TALK - Earnings call transcript Q1 2024

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Operator

Thank you for standing by. My name is Benjamin, and I will be your conference operator today. At this time, I'd like to welcome everyone to Talkspace First Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would like to turn the call over to Jeannine Feyen, Director of Communications. ahead. go Please

Jeannine Feyen

Talkspace's welcome to First and the Earnings Call We'll posted Conference to of the Good earnings you our of to through XXXX. the results. on be release Quarter the the had website I for and access presentation presentation morning, use press Talkspace's IR walk hope opportunity remarks. you've today's

take Fulk. Dr. your Management are call and Cohen; today's and Jon we'll our remarks, questions. CEO, then offer will CFO, Leading their prepared Jennifer our

Certain to call release non-GAAP earnings are measures Reconciliations are expressed basis and measures discuss on our we'll this impact and items. on on have exclude one-off non-GAAP in a been of our these adjusted website, of included the talkspace.com.

we which regarding information discussing that I priorities will goals, be may forecasts, statements other also anticipated today, want our and plans, and targets strategic forward-looking remind results. include to financial you

judgment of expect. subject results SEC today's results risks results on these that best described future could cause we materially and statements to are our affect may recent results factors about are our actual actual earnings differ as reports current from performance press to uncertainties release. most our that what our represent Important and and While future many today,

our X. harbor Slide For more information, please review safe disclaimer on

to Now Jon I Cohen. turn it Dr. will over

Ryan Daniels

of Thanks, Jeannine, set continued XXXX driven results, and business. strong thank you another by all across for began joining us with today. We execution the

maintain is of to and up in strong a growth This momentum rigorous revenue focus million, going in of which adjusted cost of on upon, confident ability we XX% delivered continuous forward. dedication our are of base our of This and $XX.X structure to history our the to the the marks profitability focus provide in and team. The our top we profitable quarter our continued and line year-over-year a $XXX,XXX, build quarter, our testament EBITDA XX-year first company. an

in the strategic first our quarter priority. by cover me progress Let

increase and grew our XX% is utilization. expand rates capture revenue the category, payer our lives, year-over-year. result growth of to increased efforts covered focused in First, This our

Anthem announced Our and growth we which [ as in November, expansion to into strong ] contributed lives, revenue the expected. quarter is our commercial progressing last

to our our work member metrics to from also enhance product acquisition continue rate and and investments both marketing favorable see capture We utilization.

In we payers conversations into have value-based entered addition, strategic regarding with arrangements. other

Talkspace increase efficacy the discuss delivery The competitive improve we our and mental report to a as as to of and health built platform was these measure advantage quality continuously ability parameters care, them arrangements. value-based in

lives. opportunity a is as million XX mentioned, Medicare, we with significant

within has discussions advanced and states go expect in multiple very than The reception their to traditional launch. Advantage to within expand We this networks. been more from later Medicare XX we are live positive, payers lives month Medicare, million representing at in

with to the by in as covered health the health expect most will care. platform to we States. We all end continue Medicare, across cementing the behavioral the year, further XX the network behavioral lives affordable be United company the With states lead continue to of in Medicare advancing our as position with

referral XX on and and ] and Notable our expansion with collaborations a and partnership new in our Madison an partnerships brand expanded We've of cove NRx [ grades. ZocDoc company significantly telemedicine our also provider keeps, [ specialty directories health ] XXXX. operating ], include [

and health the clinically with comprehensive holistic high-quality member services. with members entire marketplace, platform will providers health health and benefits our collective This launched offering accessibility and access curated digital growing whole suite we goal and of spectrum expanding of the across members resources to Additionally, to a vetted care. and provide

Fit ]. Aura, Evernow, [ and On include partners first those of Some Conceive

enterprise. direct to to Moving

we are around the our Results months on engagement Baltimore and indicate City in launched in by encouraged offering the reaching progress that of York first are We QX. early and New effectiveness are well populations therapists, Talkspace our intended. thousands and risk underserved previously know we Many alerts as kids that as diverse already suicide help have as their from working of communities. received

has We lives. therapist of made dramatic a crisis also for several intervention impact know teens on their in occurrences where

very other already having the X providing their with platform to reception the are will on commitment are of We where for exemplify and a high. The through crisis. inbound they addressing been teen partnerships, received care impact access are entities quality interest a all. these initiatives have has result as better We we of These the that health proud from outcomes mental them our public kind, drive health we these of students. teams first to believe meets

validates to savings, potential released number time ] part environment workdays just employees to demonstrate ROI value we ability to by well aimed to review businesses current at that. their category, due On with month, our last we competition. health impact headwinds employee in enterprise offering commute respect related is savings to missed budgets the in was the absenteeism This new continuing a We our and in of mental enterprises This virtual and attrition. respect measure meaningful services doing provides to depression. renewals a of to wins as the and of tool of to [ validated number employer the QX, have And experienced independently the account ability also DTE calculator due savings differentiator. X side increased an while as believe our with did we savings inflationary in employers for with areas: medical

