Talkspace, Inc. (TALK) Earnings

Management highlights

- Strategic pivot from Consumer model to Payor fee-for-service, with Payor Sessions annualized growth of about 56% since 2022. - Payor growth driven by strategic initiatives like increasing awareness, high-intent referrals, deepening Payor partnerships, and expanding offerings within the Payor channel, covering over 200 million lives through insurance and employer benefits. - Youth programs like Teenspace in major markets showing strong impact, with over 45,000 teens enrolled in NYC, 66% showing clinical improvement. - AI utilization to improve business operations and patient journey, including TalkAI agent development for mental health support, in beta testing with expectation to be in market late in Q2. - Partnerships with Payors on initiatives like directory integrations, single sign-on, and embedding scheduling, and expansion of offerings such as psychiatry business, military and Medicare enrollment, and acquisition of Wisdo. - Curating clinician network to optimize utilization and improving patient journey in psychiatry, including integration with Amazon Pharmacy.

Guidance

- Expect revenue in 2026 to be in the range of $275 million to $290 million, representing 20% to 27% year-on-year growth. - Expect adjusted EBITDA to be in the range of $30 million to $35 million, representing growth of 90% to 122%. - Payor revenue growth driven by activation strategies and existing members on the platform. - D2E expected to grow in low single-digit percentages, with Q1 revenue sequentially lower than Q4 due to renewals and attrition. - Consumer revenue to continue to decline but with less material impact in 2026.

Segment performance

For the full year 2025, Talkspace delivered revenue of approximately $229 million, an increase of 22% year-over-year, driven by payer growth of 38%. Adjusted EBITDA grew from about $7 million in 2024 to $15.8 million in 2025, representing an adjusted EBITDA margin of 7%. In the fourth quarter, total revenue was $63.0 million, up 29.3% year-over-year. Payor business revenue was $47.7 million, up 41% year-over-year, with sessions at 450,000, a 36.3% year-over-year increase, and unique active Payor members at 124,000, a 29.7% year-over-year increase. Direct-to-enterprise revenue was $11.6 million, up 21.8% year-over-year. Consumer revenue was $3.7 million. Gross profit was $26.9 million, with a gross margin of 42.7%. Operating expenses were $23.1 million, with operating expenses as a percentage of revenue at 36.7%. Adjusted EBITDA was $6.6 million, with an adjusted EBITDA margin of 10.4%.

Risks & headwinds

- Actual results may differ materially from expectations due to many risks and uncertainties. - Risk of not achieving expected market acceptance for TalkAI agent. - Potential impact of Payors' policy changes on business.

Analyst Q&A

• Q: Congrats on a solid quarter. Just around your large language model that you're currently in beta testing, what do you see as the key challenges in getting people that are currently using the general purpose large language models using yours as you roll it out?

  A: Thanks, Steve. This is obviously very much work in progress. As we stated, we're in beta with people registering as we speak to go through that testing of what this thing looks like. Where this thing is positioned as a place to have a serious conversation where your information is protected and where you have both security and safety behind you, I can't tell you yet because it's such early days about what kind of movement we'll have, what kind of people will use this versus the other LLMs. That is just absolutely a work in progress. So my message right now is to stay tuned. We will have a lot more information once we finish the beta. We've seen a little bit early results. But right now, my answer really is to stay tuned and let's just see what happens. It is being -- it will be positioned as somewhat different than the general purpose LLMs. I'm not obviously trying to [indiscernible]. I'm just telling you it's just early days, and we have a lot of interesting information right now, but we're certainly going to talk about it more as the next several months evolve.

• Q: Congrats on a great quarter. Maybe just to sort of double down on the Directory integrations. Obviously, showing some great success with the first Payor partner that you've rolled that out with. Can you just remind us on sort of how many additional sort of deep integrations you'll have sort of with additional partners this year? And I guess, what have you learned from the first partner that can be replicable to sort of continue that strong utilization with you?

