Toronto company buys St. Louis Park's Wellbeats for $92M

Wellbeats Inc., a St. Louis Park-based software company that develops virtual wellness content for employers, is being acquired by a Canadian company for $92.5 million to accelerate that company's push into the U.S.

Toronto-based LifeSpeak, a mental health and wellbeing platform for employers and insurance companies, will make Wellbeats its fourth acquisition since October 2021, the company said earlier this week. Wellbeats will continue to operate as a standalone company in Minnesota.

Wellbeats, which produces both mental and physical wellness content, also has a studio in Bloomington.

The transaction, expected to close in March, includes an upfront payment of $80 million in cash upon closing, with the remaining $12.5 million payable if certain predetermined milestones are made this year, according to a release from LifeSpeak.

When the transaction closes, Wellbeats Chief Executive Jason Von Bank will become chief operating officer of LifeSpeak.

In 2021, Wellbeats generated $17.4 million in revenue. Between September 2020 and September 2021, it grew its client base 41%.

Von Bank attributed customer growth to how quickly companies — and people in general — have converted to virtual engagement in all areas of life during the coronavirus pandemic.

LifeSpeak expects annual recurring revenue to be in the range of $75 million to $85 million for 2022 with the addition of Wellbeats. On a conference call with analysts, LifeSpeak's top executive said the decision to buy Wellbeats was not only based on revenue and scale, but acquiring Wellbeats' U.S. enterprise customer base, which has little overlap with LifeSpeak's existing base.

The acquisition also helps LifeSpeak accelerate its expansion into the U.S., executives said. Wellbeats has over 400 enterprise clients, including Dell, Cigna and Hewlett Packard Enterprise.

"As a business, we've known about them for years and years based on their reputation in the market," Nolan Bederman, LifeSpeak's executive chairman, said during the conference call. "We've always looked up to what they've been able to accomplish in the physical well being space, long before there was an opportunity for us to acquire it. When we found that opportunity, and really from knowing their business in the market, we jumped on it."

Since its founding in 2008, the number of paid subscribers on Wellbeats' platform has grown to more than 2.2 million. The company sells subscriptions to its platform to other businesses, who then provide the product to their employees or members in a health insurance plan.

Corporations across the globe are trying to improve their retention and talent acquisition strategies by offering better health and wellness benefits to workers, executives said. The corporate wellness industry is expected to reach a total addressable market of $58.4 billion by 2025, according to the Global Wellness Institute. The acquisition sets up LifeSpeak to grab a significant share of that market.