I'd the platform further new investing of to and call teens, use video any need because with across up. anywhere, that including couples, their stages category, life, and teens members soon with their be for attractive to live all so to also multiple remains in psychiatry from platform DTE including can the to seniors, enhance capabilities our offerings are and comes comprehensive partners the market. audio text-based therapy of that focused members anytime nature and Talkspace leading therapy that for the modalities, features and for our digital like We technology of out specifically on

growing pipeline, comes about look the when to DTE teens particularly sharing and to excited year. throughout forward it more vertical our are We the

Moving to our provider network.

over providers sequentially. of out ended X,XXX build to with X% quarter and the network up continue our therapists, We

to see in join to were American believe the our continue strong investments continue experience enhance highlighted testament in deliver the Association. the make exceptional study recently Talkspace We platform to we to and of the this outcomes. in outcomes provider Medical network a is published to and These clinical Journal a the demand

warm machine more Using Talkspace stronger messages what XX to therapy the between quality and and outcomes. million [ higher that and from therapist the and the that supports members' overall. patient's analyzed was, find the and experience the their relationship the licensed learning, we ] the empathetic outcomes therapists know, than satisfaction higher more the the supportive, the of de-identified clients provider, with with the This better researchers

to We and on members innovation providers. our continue also of the our focus both for of platform benefit the

work, exceptionally launched to positive, response and During the clinicians. comprehensive, burden note we capability generates time that estimate our from reduces it X members. administrative summary spend the been they providers a our could with week the has that a of an we provider, The administrative smart [ quarter, on therapy succinct up AI on per providers for initial the is hours optimizing for ], eliminating which full-time

deliver on improve ability other is better workflow care. features team enhance multiple AI working clinical therapist to the The to and our

new so of continuing we tools such While secure and to to do and course, we data a responsible protects clinically in as invest committed manner members. these, the will, integrity of in that our privacy are led,

of improve emblematic member our commitment Investments but and such experience and innovation productivity, as are also these not the only operational excellence. expand provider to

of make to In offerings. captur payer these will proposition rate DTE enhancements to to addition new the initiatives, continue increase utilization investment technology digital value and we and AI capabilities in Talkspace's supporting

Jennifer, turn and more Mental Month, Health industry the of join that call to over making quality underscore Awareness others health like across accessible. I'd to note mental May importance the self-care to Before and the we care I is

This month, a new we brand investor on corporate identity our websites. unveiled and have

beliefs life support is everyone both and the to company's that routine mental and that health brand therapy mental complete access mental belief and that my a positive be health. physical health feel health part deserves and It captures new Our design-forward bold, is that anyone's of services. a core look should high-quality health is

As everyone everyone health should physician, therapist. primary to access a have mental to care access a should have

Awareness You therapists. people that campaign telling Health own our the features stories to campaign our The while therapy. will Talkspace pivotal gained Mental encourages members insights of Month with through they talk see their profound it their out and working

relationship You ] our teaching with the new [ spot, differentiator highlighting on member the therapist years' is that experience. for us, and a see XX average, over which therapists key and will have, also our TV

With turn the over I'll to that, Jennifer. call

Jennifer Fulk

Jon, morning, and good Thank you, everyone.

the result basis, comments otherwise I details be execution on quarter highlights first then our reflect company our outlook. We financial the continued of more which on our strengthening our on financial primarily unless as XXXX quarter cover today are results, and performance year-over-year from will a give with results results priorities. My across will based first noted. pleased of

increase our first basis. XX% in Total year marking profitability EBITDA revenue a ago. $XXX,XXX for approximately $XX.X quarter, the from this a was million, Adjusted the quarter of on was first first quarter

by Payer sequentially increase sequentially by payer to completed [ And category. EAP grew completing unique health XX% a XX,XXX. and to prior behavioral members year-over-year sessions grew versus Moving year was X% XX% XX% to $XX.X million, year-over-year and XX% sessions by period. ] revenue Payer results by and XXX,XXX. the members

