Talkspace Announces Third Quarter 2024 Results
3Q 2024 Total revenue grew 23% year-over-year, driven by 45% year-over-year growth in Payor revenue
Increased 3Q 2024 GAAP Net income to $1.9 million from $4.4 million net loss year-over-year
3Q 2024 Adjusted EBITDA1 of $2.4 million
NEW YORK, Oct. 29, 2024 (GLOBE NEWSWIRE) -- Talkspace, Inc. ("Talkspace" or the "Company") (NASDAQ:TALK), today reported third quarter 2024 financial results.
Three Months
Nine Months
September 30, 2024 (Unaudited)
Results
% Variance from Prior Year
Results
% Variance from Prior Year
(In thousands unless otherwise noted)
Number of eligible lives at period end (in millions)
158.1
40%
158.1
40%
Number of completed Payor sessions
316.4
38%
899.2
50%
Number of Consumer active members at period end
8.6
(35)%
8.6
(35)%
Total revenue
$47,399
23%
$138,873
29%
Gross profit
$21,621
15%
$64,303
20%
Gross margin %
45.6%
46.3%
Operating expenses
$21,522
(10)%
$69,369
(6)%
Net income (loss)
$1,874
*
$(66)
100%
Adjusted EBITDA (1)
$2,350
*
$4,303
*
Cash and cash equivalents at period end
$118,994
—
$118,994
—
*
Percentage not meaningful.
(1)
Adjusted EBITDA is a non-GAAP financial measure. For a definition of the measure and a reconciliation to the most direct comparable GAAP measure, see "Reconciliation of Non-GAAP Results to GAAP Results."
"Talkspace delivered solid third quarter financial results with 23% revenue growth and our third consecutive quarter of adjusted EBITDA profitability. We have made meaningful strides in fortifying our relationships with key payor partners who view us as the leading full-scale, pure-play behavioral health provider and truly recognize the importance of our differentiated focus on clinical excellence," said Dr. Jon Cohen, CEO of Talkspace.
Dr. Cohen continued, "The mental health crisis remains a critical issue and Talkspace is at the forefront of addressing this need through our highly qualified network of diverse, clinically-licensed providers and our innovative platform. I'm particularly proud of our expansion to now serve more than 158 million covered lives, including increased access for seniors, teens, and members of our Military - populations with unique and pressing behavioral health needs. Our innovative approach and strategic growth have positioned us as the largest behavioral telehealth network in the U.S., enabling us to meet the escalating demand for accessible, high-quality behavioral health services."
Third Quarter 2024 Key Performance Metrics
Revenue increased 23% over the prior-year period to $47.4 million, driven by a 45% year-over-year increase in Payor revenue and a 17% year-over-year increase in Direct to Enterprise ("DTE") revenue; partially offset by a 30% year-over-year Consumer revenue decline.
Gross profit increased 15% over the prior-year period to $21.6 million, and gross margin declined to 45.6% from 48.8% in the prior-year period, driven by a shift in revenue mix towards Payor.
Operating expenses were $21.5 million, a decrease of 10% year-over-year, driven primarily by lower research and development expenses due to the capitalization of internal-use software costs.
Net income was $1.9 million, an improvement from $(4.4) million net loss in the third quarter of 2023, primarily driven by an increase in revenues, partially offset by an increase in cost of revenues.
Adjusted EBITDA was $2.4 million, an improvement from $(2.8) million in the third quarter of 2023, primarily driven by an increase in revenues, partially offset by an increase in cost of revenues.
Financial Guidance
Talkspace continues to expect fiscal year 2024 revenue to be in the range of $185 million to $195 million, growth of 23-30%, and adjusted EBITDA to be in the range of $4 million to $8 million.
Conference Call, Presentation Slides, and Webcast Details
The Third Quarter 2024 earnings conference call and webcast will be held Tuesday, October 29, 2024, at 8:30 a.m. E.T. The conference call will be available via audio webcast at investors.talkspace.com and can also be accessed by dialing (888) 596-4144 for U.S. participants, or +1 (646) 968-2525 for international participants, and referencing participant code 2125813. A replay will be available shortly after the call's completion and remain available for approximately 90 days.
About Talkspace
Talkspace (NASDAQ:TALK) is a leading virtual behavioral healthcare provider committed to helping people lead healthier, happier lives through access to high-quality mental healthcare. At Talkspace, we believe that mental healthcare is core to overall health and should be available to everyone.
Talkspace pioneered the ability to text with a licensed therapist from anywhere and now offers a comprehensive suite of mental health services, including therapy for individuals, teens, and couples, as well as psychiatric treatment and medication management (18+). With Talkspace's core therapy offerings, members are matched with one of thousands of licensed therapists within days and can engage in live video, audio, or chat sessions, and/or unlimited asynchronous text messaging sessions.
All care offered at Talkspace is delivered through an easy-to-use, fully-encrypted web and mobile platform that meets HIPAA, federal, and state regulatory requirements. More than 158 million Americans have access to Talkspace through their health insurance plans, employee assistance programs, our partnerships with leading healthcare companies, or as a free benefit through their employer, school, or government agency.
For more information, visit www.talkspace.com.
For Investors:
ICR Westwicke
For Media:
John Kim SKDK (310) 997-5963
Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking, including statements regarding our financial condition, anticipated financial performance, achieving profitability, business strategy and plans, market opportunity and expansion and objectives of our management for future operations. These forward-looking statements generally are identified by the words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "forecast," "future," "intend," "may," "might," "opportunity," "plan," "possible," "potential," "predict," "project," "should," "strategy," "strive," "target," "will," or "would," the negative of these words or other similar terms or expressions. The absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many important factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) our business and the markets we operate in are rapidly evolving; (ii) rapid technological change in our industry; (iii) our ability to secure clients' contract renewals; (iv) our ability to maintain and expand our network of therapists, psychiatrists and other providers; (v) a decline in the prevalence of enterprise-sponsored healthcare or the emergence of new technologies may adversely impact our DTE business; (vi) if our or our vendors' security measures fail or are breached; (vii) changes in healthcare laws, regulations or trends and our ability to operate in the heavily regulated healthcare industry; and (viii) and the other factors, risks and uncertainties described under the caption "Risk Factors" in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 13, 2024, subsequent quarterly reports on Form 10-Q and our other documents filed from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise unless required to do so under applicable law. We do not give any assurance that we will achieve our expectations.
Talkspace, Inc. Condensed Consolidated Income Statements
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
% Change
2024
2023
% Change
(in thousands, except percentages, share and per share data)
Unaudited
Unaudited
Unaudited
Unaudited
Revenue:
Payor revenue
$32,039
$22,112
44.9
$90,492
$55,462
63.2
DTE revenue
9,370
