Full Press Release Details
Talkspace Announces Fourth Quarter and Full Year 2023 Results
4Q 2023 Payor revenue grew 138% year-over-year
4Q 2023 Operating expenses of $23.6 million, down 37% year-over-year
4Q 2023 Net loss of $1.3 million; Adjusted EBITDA1 loss of $0.3 million, an improvement of 97% year-over-year
Provides 2024 guidance with revenue $185-$195 million and adjusted EBITDA1 $4-$8 million
Announces Initial Share Repurchase Program of $15M
NEW YORK, New York - February 22, 2024 - Talkspace, Inc. (NASDAQ: TALK), today reported fourth quarter and full year 2023 financial results.
| Three Months | Full Year | |||||||||||||||
| Unaudited | ||||||||||||||||
| Year Ended December 31, 2023 | Results | Variance from Prior Year % | Results | Variance from Prior Year % | ||||||||||||
| (In thousands unless otherwise noted) | ||||||||||||||||
| Number of eligible lives at year end (in millions) | 131 | 42 | % | 131 | 42 | % | ||||||||||
| Number of completed Payor sessions | 249.8 | 95 | % | 850.6 | 99 | % | ||||||||||
| Number of Consumer active members at year end | 11.7 | (24 | )% | 11.7 | (24 | )% | ||||||||||
| Total revenue | $ | 42,418 | 40 | % | $ | 150,045 | 25 | % | ||||||||
| Gross profit | $ | 20,971 | 30 | % | $ | 74,380 | 23 | % | ||||||||
| Gross margin % | 49.4 | % | 49.6 | % | ||||||||||||
| Operating expenses | $ | 23,554 | (37 | )% | $ | 97,589 | (32 | )% | ||||||||
| Net loss | $ | (1,306 | ) | 93 | % | $ | (19,182 | ) | 76 | % | ||||||
| Adjusted EBITDA 1 | $ | (306 | ) | 97 | % | $ | (13,529 | ) | 77 | % | ||||||
| Cash and cash equivalents at year end | $ | 123,908 | - | $ | 123,908 | - |
(1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of the measure and a reconciliation to the most directly comparable GAAP
measure, see "Reconciliation of Non-GAAP Results to GAAP Results."
Dr. Jon Cohen, CEO of Talkspace, said, "2023 was a pivotal year for Talkspace, demonstrating our commitment to strategic execution. Our achievements and streamlined
strategy have significantly fortified our foundation for 2024. We're poised for substantial growth in Payor revenue and continue to lead in covered mental healthcare. The opportunities in Direct to Enterprise ("DTE") are vast, and with our scalable
infrastructure, we are set for profitable expansion."
Jennifer Fulk, CFO of Talkspace, said, "The strategic measures we've implemented throughout the past year have significantly strengthened our financial foundation and
operational efficiency. Our disciplined approach to cost management and investment in scalable capabilities have not only enhanced our operating leverage but also positioned us well for sustained profitable growth."
Fourth Quarter 2023 Key Performance Metrics
Full Year 2023 Key Performance Metrics
The following guidance is based on current market conditions and expectations and the information available to the Company today:
Share Repurchase Program
The Company's Board of Directors has approved an initial share repurchase program authorizing the Company to repurchase up to fifteen million dollars ($15,000,000) of its
outstanding shares of common stock over the next twenty-four months. The Company may repurchase the shares periodically through various methods in compliance with applicable state and federal securities laws. The timing of purchases, the target
number of shares and the pricing per purchase will be determined by Management at its discretion. Such repurchases will be funded from cash on hand. The repurchase program may be modified, suspended, or discontinued at any time at the Company's
discretion without prior notice.
Conference Call, Presentation Slides, and Webcast Details
The conference call will be available via audio webcast at investors.talkspace.com and can also be accessed
by dialing (888) 330-2391 for U.S. participants, or +1 (240) 789-2702 for international participants, and referencing participant code 2348878. A replay will be available shortly after the call's completion and remain available for approximately 90
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 130 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
For more information, visit www.talkspace.com.
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 factors and
the other 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 10, 2023, 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.
