The Good BrigadeBeing successful in this stock market often means going after under-recognized small-cap names that have nothing to do with AI or other market trends. Especially with the S&P 500 continuing to flirt near all-time highs, it's a great time for investors to be looking for contrarian plays. Talkspace (NASDAQ:TALK) is a great example here. The mental health app provider has seen its share price surge 50% year to date (and has more than doubled over the past two quarters), even though it's a s ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Talkspace offers virtual behavioral healthcare via its platform, connecting members with licensed providers across Payor, DTE, and Consumer channels, with 2023 revenue reaching $150.0 million driven by Payor segment expansion | Financial Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Revenue** | $150.0 million | $119.6 million | | **Eligible Lives (Payor & DTE)** | ~131 million | ~92 million | | **Completed Payor Sessions** | ~850,600 | ~426,400 | | **Consumer Active Members** | ~11,700 | ~15,400 | - The company serves clients through three main channels: **Payor** (health plans), **Direct-to-Enterprise** (DTE), and **Consumer** (direct subscriptions)[15](index=15&type=chunk) - Talkspace operates through **Management Services Agreements (MSAs)** with Talkspace Provider Network, PA (TPN) and other professional entities to comply with the corporate practice of medicine laws[34](index=34&type=chunk)[35](index=35&type=chunk) - The technology platform uses **machine learning** for provider matching and has a vast dataset of over **7.2 billion words** from anonymized messages and approximately **5 million completed psychological assessments**[27](index=27&type=chunk)[28](index=28&type=chunk) - As of December 31, 2023, the company's workforce included **472 employees** and **5,235 independently contracted providers**[39](index=39&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including a history of losses, intense competition, reliance on contract renewals, and a complex regulatory environment - The company has a **history of losses** and may not achieve or sustain profitability due to substantial investments in client acquisition and technology development[80](index=80&type=chunk) - The business faces **significant competition** from other telehealth providers like American Well, Teladoc, and Lyra Health, as well as potential competition from large technology companies and retailers[90](index=90&type=chunk)[91](index=91&type=chunk) - The company's structure, which relies on **Management Services Agreements** with affiliated professional entities, could be challenged under state laws prohibiting the corporate practice of medicine or fee-splitting[154](index=154&type=chunk)[156](index=156&type=chunk) - Failure to comply with numerous federal and state privacy and security regulations, such as HIPAA, CCPA, and GDPR, could result in **significant liability and reputational harm**[167](index=167&type=chunk)[169](index=169&type=chunk)[176](index=176&type=chunk) - **Material weaknesses in internal controls** over financial reporting were identified for the year ended December 31, 2022, and while remediated, future weaknesses could impair the ability to produce accurate financial statements[204](index=204&type=chunk) [Unresolved Staff Comments](index=63&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[232](index=232&type=chunk) [Cybersecurity](index=64&type=section&id=Item%201C.%20Cybersecurity) Talkspace maintains a cybersecurity risk management program, overseen by the Audit Committee and managed by CISO/CTO, with no material incidents reported to date - The company has established policies for assessing, identifying, and managing **material risks** from cybersecurity threats, which are integrated into the broader enterprise risk management process[234](index=234&type=chunk) - Oversight is provided by the **Audit Committee**, which receives at least **quarterly updates** from management on security posture, risk mitigation, and material threats[243](index=243&type=chunk) - The company has **not experienced any material impact** from cybersecurity threats or incidents to date[242](index=242&type=chunk) [Properties](index=66&type=section&id=Item%202.%20Properties) The company's headquarters are in New York, NY, with most employees working remotely, and no leased facilities are considered material - The company's headquarters are located in **New York, NY**, but the **majority of its employees work remotely**[247](index=247&type=chunk) [Legal Proceedings](index=66&type=section&id=Item%203.%20Legal%20Proceedings) The company settled securities class action and stockholder derivative lawsuits in February 2023, receiving final court approval in Q3 and Q4 2023 without admitting liability - The company **settled certain class action lawsuits** in February 2023, with final court approval granted in Q3 and Q4 2023. The company **admitted no liability**[248](index=248&type=chunk) [Mine Safety Disclosures](index=66&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[250](index=250&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=67&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Talkspace common stock and warrants trade on Nasdaq, with no cash dividends paid or planned, and a $15 million share repurchase program approved in February 2024 - The company's common stock and warrants began trading on **Nasdaq** on June 23, 2021, under symbols "**TALK**" and "**TALKW**"[253](index=253&type=chunk) - The company has **never paid cash dividends** and does not intend to in the foreseeable future[256](index=256&type=chunk) - **No shares of common stock were repurchased** by the company during the fourth quarter of 2023[259](index=259&type=chunk) - On February 22, 