Talkspace, Inc. (NASDAQ:TALK) Q4 2022 Earnings Conference Call February 22, 2023 8:30 AM ET Company Participants Jeannine Feyen - Director of Communications Jon Cohen - Chief Executive Officer Jennifer Fulk - Chief Financial Officer Conference Call Participants Lucas Romanski - Cowen Jack Senft - William Blair Stephanie Davis - SVB Securities Daniel Grosslight - Citi Operator Good morning. My name is Adra and I will be your conference operator today. At this time, I would like to welcome everyone to the Tal ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $29.3 million, down 2% sequentially, driven by strong momentum in the B2B payer business and DTE, offset by further softening in the B2C business [27][28] - B2B revenue was $16.8 million, up 15% sequentially, primarily driven by a higher number of sessions completed by behavioral health and EAP members [28][32] - B2C revenue was $12.5 million, down 18% from the second quarter, driven by a lower number of customer acquisitions and fewer renewals from smaller existing cohorts [28][29] - Gross profit was slightly up at $14.6 million, with a gross margin of 49.8%, an increase of approximately 100 basis points from Q2 [29][30] - The net loss for Q3 was $18 million, with an adjusted EBITDA loss narrowing to $15.5 million, an improvement of $1.5 million compared to the second quarter [31] Business Line Data and Key Metrics Changes - B2B revenue represented most of the company's revenue for the first time in Q3, with a year-on-year increase of over 65% [12][28] - B2C revenues declined quarter-on-quarter by 18%, marking the fourth sequential quarter of reduced advertising spend [14][22] - The enterprise franchise grew 62% year-over-year and 10% sequentially, with the addition of 10 new accounts [13][28] Market Data and Key Metrics Changes - The company added 9 million covered lives in Q3, which had a modest revenue impact due to the timing of these new lives [13][32] - The B2B segment is expected to continue growing, with strong session growth based on new lives and higher engagement [33][35] Company Strategy and Development Direction - The company is focused on moving towards cash flow breakeven, enhancing efficiency, and reducing operating expenses by approximately $4 million per quarter [19][30] - There is a strong emphasis on expanding the B2B business, which is seen as the largest and most profitable growth opportunity [36][61] - The leadership team has been strengthened with new hires in key positions, indicating a commitment to operational and financial discipline [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth opportunities for the company, particularly in expanding access to mental health care [9][25] - The macroeconomic conditions are seen as a headwind for B2C members, but the company believes that building coverage in the payer footprint will provide additional incentives for members to leverage health benefits [28][29] - Management expects continued strong session growth and engagement in the B2B segment, despite potential seasonal slowdowns [33][35] Other Important Information - The company maintains a strong balance sheet with approximately $153 million in cash as of September 30, which is believed to be sufficient to reach profitability [32] - The company is implementing product enhancements to improve margins and drive utilization across its platform [17][21] Q&A Session Summary Question: Customer acquisition costs expectations for Q4 - Management expects some additional modest pressure on customer acquisition costs (CAC) due to seasonal factors and reduced advertising spend [40][41] Question: Elasticity of the end market and inflationary environment impact - Management noted a shift towards insured products, which is anticipated to provide a competitive advantage and reduce out-of-pocket costs for consumers [44][45] Question: Clinical inefficiencies and network progress - Management reported improvements in engagement and efficiency within the W2 network, with plans to selectively add to the network in high-demand areas [46][48] Question: Enterprise and health plan adds for 2023 - Management indicated a strong pipeline for additional covered lives in 2023, with ongoing discussions and a robust backlog [50][52] Question: B2C side performance and ARPU - Management suggested that the decline in ARPU is not overly concerning and may be attributed to product mix optimization rather than a significant consumer pullback [54][55] Question: Jon Cohen's focus on B2B vs B2C - Jon Cohen emphasized that the primary opportunity lies in the B2B segment, while also recognizing the importance of reducing financial barriers for B2C services [63][64]

