USA — Pear Therapeutics has recently made an announcement stating that it is exploring strategic alternatives to maximize shareholder value.
The company has hired a financial advisor to investigate options such as a possible acquisition, company sale, merger, asset divestiture, licensing, or other strategic transactions, as well as additional funding.
If a transaction cannot be completed, the company may be forced to seek reorganization, liquidation, or other types of restructuring.
As part of this process, Pear has withdrawn its revenue and operating guidance for fiscal years 2022 and 2023, and will skip the fourth quarter and full year earnings calls. The news has resulted in a 30% drop in the company’s stock.
Pear also stated that it may consider licensing or other strategic transactions, as well as additional financing.
However, the company emphasized that there is no set timetable for this process, and it cannot guarantee that it will result in a transaction or that any transaction, if pursued, will be completed on favorable terms.
In the absence of a transaction, Pear may be forced to reorganize, liquidate, or pursue other types of restructuring.
Last month, the company announced that its Chief Commercial Officer, Julie Strandberg, would be leaving at the end of March.
Pear Therapeutics has been struggling with financial challenges, reducing its revenue forecast for 2022 and embarking on a restructuring process to narrow its business focus.
Despite initially targeting a net revenue of US$22 million, Pear reduced its forecast to US$14 million to US$16 million due to cost-saving efforts, which included laying off 25 employees in July 2022, followed by 59 more in November.
Pear’s operating expenses reached nearly US$110 million in 2021, leading to a net loss of US$65 million.
By the third quarter of 2022, operating expenses had already surpassed US$104 million, resulting in a net loss of over US$49 million.
The company filed a notice with the SEC in early 2023 outlining a plan to sell up to US$300 million worth of stock shares.
Pear is hoping that its cost-saving measures and restructuring efforts will bring down its operating expenses in 2023 below US$100 million. Pear also said it is evaluating its options with investment bank MTS Health Partners.
Surges in M&As in digital therapeutics sector
The digital therapeutics sector has been witnessing a significant surge in mergers and acquisitions in recent years.
Pear Therapeutics is one of the companies that has recently made headlines in this area, having gone public in December 2021 in a deal worth US$1.6 billion with Thimble Point Acquisition Corp, a special purpose acquisition company.
The diabetes sector of the digital health industry is teeming with startups, and Livongo is among the most prominent names in the field. The company was acquired by Teladoc in a US$18.5 billion merger in 2020.
Omada is another company that started out in the diabetes space.
Recently, the company unveiled a new service that enables patients to adjust their medications without needing to visit their primary care physician.
In July 2021, Amwell made two acquisitions in the digital health space, for a combined total of $320 million.
The telehealth company expanded its services beyond virtual visits by acquiring SilverCloud Health, a digital platform focused on mental health, and Conversa Health, which provides automated virtual healthcare.
The acquisition is expected to enhance Amwell’s mental health offerings and expand its reach in the rapidly growing digital therapeutics market.
In December 2018, Propeller Health, a digital therapeutics company focused on respiratory disease management, announced its acquisition by ResMed, a sleep and respiratory care company, for US$225 million.
The acquisition is expected to strengthen ResMed’s position in the digital health market and expand its offerings in the respiratory care space.
These mergers and acquisitions highlight the increasing demand for digital therapeutics solutions, as well as the growing interest of large healthcare companies in this space.
As the digital therapeutics market continues to evolve, we can expect to see more consolidation and strategic partnerships in the industry.
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