2024, the Board of Directors approved a **$15 million share repurchase program** authorizing up to $15 million of the company's common stock over a 24-month period[261](index=261&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, Talkspace's revenue grew 25.5% to $150.0 million, driven by Payor segment expansion, while significantly narrowing its net loss to $19.2 million and maintaining strong liquidity | Revenue Source | 2023 Revenue | 2022 Revenue | % Change | | :--- | :--- | :--- | :--- | | **Payor** | $80.8 million | $36.2 million | +123.5% | | **DTE** | $33.6 million | $28.2 million | +19.0% | | **Consumer** | $35.6 million | $55.2 million | -35.4% | | **Total Revenue** | **$150.0 million** | **$119.6 million** | **+25.5%** | | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Gross Profit** | $74.4 million | $60.3 million | | **Gross Margin** | 49.6% | 50.5% | | **Operating Loss** | $(23.2) million | $(83.2) million | | **Net Loss** | $(19.2) million | $(79.7) million | | **Adjusted EBITDA** | $(13.5) million | $(58.7) million | - The decrease in operating expenses was driven by efficiency initiatives, with **significant reductions in sales and marketing (-27.9%)** and **general and administrative (-41.2%) costs**[296](index=296&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk) - As of December 31, 2023, the company had **$123.9 million in cash and cash equivalents** and **no debt**[311](index=311&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=83&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on its $123.9 million cash, deemed immaterial, with foreign currency risk also considered insignificant - The company holds **$123.9 million in cash and cash equivalents** and does **not believe interest rate fluctuations would have a material effect** on its business[331](index=331&type=chunk)[332](index=332&type=chunk) - Foreign currency exchange risk is considered **immaterial** due to limited operations outside the U.S. and revenue being primarily in U.S. dollars[333](index=333&type=chunk) [Financial Statements and Supplementary Data](index=84&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The 2023 consolidated financial statements, audited by Kost Forer Gabbay & Kasierer with an unqualified opinion, show a net loss of $19.2 million, with Payor revenue estimation noted as a critical audit matter - The independent registered public accounting firm issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2023[337](index=337&type=chunk)[347](index=347&type=chunk) - The auditor identified the estimation of transaction price and variable consideration for Payor revenue recognition as a **Critical Audit Matter** due to the significant judgment and subjective assumptions involved[341](index=341&type=chunk)[342](index=342&type=chunk) | Balance Sheet Item (As of Dec 31, 2023) | Amount (in thousands) | | :--- | :--- | | **Total Assets** | $142,221 | | Cash and cash equivalents | $123,908 | | **Total Liabilities** | $23,575 | | **Total Stockholders' Equity** | $118,646 | | Income Statement Item (Year Ended Dec 31) | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | **Revenues** | $150,045 | $119,567 | | **Gross Profit** | $74,380 | $60,338 | | **Net Loss** | $(19,182) | $(79,672) | | **Net Loss Per Share** | $(0.12) | $(0.51) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=119&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[459](index=459&type=chunk) [Controls and Procedures](index=119&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with prior material weaknesses fully remediated - Management concluded that internal control over financial reporting was **effective** as of December 31, 2023[464](index=464&type=chunk) - The **material weaknesses** identified as of December 31, 2022, related to IT general controls and oversight, have been **remediated** as of December 31, 2023[466](index=466&type=chunk)[469](index=469&type=chunk) [Other Information](index=120&type=section&id=Item%209B.%20Other%20Information) No director or officer adopted or terminated Rule 10b5-1 trading arrangements during the fourth quarter of 2023 - **No director or officer adopted or terminated a Rule 10b5-1 trading arrangement** in the fourth quarter of 2023[470](index=470&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=121&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - Information is **incorporated by reference** from the 2024 Proxy Statement[474](index=474&type=chunk) [Executive Compensation](index=121&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - Information is **incorporated by reference** from the 2024 Proxy Statement[475](index=475&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=121&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - Information is **incorporated by reference** from the 2024 Proxy Statement[476](index=476&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=121&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - Information is **incorporated by reference** from the 2024 Proxy Statement[477](index=477&type=chunk) [Principal Accounting Fees and Services](index=121&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - Information is **incorporated by reference** from the 2024 Proxy Statement[478](index=478&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=122&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of all exhibits filed with or incorporated by reference into the Form 10-K, including key agreements and certifications - This section contains the **index of all exhibits** filed with or incorporated by reference into the Form 10-K[482](index=482&type=chunk)[483](index=483&type=chunk) [Form 10-K Summary](index=122&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates there is no Form 10-K summary - None[481](index=481&type=chunk)