PART I. FINANCIAL INFORMATION This section provides the unaudited financial statements, management's analysis of operations and liquidity, market risk disclosures, and an assessment of internal controls and procedures [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows, along with explanatory notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, total assets decreased to $175.6 million, primarily due to reduced cash, while total liabilities slightly increased and stockholders' equity declined to $142.7 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $152,639 | $198,256 | | Total current assets | $165,937 | $213,330 | | Total assets | $175,630 | $223,606 | | **Liabilities & Equity** | | | | Total current liabilities | $29,024 | $27,177 | | Total liabilities | $32,961 | $31,333 | | Accumulated deficit | $(232,895) | $(171,530) | | Total stockholders' equity | $142,669 | $192,273 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2022 revenues increased to $29.3 million, but the company reported a net loss of $18.0 million, widening to $61.4 million for the nine months ended September 30, 2022 Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $29,332 | $26,359 | $89,326 | $84,499 | | Gross Profit | $14,595 | $14,172 | $44,163 | $50,801 | | Operating (loss) | $(19,851) | $(25,227) | $(62,127) | $(65,345) | | Net (loss) income | $(17,983) | $1,505 | $(61,365) | $(41,674) | | Diluted EPS | $(0.11) | $0.01 | $(0.39) | $(0.64) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, net cash used in operating activities increased to $46.9 million, resulting in a $45.6 million decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(46,856) | $(41,109) | | Net cash used in investing activities | $(254) | $(622) | | Net cash provided by financing activities | $1,493 | $251,348 | | **Net (decrease) increase in cash** | **$(45,617)** | **$209,617** | | Cash at end of period | $152,639 | $222,865 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, revenue recognition, fair value measurements, and legal proceedings, notably the Q2 2022 transition to a consolidated Variable Interest Entity (VIE) structure for healthcare provider relationships - The company's revenue is disaggregated into B2B and B2C channels. For Q3 2022, B2B revenue grew significantly to **$16,800 thousand** from **$7,700 thousand** YoY, while B2C revenue declined to **$12,500 thousand** from **$18,600 thousand** YoY[39](index=39&type=chunk) - In Q2 2022, the company transitioned its relationships with healthcare providers into a Variable Interest Entity (VIE) structure. The company determined it is the primary beneficiary of these VIEs and has consolidated them in its financial statements[29](index=29&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) - The company is involved in securities class action and stockholder derivative lawsuits related to its merger with HEC. The company believes the lawsuits are without merit and intends to defend against them vigorously[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Q3 2022 financial performance, emphasizing a strategic shift to the B2B channel, which drove revenue growth despite reduced B2C marketing spend, and assesses liquidity and capital resources [Overview and Key Business Metrics](index=18&type=section&id=Overview%20and%20Key%20Business%20Metrics) Talkspace, a virtual behavioral health company, saw B2B eligible lives increase to **86.1 million** by September 30, 2022, while B2C active members decreased, reflecting a strategic channel shift Key Business Metrics (in thousands, except where noted) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | B2B eligible lives at period end (millions) | 86.1 | 56.6 | | Number of completed B2B sessions | 298.0 | 192.1 | | Number of health plan clients at period end | 17 | 11 | | Number of enterprise clients at period end | 215 | 139 | | Number of B2C active members at period end | 17.9 | 28.0 | [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q3 2022 revenues grew **11.3%** to **$29.3 million**, driven by B2B growth, while gross margin declined to **49.8%** and sales and marketing expenses decreased **30.5%** - Q3 2022 revenue growth was driven by a **117.3%** increase in B2B revenue, while B2C revenue fell **32.7%** due to an intentional and strategic decision to reduce marketing spend[108](index=108&type=chunk) - Gross margin for Q3 2022 decreased to **49.8%** from **53.8%** in Q3 2021, primarily due to a revenue shift to the B2B business, which generally has lower margins, and higher therapist compensation[112](index=112&type=chunk) - Sales and marketing expenses for Q3 2022 decreased by **$8.1 million** (**30.5%**) YoY, mainly due to a reduction in direct marketing and promotional costs for the B2C business[118](index=118&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2022, the company held **$152.6 million** in cash with no debt, and management expects current balances to fund operations despite **$46.9 million** net cash used in operations - The company held **$152.6 million** in cash and cash equivalents as of September 30, 2022, down from **$198.3 million** at the end of 2021[124](index=124&type=chunk) - Net cash used in operating activities for the nine months ended September 30, 2022, was **$46.9 million**[129](index=129&type=chunk) - Management expects to be able to fund cash needs for at least the foreseeable future with available cash balances[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the market risk disclosures previously provided in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - There were no material changes to the information on market risk during the nine months ended September 30, 2022[141](index=141&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of September 30, 2022, due to material weaknesses in internal control over financial reporting, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of September 30, 2022, due to material weaknesses in internal control over financial reporting[143](index=143&type=chunk) - Identified material weaknesses relate to: (a) aggregation of open control deficiencies, (b) general IT controls for user access and change-management, and (c) controls over accounting for complex financial instruments such as warrants[144](index=144&type=chunk) - Remediation plans are underway, including implementing a new ERP system, expanding the finance and IT teams, improving processes for complex accounting, and engaging outside resources to assist with internal controls[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) PART II. OTHER INFORMATION This section details legal proceedings, updates on risk factors, and lists exhibits filed with the quarterly report [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising from normal business operations, with specific details on securities class action and stockholder derivative lawsuits provided in Note 5 - The company is party to various legal proceedings. For details, the report refers to Note 5, "Commitments and Contingent Liabilities"[154](index=154&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - During the nine months ended September 30, 2022, there were no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021[155](index=155&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including CEO and CFO certifications and Inline XBRL data files - The report includes CEO and CFO certifications pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350, as well as Inline XBRL documents[160](index=160&type=chunk)

