics bill insurers (Medicare, Medicaid, private insurance) under CoCM reimbursement codes and then they pay April for providing the required staff and technology.

• Funding raised: ~$50k

In summary, Wysa is a technology-focused, international business with funding, a strong evidence base, some regulatory approval, significant consumer traction and growing traction with employers and health systems.

On the other hand, April is a much smaller business, focused exclusively on the US and on enabling collaborative care models. They never raised any significant funding.

The Deal Terms

Few details were released publicly but what we do know is that Wysa will remain the primary brand, with April continuing their operation as a sub-brand, “April Health by Wysa”. Also looks like April leadership will continue to run the April business.

In terms of the financials, nothing has been announced but it was most likely an all-stock deal at a relatively low valuation for April considering their size. Wysa’s valuation was likely similar to their last priced round.

The Deal Thesis

The thesis of this deal is simple and quite clever. April allows Wysa to vertically integrate and expand its reimbursable services revenue in the US.

Breaking into the insurer market in the US has been difficult for Wysa.

From a product perspective, the combined entity could work together quite nicely. Here’s what a patient journey might look like…

A patient goes to their PCP. The PCP realises they need behavioural health support and refers them to April. The patient receives immediate access to Wysa’s chatbot. The April care manager then engages with the client, understands their needs and matches them to the right level of human care within April’s network. April clinicians use Wysa co-pilot to deliver hybrid care, improving outcomes, and clinician efficiency and ideally facilitating the care coordination with the PCP.

What problems does this solve?

• For clients, it gives them easier access to hybrid behavioural health services under a coordinated care plan. They can get always-on support from Wysa’s digital products, even while waiting for their first appointment, as well as access to therapists and psychiatrists when needed.

• For clinics, it gives them an easy and reliable destination for referrals, as well as an opportunity to increase revenue by billing for behavioural health services through the collaborative care model.

50% of behavioural health referrals in the US fail. Having immediate access to a chatbot, followed closely by interaction from a high-quality care management team could improve this. And that would be great!

Another problem this could solve is the economic challenges of delivering care coordination. It’s widely recognised that collaborative care is a great model for behavioural health challenges, but it usually requires a human to play the role of care manager or care coordinator. This is often a time-intensive role and as a result, expensive.

In the long term, I think there’s an opportunity for Wysa to use its AI capabilities to improve the performance and economics of care coordination, using its chatbot to play the role of care manager (or at least as a support to care managers).

So this deal could make a lot of sense from Wysa’s perspective, but what about from April’s?

While this is speculation, I think this deal is one born largely from necessity for April.

They have been around for a few years and never raised significant capital. Considering their competition includes well-funded players like Concert Health, it would have been difficult for them to scale to the level of their ambition. It’s also unlikely they were making a bunch of money.

Therefore, getting acquired by Wysa, who can bring some cash, a salesforce and other supportive infrastructure to the table, gives them a nice landing ground. They can still pursue their mission of delivering collaborative care, bolstered by additional technological, labour and capital resources.

Will it work?

Ah, the million-dollar question. Let’s paint a picture of the bull and bear case and then I’ll give you my own verdict.

The Bull Case:

The bull case is that Wysa gets a foothold in the US insurance market, allowing them to accelerate their revenue from reimbursed channels (faster than they would ever have done on their own

The two products together will provide a compelling offering to PCPs, patients and insurers as they get the benefits of a hybrid care model - always available digital services from Wysa combined with human-based services from April. All going well, this will provide growth for Wysa in the US market and considering the low cost of this acquisition to Wysa (based on my assumptions) will make a very good deal for Wysa.

There are four reasons to believe in the Bull Case;

1. There are genuine product synergies. As mentioned above, the technology products of Wysa and the human-based services of April could work really well together for both clients and clinicians. It’s a genuine vertical expansion strategy expanding on a proven care model (collaborative care). For the combined product offering to be able to sell more contracts with PCPs, you need to believe that they will see the value of Wysa’s chatbot and digital interventions for clients.

2. US market expansion will create value. This deal will allow Wysa to sell reimbursable services in the US, a market they have struggled to crack. That’s a huge market opportunity for the business and in the bull case, this deal accelerates their progress.

3. It’s a lean deal. April is a small team, still early in their lifecycle as a business. That means they don’t come with much baggage, technologically or operationally. It should be relatively easy to integrate them and their product into Wysa. Importantly, they also don’t come with a lot of opex. In many of these deals, the first thing you must do is strip out a lot of overheads from the combined entity, which is a painful exercise. That won’t be the case here.