Mark Cuban Cost Plus Drug Company, PBC; Talkspace; and Health Gorilla join Wheel's ecosystem to provide everything customers need to stand up virtual care at scale. AUSTIN, Texas, March 7, 2024 /PRNewswire/ -- Wheel, the virtual care platform powering the future of care, today announced it is adding three high-impact companies to its Integrated Virtual Care Ecosystem — Talkspace; Mark Cuban Cost Plus Drug Company, PBC (Cost Plus Drugs); and Health Gorilla. With these additions to the Wheel ecosystem, Wheel ...

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.While many investors like to look for moment ...

Feeling better starts with a single message 2 This presentation may contain the measure Adjusted EBITDA, Adjusted EBITDA margin, and non-GAAP costs and expenses (including non-GAAP cost of revenue, research and development, sales and marketing, and general and administrative) which are non-GAAP financial measure. For additional information about the measure and a reconciliation to the most closely comparable GAAP measure see the Talkspace Investors Relations website at investors.talkspace.com. Payor Session ...

Financial Data and Key Metrics Changes - In Q4 2023, total revenue was $42.4 million, a 10% increase from the previous quarter and a 40% increase year-over-year. For the full year 2023, total revenue amounted to $150 million, reflecting a 25% growth over 2022 [100] - Adjusted EBITDA loss narrowed to approximately $300,000 in Q4 and $13.5 million for the full year 2023, an improvement from a $59 million loss in 2022 [11][20] - Cash and cash equivalents as of December 31, 2023, totaled $123.9 million, providing a robust liquidity position for future investments [11][99] Business Line Data and Key Metrics Changes - Payor revenue more than doubled year-over-year to $80.8 million in 2023, with covered lives growing 42% and sessions nearly doubling to 850,000 [83][20] - Direct-to-enterprise (DTE) revenue for Q4 was $8.9 million, up 11% sequentially, and for the full year, DTE revenue increased 19% year-over-year to $33.6 million [28][20] - Consumer category revenue was $8.2 million in Q4, a 4% sequential decline, and $35.6 million for the full year, a 35% year-over-year decline [101] Market Data and Key Metrics Changes - The company is positioned to capture a growing market for mental health services, estimated to grow at a 5% CAGR through 2032 to about $137 billion [80] - The company aims to address the mental health needs of seniors, with 65 million lives in Medicare, highlighting the increasing demand for mental health support among the elderly [98] Company Strategy and Development Direction - The company is focused on growing payor revenue and expanding its direct-to-enterprise business, particularly in addressing the youth mental health crisis [21][26] - Investments in AI are being made to enhance service delivery and operational efficiency, with a commitment to leveraging data science for improved mental health care [7][96] - A share repurchase plan of $15 million was approved to optimize returns on excess capital, reflecting confidence in future profitability [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving break-even adjusted EBITDA in Q1 2024 and expects revenue growth of 23% to 30% year-over-year for the full year [13][20] - The company anticipates continued growth in payor sessions and revenue, driven by new partnerships and expanding covered lives, including Medicare [49][98] - Management emphasized the importance of maintaining a disciplined approach to capital allocation while exploring organic growth opportunities [99] Other Important Information - The company reduced total operating expenses by 32% from $143 million to $98 million in 2023, positioning itself for continued operating leverage [6][20] - The company has made significant investments in its leadership team and technology to enhance its service offerings and operational capabilities [78][96] Q&A Session All Questions and Answers Question: Can you provide an update on the opportunities in school systems and their potential size? - Management indicated significant interest in school systems, with variable sizes depending on the district, and highlighted the New York City contract covering 465,000 teenagers as a benchmark [34][105] Question: How do you see the progression of margins over the next three years? - Management expects fairly linear improvement in adjusted EBITDA margins, driven by growth in the payor category and operational efficiencies [36][110] Question: What is the current status of clinician turnover and their response to AI tools? - Management reported low clinician turnover and positive early feedback from therapists regarding AI tools that enhance their ability to provide care [112] Question: Are there further markets the company is looking to expand into? - Management confirmed ongoing efforts to expand into Medicare and Medicare Advantage, emphasizing the need to address the mental health challenges faced by seniors [115][116]

Exhibit 99.1 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 ...

NEW YORK--(BUSINESS WIRE)--Today, Talkspace, a leading online behavioral health company, and Wheel, the foremost virtual care platform powering the next generation of virtual healthcare, announced they will partner to offer patients access to board-certified general practitioners and licensed behavioral health providers across the U.S. – conveniently and virtually. In particular, the partnership will provide Talkspace and Wheel clients, including employers, payers, life sciences companies, and more with ...

NEW YORK--(BUSINESS WIRE)--Today, Talkspace (NASDAQ: TALK), a leading online behavioral health care company, announced a new partnership with the American Federation of Teachers (AFT). The partnership will offer discounted access to high-quality therapy and evidenced-based mental health resources, including curated monthly content, to AFT’s more than 1.7 million members, including educators, paraprofessionals, nurses, health professionals, and retirees. According to a recent survey conducted by the Ameri ...

NEW YORK, Jan. 12, 2024 (GLOBE NEWSWIRE) -- Talkspace (Nasdaq: TALK), a leading behavioral healthcare company, today announced that management will present and host one-on-one investor meetings at the 26th Annual Needham Growth Conference on January 16 and 19, 2024, virtually. The Company’s presentation will be on January 19, 2024, at 3:00pm EST. To schedule a one-on-one meeting with management, please contact your Needham representative. About Talkspace Talkspace (Nasdaq: TALK) is a leading virtual behavio ...