As significantly Jon XX previously commercial highlighted, incremental quarter lives. benefited the million covered from the of launch first the December

rate the utilization enhancements In media gains funnel growth the the in driven capture basis by upper and there improvement continued addition, primarily same marketing and the as sessions per an as product. XX% to well optimization same a XX% member. year, These compared in across was were of period last

last category, was to [ from first team and in sequentially, year direct-to-enterprise due progress last million, In $X.X ] the revenue quarter. primarily up launches XX% our quarter XX% recent

partially these attrition of new accounts. As noted, Jon legacy launches offset were by

XX% the out where In need quarter. sequential lives have thereby first to more $X the decline substantial revenue primarily their The decline pay for was members stemmed the decrease. from members which pocket. category quarter, the XX% a of of was a increase will This fourth million reducing for and qualify pocket, coverage, pay during covered year-over-year out in consumer to

members. creates consumer payer focus drives strategic aligns increasing this category higher long-term shift has value with our revenues, it impacted and on While conversion from rates greater coverage,

profit. gross to Moving

year shift Our versus prior expected XX.X%, consumer profit payer last revenue category, first mix the as and categories. lower Gross quarter gross first gross for increased margin has than net to $XX.X million. lower due the the DTE further margins year quarter towards was than to XX% which

Turning to operating expenses.

expenses Our were million. the GAAP year-over-year reduced $XX.X for to quarter first X% operating

amounted same million compared year. $X.X QX of a stock-based expenses the approximately Excluding our to to reduction last million, reflecting compensation, $XX.X period

includes This structure. costs. several we've organizational all Over quarters, agility improved enhancing operational in strides overhead past optimizing cost our significant has reduced and the which efficiencies made across our departments,

Additionally, that we marketing high have acquisition. strategically on activities our visibility and with focusing to enhance brand invested initiatives objectives, member in align our growth ROI

also to our ongoing and better invested a supporting scaling have our enhancing platform We accommodate responsive excellence. improvements service and robustness These offerings reflect operational sustained in to and efficiently. expand growth and scalability our operational framework, its capabilities, lean growth commitment fostering

improvement nonoperating GAAP Moving net period loss million, million immaterial year-over-year. Adjusted $XXX,XXX, $X.X of a ago. same versus the year to did a $X.X benefit few the in items. profitability. was EBITDA EBITDA first an was quarter improvement a Adjusted million accounting from $X.X

However, EBITDA in quarter. have adjusted positive still excluding would we achieved items, the a these

end and $X.X cash the employee the from payment quarter, had in to by QX XXXX. million sheet. Turning driven the cash primarily equivalents sequentially the and down bonuses at balance corporate of We from million of $XXX first

payer we during million Finally, $X $XXX established expect we full the for government we in on remain financial continue bring fourth and to the commercial to and between revenue and our guidance commentary as year. adjusted for million confident our lives enthusiastic both and continue EBITDA We [indiscernible] between and covered $XXX through quarter plans, $X more million million remain business Medicare.

impact from we value potential New within supported our to by teens pipeline early and And of in our our employer expand initiatives are the encouraged in ongoing the and Baltimore. positive York the by DTE, vertical,

heavily and revenue-generating to the quite more prospects the expect a The these towards and quarter-to-quarter, of adjusted weighted now implementing remains year. converting be half variable EBITDA as result, second of we timing clients to

operational affordable, today's, and advancements for high-quality our the recent in profitability business. coupled with summarize, for categories. in significant of growing reinforces the long-term care, our and DTE our both demand direction mental To enthusiasm strategic our sustainability The bolsters and of health achieved payer confidence quarters accessible discussion we've the

for we With that, questions. open will the call

Operator

the with from TD of first comes line Cowen. [Operator question Instructions] Charles And Rhyee your

Charles Rhyee

opportunity roll Medicare already then you the about opportunity this to ask occur? the gave would as of to we perhaps how secondly, have quarter? you wanted think last that out And of I in year. much And how perhaps, long-term that expect about kind contemplated next . guidance you

Jon Cohen

Charles. So

as end of to that states launch we all So we're the very then going we'll states. XX-ish short will by have have time. XX of period within the stated, a And year,

will be standard that for Now Medicare.

add are million, split as discussions $XX deep both it's you Medicare. and each, to Advantage that in, on plans We almost heard, with fairly $XX Medicare to sides of million

We have for go-to-market plan strongly Medicare. a developed

As most you to Medicare know, the people or it's XX-year-old Group. significant really providers are new for there because over national no

figure Medicare progress be So work patients, I a this will them the what of as how in we make like aware will call up sign to out we service.

the of terms it's and So in -- guidance...