Talkspace, Inc. (NASDAQ:TALK) Q2 2022 Earnings Conference Call August 8, 2022 5:00 PM ET Company Participants Mike Lovell - Senior Director, Investor Relations Doug Braunstein - Chairman & Interim Chief Executive Officer Jennifer Fulk - Chief Financial Officer Conference Call Participants Jack Senft - William Blair Anna Kruszenski - SVB Securities Operator Ladies and gentlemen, thank you for standing by. And welcome to Talkspace Second Quarter First Half 2022 Earnings Conference Call. All lines have been p ...

Therapy tools na. 4 ml 1 hry Reminders Rooms Sharon Adams H., 11:00 PM I understand hew this would talk spa 2022 Second Quarter and First Half Earnings Presentation August 8, 2022 Disclaimer 2 This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking, including statements regarding our f ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39314 TALKSPACE, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 84-4636604 (State or oth ...

Market Opportunity - The digital mental healthcare market is underpenetrated and growing[6] - Over 50% of Americans with a mental illness do not receive treatment, representing approximately 27 million people in 2022[9] - 78% of behavioral health consumers prefer virtual delivery over in-person[9] - The U S Behavioral Health Market is projected to grow at a CAGR of +5 5%[9] Business Strategy & Performance - The company is making continued progress on well-defined strategic priorities[6] - The company has a strong balance sheet to enable investments to accelerate revenue growth and boost cash flow[6, 34] - The company is optimizing B2C returns by enhancing value proposition, increasing conversion, and improving retention[19, 21] - The company is growing its B2B business with multiple drivers to increase market penetration and enhance profitability[34] Product & Technology - The company has a full-stack behavioral health platform to serve both B2B and B2C markets[6] - The company leverages technology at every step of the clinical journey, from screening to discharge[15, 18] - Integrated machine learning drives member engagement and improves clinical efficacy[34] Financials (Q1 2022 Performance) - B2C revenue was $12.9 million in Q1 2022[36] - B2B revenue was $17.3 million in Q1 2022[36] - Total revenue was $30.2 million in Q1 2022[36]

Therapy tools 0:43 Rooms Sharon Adares H., 1100M I understand hew this would l ol ce talk spa First Quarter 2022 Earnings Presentation May 3, 2022 Disclaimer 2 This presentation 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39314 TALKSPACE, INC. (Exact Name of Registrant as Specified in its Charter) (Former name, former address and former fiscal yea ...

Talkspace Inc (NASDAQ:TALK) Q1 2022 Results Conference Call May 3, 2022 5:00 PM ET Company Participants Mike Lovell - Director, Investor Relations Doug Braunstein - Chairman & Interim Chief Executive Officer Jennifer Fulk - Chief Financial Officer Conference Call Participants Charles Rhyee - Cowan Vikram Kesavabhotla - Baird Ryan Daniels - William Blair Stephanie Davis - SVB Leerink Glen Santangelo - Jefferies Operator Good day and thank you for standing by. Welcome to the Talkspace First Quarter 2022 Earni ...