Consolidated Statements of Operations
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||
| (in thousands, except percentages, share and per share data) | Unaudited | Unaudited | ||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| Payor revenue | $ | 25,362 | $ | 10,665 | 137.8 | $ | 80,823 | $ | 36,168 | 123.5 | ||||||||||||||
| DTE revenue | 8,897 | 8,615 | 3.3 | 33,614 | 28,241 | 19.0 | ||||||||||||||||||
| Consumer revenue | 8,159 | 10,961 | (25.6 | ) | 35,608 | 55,158 | (35.4 | ) | ||||||||||||||||
| Total revenue | 42,418 | 30,241 | 40.3 | 150,045 | 119,567 | 25.5 | ||||||||||||||||||
| Cost of revenues | 21,447 | 14,066 | 52.5 | 75,665 | 59,229 | 27.7 | ||||||||||||||||||
| Gross profit | 20,971 | 16,175 | 29.7 | 74,380 | 60,338 | 23.3 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Research and development, net | 3,867 | 4,866 | (20.5 | ) | 17,571 | 21,659 | (18.9 | ) | ||||||||||||||||
| Clinical operations, net | 1,478 | 277 | 433.6 | 6,159 | 6,591 | (6.6 | ) | |||||||||||||||||
| Sales and marketing | 12,846 | 14,128 | (9.1 | ) | 52,544 | 72,842 | (27.9 | ) | ||||||||||||||||
| General and administrative | 5,363 | 11,801 | (54.6 | ) | 21,315 | 36,270 | (41.2 | ) | ||||||||||||||||
| Impairment of goodwill | - | 6,134 | (100.0 | ) | - | 6,134 | (100.0 | ) | ||||||||||||||||
| Total operating expenses | 23,554 | 37,206 | (36.7 | ) | 97,589 | 143,496 | (32.0 | ) | ||||||||||||||||
| Operating loss | (2,583 | ) | (21,031 | ) | 87.7 | (23,209 | ) | (83,158 | ) | 72.1 | ||||||||||||||
| Financial (income), net | (1,330 | ) | (2,851 | ) | (53.3 | ) | (4,245 | ) | (3,740 | ) | 13.5 | |||||||||||||
| Loss before taxes on income | (1,253 | ) | (18,180 | ) | 93.1 | (18,964 | ) | (79,418 | ) | 76.1 | ||||||||||||||
| Taxes on income | 53 | 127 | (58.3 | ) | 218 | 254 | (14.2 | ) | ||||||||||||||||
| Net loss | $ | (1,306 | ) | $ | (18,307 | ) | 92.9 | $ | (19,182 | ) | $ | (79,672 | ) | 75.9 | ||||||||||
| Net loss per share: | ||||||||||||||||||||||||
| Basic and Diluted | $ | (0.01 | ) | $ | (0.11 | ) | 90.9 | $ | (0.12 | ) | $ | (0.51 | ) | 76.5 | ||||||||||
| Weighted average number of common shares: | ||||||||||||||||||||||||
| Basic and Diluted | 167,485,398 | 159,343,311 | 165,039,920 | 156,885,256 |
Consolidated Balance Sheets
| December 31, 2023 | December 31, 2022 | |||||||
| (in thousands) | Unaudited | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 123,908 | $ | 138,545 | ||||
| Accounts receivable | 10,174 | 9,640 | ||||||
| Other current assets | 5,718 | 4,372 | ||||||
| Total current assets | 139,800 | 152,557 | ||||||
| Property and equipment, net | 314 | 677 | ||||||
| Intangible assets, net | 1,786 | 2,529 | ||||||
| Other assets | 321 | 491 | ||||||
| Total assets | $ | 142,221 | $ | 156,254 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 6,111 | $ | 6,461 | ||||
| Deferred revenues | 3,069 | 4,355 | ||||||
| Accrued expenses and other current liabilities | 12,468 | 16,502 | ||||||
| Total current liabilities | 21,648 | 27,318 | ||||||
| Warrant liabilities | 1,842 | 939 | ||||||
| Other liabilities | 85 | 461 | ||||||
| Total liabilities | 23,575 | 28,718 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock | 16 | 16 | ||||||
| Additional paid-in capital | 389,014 | 378,722 | ||||||
| Accumulated deficit | (270,384 | ) | (251,202 | ) | ||||
| Total stockholders' equity | 118,646 | 127,536 | ||||||
| Total liabilities and stockholders' equity | $ | 142,221 | $ | 156,254 |
Consolidated Statements of Cash Flows
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| (in thousands) | Unaudited | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (19,182 | ) | $ | (79,672 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1,196 | 1,357 | ||||||
| Stock-based compensation | 8,395 | 12,116 | ||||||
| Remeasurement of warrant liabilities | 903 | (3,131 | ) | |||||
| Impairment of goodwill | - | 6,134 | ||||||
| Increase in accounts receivable | (534 | ) | (4,126 | ) | ||||
| (Increase) decrease in other current assets | (1,346 | ) | 5,080 | |||||
| Decrease in accounts payable | (350 | ) | (968 | ) | ||||
| Decrease in deferred revenues | (1,286 | ) | (2,831 | ) | ||||
| (Decrease) increase in accrued expenses and other current liabilities | (4,034 | ) | 4,862 | |||||
| Other | (155 | ) | 102 | |||||
| Net cash used in operating activities | (16,393 | ) | (61,077 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (151 | ) | (350 | ) | ||||
| Proceeds from sale of property and equipment | 10 | 33 | ||||||
| Net cash used in investing activities | (141 | ) | (317 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | 2,707 | 3,181 | ||||||
| Payments for employee taxes withheld related to vested stock-based awards | (810 | ) | (853 | ) | ||||
| Payments for reverse capitalization, net of transaction costs | - | (645 | ) | |||||
| Net cash provided by financing activities | 1,897 | 1,683 | ||||||
| Net decrease in cash and cash equivalents | (14,637 | ) | (59,711 | ) | ||||