  A: Yes, I can start, and then I'll hand it over to Jon. I mean on the first Payor, like you said, it's been extremely successful. They're happy in so far as they're bringing a much friendlier consumer experience to their members and making it easier and candidly less frustrating, right, that sort of finding your care journey. And we view it as, obviously, from a CAC perspective, very accretive, right, to get that incremental conversion and additional traffic coming from the Payor. So it's early in '26, Ryan. So we're obviously working hard to do more. I would say line of sight we have today, there's probably, depending on how you look at it, call it, 3 directory integrations we're doing in the early part of '26. So for sure, at least 3. I think in terms of what that represents materiality-wise versus one last year, it's probably about similar size all in all, population-wise, maybe a little bit bigger in the aggregate, the 3. So as big or bigger of an opportunity as we saw with the integration in '25. What we're learning is, it's interesting. Some of these directories, it's sort of the first time they're doing these integrations. So we are sort of in this beneficial position where we're working in tandem with them on the design of how the directory works, which obviously gives us a level of influence to sort of shape what that experience looks like from our own knowledge, having done this, right, for a decade as a marketplace business ourselves. So they really appreciate the sort of edification we're able to bring there, but also helps us candidly, in terms of the algorithm, what helps screen providers hire? Is it quality? Is it schedule and sort of how that sort of search algorithm is designed, we sort of have a seat at the table for that.

• Q: Congrats on a strong year and outlook. Jon, at the end of your comments, you said something about momentum already here in '26. And I was just curious if you could go a little bit deeper in terms of what you're seeing already through almost 2 months, the basis of that comment?

  A: I would -- the comment is because at the beginning of the year, it really does somewhat change things because people coming back on, they're looking at the assurances, they're beginning to reengage at a bunch of different levels. But most of what we're gauging everything is people coming on to the platform and doing sessions. So my comment was purposeful that we're continuing as we exit 2025 to see the momentum continue early on in '26.

• Q: Congrats on a great quarter. Maybe just to sort of double down on the Directory integrations. Obviously, showing some great success with the first Payor partner that you've rolled that out with. Can you just remind us on sort of how many additional sort of deep integrations you'll have sort of with additional partners this year? And I guess, what have you learned from the first partner that can be replicable to sort of continue that strong utilization with you?

  A: Yes, I can start, and then I'll hand it over to Jon. I mean on the first Payor, like you said, it's been extremely successful. They're happy in so far as they're bringing a much friendlier consumer experience to their members and making it easier and candidly less frustrating, right, that sort of finding your care journey. And we view it as, obviously, from a CAC perspective, very accretive, right, to get that incremental conversion and additional traffic coming from the Payor. So it's early in '26, Ryan. So we're obviously working hard to do more. I would say line of sight we have today, there's probably, depending on how you look at it, call it, 3 directory integrations we're doing in the early part of '26. So for sure, at least 3. I think in terms of what that represents materiality-wise versus one last year, it's probably about similar size all in all, population-wise, maybe a little bit bigger in the aggregate, the 3. So as big or bigger of an opportunity as we saw with the integration in '25. What we're learning is, it's interesting. Some of these directories, it's sort of the first time they're doing these integrations. So we are sort of in this beneficial position where we're working in tandem with them on the design of how the directory works, which obviously gives us a level of influence to sort of shape what that experience looks like from our own knowledge, having done this, right, for a decade as a marketplace business ourselves. So they really appreciate the sort of edification we're able to bring there, but also helps us candidly, in terms of the algorithm, what helps screen providers hire? Is it quality? Is it schedule and sort of how that sort of search algorithm is designed, we sort of have a seat at the table for that.

• Q: Jon, I wanted to ask a question, right? You kind of made the comment earlier, right? A lot of people are now seeking out information, but they're not just going to a search engine anymore, right? They're going into ChatGPT or something and asking them. And so you've talked about how do you optimize to be picked up by these LLMs so that people can get directed to you. And it sounds like is this like the new SEO? Like is even search engine optimization as much of a thing? Is it really now how do you optimize to be picked up by LLMs? Because it's something that we've heard from other companies as well more recently. And then connected to that really is, how do you then connect from maybe that kind of initial outreach by patient who is -- a patient who is going through a chat like an LLM or a ChatGPT or something and get them to your AI bot, right, which would be more a protected environment for patients. How do we bridge those 2? Or how do we get them to search you first?