Jennifer Fulk

Charles. that, on touch I'll Yes.

with Medicare expansion the as component a covered come of So had that. describe that several and our long-term lives would I it levers, guidance

really long-term the utilization lives payer rate as payers, capture that within both long-term So the have in specifically on growth we was same remember, direct-to-enterprise and category. our as in weighted well the basis that guidance in

factors number levers, of X Medicare But being in. weigh had categories, X those we across So a those one. really

Charles Rhyee

at asking fair the for maybe Would sort given was per assumption? look you Okay. much like, the more in the I Medicare put of the haven't and that here, like I way that a guess seems opportunity be perhaps guide, was se. it question I

Jon Cohen

Yes.

fairly I metal opportunity, that given would lonely yes, either or/and you've talk millions we're me of mean large fair or I of with lives it's about heard medical a issue. a are have Medicare -- think XX% patients -- adding I assumption. diagnosable a depressed be think health

schools to a but happen out And of strategy, got into figure out. large. to it I really we know same the we thing like go-to-market the the bit when we So us in opportunity little I is took Medicare. compare to going the services first to to providing this think the time figured teens is

Charles Rhyee

clarification. a is a more that then effect? and just bit about And relation adjusted that sort timing as Is back little Great. Jennifer, that York New of Baltimore, you're back what's up being and City a just ramping talked the half half? weighted. EBITDA driving in you -- to

Jennifer Fulk

for And we lives a from dependent Yes. And in payers, pipeline there we be contribution. the what and factors I'll that having in saw the covered And for to come ramp year guidance added as back nice first also of was said was to quarter, direct we those 'XX. covered quarter said year, X are a -- -- in turning, were on we December specifically of the to then issued the that the the our we in early those growth enterprise, lives. the going guidance maturing particularly

lumpy We have from and also was to variability it be quarter-to-quarter. said that going we'd

So that. that's for the context

Operator

Ryan Your next the Daniels question comes of from William line with Blair.

Jack Senft

Daniel. Ryan on is Senft Jack for This

forward? But from of should I mix for shift of about margins think first, So it you been. how know specifically, to just it's I remainder think know the has kind we how going and guide the gross this? year, should but don't about we this down

Jennifer Fulk

Jack. Yes,

the I I'll I So in line. to it XX% in the percentage back anticipate -- be growth you profit that but reference to what category payer our making originally come a rate, revenue payer we guidance. of is to XX%, didn't we first and saw up, as said expect lower we still to larger gross earlier, a the grow at given top that know the quarter,

we to a at to have that don't make moment change guidance. So the

Jack Senft

were respect the there? a really you follow-up. quick remarks, of you and Can front main a inflation mentioned seeing to competition. your know in kind that -- on headwinds attrition. the increase just account deeper the in And drivers And just in bit generally, an what with dive I guys Understood. some and prepared competitive you're

Jon Cohen

Yes.

So quarter. on revenue in first the grow I'll off, DTE XX% that reiterate did

I health issues reasons are There don't it's restraints So way but don't some that's to national. of both they that one or of behavioral decided specific for point benefit really us, we an another mental through there and that payer, want budgetary have taking health that a employers. consideration with issue do tried versus sure want constraints to benefits. we're product seeing on the for versus attrition. and There anything employers into don't benefits is reason are which for through is to attrition. have There multiple offer there frequently them, some And that their are thing Talkspace one competition the their wins and is -- are new international anymore. -- but people make they -- good realize that I course,

So that DTE is they'll a having to opposed sometimes And they then as not say, sometimes relationship. as they what was. they thought move towards utilization it well,

multiple, I companies is reasons there's the about about talk So mental that their evaluate all how reason benefit. multiple health

one just or not it's So the other.

Operator

from And comes Davis line question the Barclays. of your next Stephanie with

Stephanie Davis

you did about addition talk on on changes much as bit we and go this March, a When potentially as of of the a some given durability talk quite we impact retention on saw populations how you duration increasing increases could duration the in covered that? Can have platform these that data about the this maybe don't in newer some member of you benefit. you more

Jon Cohen

people of on sessions and that to platform we're the through side, very have see back time know the to are of we -- the second. coming the do. don't they Sure. give length strong evidence number are what do staying who on the to on But that the but longer consumers, benefits absolutely that specifics, we people we BH platform to not seen are Jennifer relative I'll go a amount in in I know And -- who payer continue who than the of We clear. are is going relative to consumers. we increases data