| Cash and cash equivalents at the beginning of the year | 138,545 | 198,256 | ||||||
| Cash and cash equivalents at the end of the year | $ | 123,908 | $ | 138,545 |
Non-GAAP Financial Measures
In addition to our financial results determined in accordance with GAAP, we believe adjusted EBITDA, a non-GAAP measure, is useful in evaluating our operating
performance, and our management uses it as a key performance measure to assess our operating performance. Because adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this
measure for business planning purposes and in evaluating acquisition opportunities. We also use adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial measure,
when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. We
believe that the use of adjusted EBITDA is helpful to our investors as it is a metric used by management in assessing the health of our business and our operating performance. However, non-GAAP financial information is presented for supplemental
informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
Some of the limitations of adjusted EBITDA include (i) adjusted EBITDA does not necessarily reflect capital commitments to be paid in the future and (ii) although
depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these requirements. In evaluating adjusted EBITDA, you should be aware that in the future we will incur expenses
similar to the adjustments described herein. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. Our adjusted EBITDA may not
be comparable to similarly titled measures of other companies because they may not calculate adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure. Adjusted EBITDA should not be considered
as an alternative to loss before income taxes, net loss, loss per share, or any other performance measures derived in accordance with U.S. GAAP. When evaluating our performance, you should consider adjusted EBITDA alongside other financial
performance measures, including our net loss and other GAAP results.
A reconciliation is provided below for adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP. Investors are
encouraged to review our financial statements prepared in accordance with GAAP and the reconciliation of our non-GAAP financial measure to its most directly comparable GAAP financial measure, and not to rely on any single financial measure to
evaluate our business. We do not provide a forward-looking reconciliation Adjusted EBITDA guidance as the amount and significance of the reconciling items required to develop meaningful comparable GAAP financial measures cannot be estimated at this
time without unreasonable efforts. These reconciling items could be meaningful.
We calculate adjusted EBITDA as net loss adjusted to exclude (i) depreciation and amortization, (ii) interest and other expenses (income), net, (iii) tax benefit and
expense, (iv) stock-based compensation expense, (v) impairment of goodwill, and (vi) certain non-recurring expenses, where applicable.
Reconciliation of Non-GAAP Results to GAAP Results
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (in thousands) | Unaudited | Unaudited | ||||||||||||||
| Net loss | $ | (1,306 | ) | $ | (18,307 | ) | $ | (19,182 | ) | $ | (79,672 | ) | ||||
| Add: | ||||||||||||||||
| Depreciation and amortization | 283 | 351 | 1,285 | 1,357 | ||||||||||||
| Financial (income), net (1) | (1,330 | ) | (2,851 | ) | (4,245 | ) | (3,740 | ) | ||||||||
| Taxes on income | 53 | 127 | 218 | 254 | ||||||||||||
| Stock-based compensation | 1,994 | 2,730 | 8,395 | 12,116 | ||||||||||||
| Impairment of goodwill | - | 6,134 | - | 6,134 | ||||||||||||
| Non-recurring expenses (2) | - | 2,947 | - | 4,880 | ||||||||||||
| Adjusted EBITDA | $ | (306 | ) | $ | (8,869 | ) | $ | (13,529 | ) | $ | (58,671 | ) |
(1) For the three months ended December 31, 2023, financial (income), net, primarily consisted of $1.6 million of interest income from our money market accounts
partially offset by $0.3 million in losses resulting from the remeasurement of warrant liabilities. For the year ended December 31, 2023, financial (income), net, primarily consisted of $5.3 million of interest income from our money market accounts
partially offset by $0.9 million in losses resulting from the remeasurement of warrant liabilities. For the three months ended December 31, 2022, financial (income), net, primarily consisted of $2.7 million in gains resulting from the remeasurement
of warrant liabilities. For the year ended December 31, 2022, financial (income), net, primarily consisted of $3.1 million in gains resulting from the remeasurement of warrant liabilities.
(2) For the three months ended December 31, 2022, non-recurring
expenses primarily consisted of a $5.5 million accrual for estimated litigation expenses, partially offset by one-time savings related to marketing expenses. For the year ended December 31, 2022, non-recurring expenses primarily consisted of a
$5.5 million accrual for estimated litigation expenses.