  A: Right. So great question. So actually, just -- I don't know if you've seen it, there's an article in New York Times this morning all about search engine optimization through LLMs. And I have talked about this. We have put in place. Our marketing folks have been aware of this for quite some time. So we actually have people who just are working through LLM search strategies so that we do appear on whether it's Gemini or Claude or ChatGPT. So we have been optimizing -- there's another term for it. It's called generic -- I think it's called generative optimization as opposed to SEO. But however, saying that we are not only aware of it that what we put in place mechanisms to make sure that people do find us. And we track it also, by the way. So we have seen this go up month to month to month. People who are finding us on the other LLMs, the number of people, it continues to increase month-to-month. So one, that's what we're doing on the SEO, very comfortable about where we are relative to that strategy. In terms of people finding us is an interesting question because we have not gone to market yet. We do have a fairly fully baked initial marketing plan so that people will find us depending on what they're looking for. Now there's a lot of nuances to that. We don't have time here to probably talk about all that. But meaning are they really looking for therapists? Are they looking to have a serious conversation. There's a lot of different things that people look for. We -- so as I mentioned a couple of minutes ago, our view on this is that if you want to have a serious conversation that's confidential, particularly around relationships or other issues that may be bothering you and your information is protected, if you're protected, and we have significant clinical background, that people will then make a decision about where they will go depending on what they want. We don't -- the answer, of course, is we don't have the answer yet. But we are being positioned. We are -- we'll start off being positioned in a little bit different mode than the others. But the -- I can't even say the jury is out because we haven't gone yet. So we will know more, as I said, once we finish the beta in terms of why people are coming to it, how people are using it, which will be a significant bunch of data points about how we relatively -- how we go to market after that.

• Q: As we think about how you guys are mapping out driving higher utilization into 2026, what are the 3 or so most important levers you feel you have at your disposal to help drive that?

  A: Well, no particular order. We've talked at length already about the directory integration. I think you've heard me talk about the change that we made had a very, very significant impact on the number of people that are booking checkouts, booking for session, second and third. That's been a really big [ add ]. And so I think as I talked about before, that's a never-ending journey. There are literally -- you can't believe how many more things you could do to test and to change to make sure that you actually get more people through to the funnel and through the funnel. So that's the second. I would say, again, no particular order, the third is partnerships. You've heard us talk about the growth in both Amazon, Zocdoc and the 20-plus other partners that we've announced. We will continue to lean in on the partnership expansion because a lot of it -- it's beneficial for both the partners and for us to get the referrals. So I would say that those 3 levers, journey, partnership and certainly directories. And probably in a general sense, [ that number ] is just our ongoing relationship with the Payors.

• Q: A couple of questions here. First on the '26 revenue guidance, obviously coming in pretty strong versus the high end of the range that you targeted 3 years ago. I guess, are you able to provide any color or just remind us roughly how much revenue you're expecting from Wisdo in '26? I'm just trying to get a sense for just rough approximation for like the organic versus the inorganic growth this year.

  A: Steve, yes, we haven't broken out Wisdo separately. It will show up depending on the type of contract, most likely in D2E or the Payor lines of business and to a lesser extent, a little bit of the consumer there. So it's embedded in the 3 business lines we report out. I would think of it if you're -- I understand the question sort of inorganic benefit from them. It's fairly modest, so single-digit millions contribution for '26.

• Q: Just curious, given the anticipated growth this year, if you guys are comfortable with the size of the provider network as it is right now? And if there are any specific pockets that you feel like you might need to address?

  A: Peter, the short answer is yes. We feel very good about it. We actually -- Jon had some notes in his prepared remarks about what we call the curated network. So we're actively pruning, engaging, trying to activate. And I think it was, maybe Bobby's question, sort of the rank ordering of how we're activating folks. One of the indirect components of that, which I think is not as obvious because really on the supply side is making sure we're engaging the network to have adequate availability such that when someone comes in and they want a certain day at a certain time, a certain type of therapists, we have that, right? And there's a lot of creative ways we're working on the product to make sure we're capturing that sort of consumer intent in real time. So short answer is we feel very good about where it is. It will grow here and there. It's very specific state by state. If we add a big partner with a certain type of population, do we need to ramp up hiring there? We've had numerous examples where our recruiting team has proven again and again, they're very effective and very nimble in ramping up supply when and if needed. But as sort of a run rate basis, we feel very good about where we are. The one area I would flag which we grew quite a bit in 2025 was on the psych side. So Jon talked about it as one of the more exciting sort of newer service offerings for us, psych. And what we mean by that is really medication management has been a very small-ish, but very fast-growing component of our Payor business. And so you'll see, I think in our 10-K, we ramped up our provider network on the psych side quite a bit in '25.