4. It was (probably) good value. Considering April was young, had never raised much money, and wasn’t selling much tangible assets, I imagine Wysa got good terms on the deal. If the price was low (which I imagine it was), the deal can create significant upside value for Wysa if it delivers meaningful US revenue. Importantly, the terms for the April founders probably looked good too because they didn’t have to deal with a big tranche of investor preference shares that got in at high valuations (if you’re a founder who raised money in the last 3 years, I’m sorry…)

That’s the bull case, now what about the bear?

The Bear Case:

The bear case here is that Wysa didn’t acquire many tangible assets from April and that it has pushed them towards being a healthcare services business - a category with many challenges.

This deal brings Wysa closer to being a healthcare services business. April relies on human-based care and scaling that model will require them to increase the size of their therapist and prescriber network. As we see with large players like Talkspace, Lifestance and others, this is a hard business to make money in. It’s expensive to build a large provider network and hard to run it while maintaining margins. It’s a very different business from being a pure-play technology provider and has a lot of competition. How many businesses can you name that are trying to combine digital products with human services in mental healthcare? It’s a lot right??

Competitors like Limbic have made the clear choice to not become a service provider, focusing instead on a pure SAAS play, selling to health systems and clinics.

On top of this, the impact of this deal is limited to the US and to the insurer channel. April will only benefit Wysa in the US (which, yes, is the primary reason for the deal) but considering how much of Wysa’s business is in other markets, there is a ceiling to the impact April will have on the broader Wysa business. Wysa also has a significant B2B business and consumer user base, on which April will have no effect.

The Verdict:

Most deals fail. But I think this one actually has a chance.

Look, the day a deal is signed is usually its high point. Rarely will the reality ever meet the merry expectations that existed from both sides on that day. But given the opportunity for vertical product integration, accelerated US market expansion for Wysa and the relative ease of integrating a smaller business, this one might just buck the trend! Also, in deals like this, price matters, and I strongly suspect April was picked up at a favourable cost to Wysa.

Finally, it looks like Wysa and April were dating before they actually tied the knot, having partnered to provide a combined service to a couple of clinics from last year. Nice to know this wasn’t just a shotgun wedding!

What it means?

There are a few interesting takeaways from this deal.

1. 2025 will be the year of deal-making. Many startups are reaching the end of their runway and are looking for landing zones. In 2021 and 2022 many behavioral health startups raised large rounds. But most have failed to raise since. Considering most companies typically plan their raise to last them for 24-36 months, many of these companies are now running out of cash and looking for a way out.  

   

   Source: gimbhi, Crunchbase, Pitchbook

   Last year, several of these companies closed their doors or sold for parts (Pear, Akili, Mindstrong etc.). This year, more are looking for M&A opportunities to find soft landings. Quartet Health was recently acquired by Neuroflow for example, and in the broader behavioural health space, there’s been a lot of PE deal activity already this year.
   It’s a tough spot to be in as a business. There are many good businesses here with meaningful revenue, they just haven’t reached the scale required to be profitable and the sources of external capital have dried up. I therefore expect more deals like this throughout the rest of 2025.

2. The search for reimbursement of digital interventions. It’s still hard to get paid for digital mental health interventions. Wysa is one of the more advanced players in this space with a significant evidence base, regulatory approval and deals with serious payers like the NHS. However, the nature of the US insurance system makes it hard even for them to get paid for a digital product. While there are positive signals that this may start to change, businesses can’t wait around. They need to find ways to get paid by insurers, either by taking on some form of VBC agreements or finding interesting ways to fit into existing billing codes (like what Wysa is doing in this deal to take advantage of reimbursement for collaborative care provision).

3. The decline of D2C. Several consumer-focused products are struggling to operate at scale. Better Help’s consumer revenue is shrinking and even data on Wysa’s app downloads suggest their consumer channel is not growing at the rates it was a couple of years ago. I estimate they’re getting approximately 30,000 downloads per month right now, that would be 360,000 a year - only 6% YoY growth on their total of 6M downloads.

   

   Wysa Android App Downloads. Source: AppBrain

   I'm still a believer in the D2C bridge strategy. Wysa has executed it well, using strong early adoption from consumers to build an evidence base and expand into other channels. However, their strong desire to crack the insurer channel shows that consumer channels can’t (yet) support a mental health business at scale.

As always, I’ll be keeping an eye on what happens with this deal in the coming months and will be sure to keep you updated.

That’s all for this week.

Thank you so much for reading, I really hope you found it useful and it means a lot to know you take time out of your day to read these posts.

Do reach out if you have any questions or feedback. My goal is to help you, the people building mental health organisations be successful. So I want to hear the challenges you have and if I may be able to help solve them.

Keep fighting the good fight!

Steve

Founder of The Hemingway Group

P.S. Connect with me on LinkedIn if you haven’t already

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