Jennifer Fulk

of I'll and right? on platform, course, session covered growth the the been just really we but lives, driven see point progress that in Stephanie, Of back, of provide, are that also a all that's sessions, but utilization. completing you against course, the also to total metrics the them, members consistent, that's by

only to moved of of to I the I of these direction levers, but metrics. it believe got across when positive additional good funnel, like within comes in mentioned, product we've features. top line all We've the And both also sight

of couple some the that feel teams So to those improving, capture really got Jon it and on further the them throughout focus in the within capture comes utilization the we we've do just levers and features. But there's the pull a interesting referenced -- friction funnel, place, like reducing rate. to the rate when increasing

I'll us. on category for a -- this We just Medicare. new comment is TAM and

these And relatively lot testing staying of but we population be so that the in the launch lives we figuring will for outlook things year. our here as -- we're and what stayed new we've a rest of works in out just conservative

Stephanie Davis

you how terms -- And what as your of But that's up you are structuring big guidance. planning are in rollout? of factor based thinking you, not new thinking you the order how about assumptions in the really to on, coming populations you're us get I a on these this? how -- ramp to mentioned in are know on And

Jon Cohen

the On commercial? or commercial? the On Medicare

Stephanie Davis

On the Medicare.

Medicare side. On the

assume it's new utilization. sort a in? thinking know what Just [indiscernible] of do We you so durability, don't population -- the what

Jon Cohen

the marketing [indiscernible], on the to involves multiple in actually As we I patients. levers what Jennifer strategy, will begin that to terms both as Medicare at which test side directly conservative earlier. uptake of to multiple A going the mentioned and significant relatively look being as be we're said, think we go-to-market we're

also to of payer. where as thinking time, honestly, all -- secondary point quite fair we us amount us we're can and the I've Medicare address a So time actually it's through build a before, nuances collect taken we get the this, discussed a and and to of lot spend of

But be Medicare is, it a will test. on patients the begins, get launch itself as board to it

work. quite quickly have relatively move to honestly, the and ability, that don't things to We test work

texting there. today, said, relative the I as use. We the schools. social tell do know same what -- with As I sit they you We we here what what with I fair of platforms platforms thing know I they going exactly media to can't is to But for use. We very a them. a other are also know use, big video what's number of know We know what that we reasons. tech variety them But because versus savvy. they're

decisions approach going that to how of into the about the gone All has we're market.

Jennifer Fulk

what synergy I'll do. the is just we add And important our to brands. else with On we everything broad because real maybe get X, Yes. our marketing quick and it's messages media with do day just

you just will benefits you that patient, you're So insurance an for when therapy, team Medicare, ad your to if now put see in or see you come have cover that you if might Medicare talkspace.com, a that looking are if covered. where you, you now

on X, and of the size we that from of just just benefit So expanding. that the lives broader day rate our capture get covered

Stephanie Davis

Super right. And helpful. All last of one me. out

this? quick How the house? out on to as more way bit Is do thinking a of kind the to the of cost is maybe on coverage. as Or a you something importance that Just from the of declines this payer folks you some your BXE there question focus are repurpose the side? [indiscernible] just a on payers about shift the structure you

Ryan Daniels

took we relative to number the -- people of the within So fair out operation. commercial I off, size first taken a we've last say, year of would the

side honestly, should relative I the DTE be what employers, reconfigured side, going city the universities, now like. who's organization on with of it and talked new I've in which new looks been a We that people, months The subcategories, teens, after colleges, close here states, terms DTE think have organization is year we're is counties. leadership about, to to now, right where what it remember, to

we approach a believe very and opportunities thinking as about very and currently built. -- now all that are honestly all So a organization substantial on I there the side DTE of to already large just with we be a the configured employers, pipeline the opportunity it to continue that very commercial those is not

in Or DTE in much more there'll actually, don't I much change the currently it's think structured. more there won't DTE. So as no, change organization the be be

Operator

I Cohen That back over concludes the closing for conference will Q&A turn now remarks. our session. to Jon

Jon Cohen

want reiterate I to quarters. believe modalities over closing, innovation, position Comprehensive elderly. in sustained the by our last our our we capabilities serve industry all the built to market, the teens to continue In you. unique demographics, offerings Enhanced in reflected and Thank momentum from set standards. to X are

quarter's our mission our mental morning. you commitment joining care us results again This underscore of to health expanding this access. Thank for

Operator

Thank gentlemen, Ladies you concludes and today's that all for call. joining.

disconnect. now may You

Talkspace (TALK) 7 May 242024 Q1 Earnings call transcript