PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The company presents its unaudited Q3 2024 financial statements, reporting a net income of $1.9 million and cash of $119.0 million Condensed Consolidated Balance Sheets Total assets stood at $138.2 million, with cash at $119.0 million and total liabilities reduced to $20.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $118,994 | $123,908 | | Total current assets | $131,518 | $139,800 | | Total assets | $138,231 | $142,221 | | Liabilities & Equity | | | | Total current liabilities | $19,053 | $21,648 | | Total liabilities | $20,643 | $23,575 | | Total stockholders' equity | $117,588 | $118,646 | | Total liabilities and stockholders' equity | $138,231 | $142,221 | Condensed Consolidated Statements of Income The company achieved Q3 2024 profitability with a net income of $1.9 million, driven by a 22.6% revenue increase Statement of Income Summary (in thousands, except per share data) | Metric | Q3 2024 (Unaudited) | Q3 2023 (Unaudited) | 9 Months 2024 (Unaudited) | 9 Months 2023 (Unaudited) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $47,399 | $38,646 | $138,873 | $107,627 | | Gross profit | $21,621 | $18,849 | $64,303 | $53,409 | | Income (loss) from operations | $99 | $(5,179) | $(5,066) | $(20,626) | | Net income (loss) | $1,874 | $(4,414) | $(66) | $(17,876) | | Diluted EPS | $0.01 | $(0.03) | $(0.00) | $(0.11) | Condensed Consolidated Statements of Cash Flows Net cash from operations was $7.6 million for the nine-month period, with a total net cash decrease of $4.9 million Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7,623 | $(14,863) | | Net cash used in investing activities | $(3,837) | $(10) | | Net cash (used in) provided by financing activities | $(8,700) | $1,660 | | Net decrease in cash and cash equivalents | $(4,914) | $(13,213) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail revenue disaggregation, a share repurchase program, and the consolidation of Variable Interest Entities (VIEs) Revenue by Source (in thousands) | Revenue Source | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Payor | $32,039 | $22,112 | $90,492 | $55,462 | | DTE | $9,370 | $8,002 | $28,911 | $24,717 | | Consumer | $5,990 | $8,532 | $19,470 | $27,448 | | Total revenue | $47,399 | $38,646 | $138,873 | $107,627 | - The company repurchased and canceled 2,948,892 shares of common stock for $8.0 million in the nine months ended September 30, 2024, with $32.0 million remaining available under the share repurchase program51 - The company consolidates several Variable Interest Entities (VIEs), which are professional corporations established to comply with regulations governing the corporate practice of medicine216163 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong Q3 2024 performance, driven by a 22.6% revenue increase and a strategic shift to the Payor segment - The number of eligible lives covered by Talkspace's services grew to approximately 158.1 million as of September 30, 2024, up from 112.9 million a year prior69 - The company achieved its first quarterly net income of $1.9 million and positive Adjusted EBITDA of $2.4 million in Q3 2024, marking a significant milestone90110 - A strategic focus on the Payor segment drove strong growth while leading to a corresponding decline in the Consumer segment9192 Results of Operations Q3 2024 revenue grew 22.6% to $47.4 million, driven by Payor segment growth and reduced operating expenses Q3 2024 vs Q3 2023 Revenue Change (in thousands) | Revenue Source | Q3 2024 | Q3 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Payor revenue | $32,039 | $22,112 | $9,927 | 44.9% | | DTE revenue | $9,370 | $8,002 | $1,368 | 17.1% | | Consumer revenue | $5,990 | $8,532 | $(2,542) | (29.8%) | | Total revenue | $47,399 | $38,646 | $8,753 | 22.6% | - Gross margin for Q3 2024 was 45.6%, down from 48.8% in Q3 2023, attributed to a revenue mix shift towards the Payor segment96 - Q3 2024 operating expenses fell by 10.4% YoY, driven by a 43.7% decrease in R&D expenses and a 6.4% decrease in sales and marketing expenses9798100 Non-GAAP Financial Measures Adjusted EBITDA turned positive to $2.4 million in Q3 2024, a significant improvement from a $2.8 million loss in Q3 2023 Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Metric | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $1,874 | $(4,414) | $(66) | $(17,876) | | Depreciation and amortization | $231 | $305 | $652 | $913 | | Financial (income), net | $(1,701) | $(779) | $(5,123) | $(2,915) | | Taxes on income | $(74) | $14 | $123 | $165 | | Stock-based compensation | $1,931 | $1,969 | $7,290 | $6,401 | | Non-recurring expenses | $89 | $105 | $1,427 | $89 | | Adjusted EBITDA | $2,350 | $(2,800) | $4,303 | $(13,223) | Liquidity and Capital Resources The company holds $119.0 million in cash with no debt and repurchased $8.0 million in shares year-to-date - The company held $119.0 million in cash and cash equivalents with no debt as of September 30, 2024112 - The Board of Directors authorized a share repurchase program, which was amended on August 1, 2024, to increase the total authorization by an additional $25.0 million50115 - During the nine months ended September 30, 2024, the company repurchased 2,948,892 shares for $8.0 million, with $32.0 million remaining available for repurchases116 Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures were reported compared to the 2023 Annual Report on Form 10-K - There were no material changes to the market risk information previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023138 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal controls - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024140 - No material changes to the company's internal controls over financial reporting occurred during the third quarter of 2024141 PART II. OTHER INFORMATION Legal Proceedings The company reports no material pending legal proceedings as of the end of the quarter - The Company has no material pending legal proceedings as of September 30, 2024145 Risk Factors No material changes to risk factors were reported from the company's 2023 Annual Report on Form 10-K - During the nine months ended September 30, 2024, there were no material changes to the risk factors disclosed in the Company's 2023 Annual Report on Form 10-K146 Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased in Q3 2024, with $32.0 million remaining available under the repurchase program - No shares were repurchased during the three months ended September 30, 2024148 - As of September 30, 2024, $32.0 million remained available for share repurchases under the company's Share Repurchase Program148 Other Information The Chief Technology Officer adopted a Rule 10b5-1 trading plan for the potential sale of company stock - On August 19, 2024, Chief Technology Officer Gil Margolin adopted a Rule 10b5-1 trading plan for the sale of up to 853,901 shares of common stock151 Exhibits This section lists all exhibits filed with the report, including CEO/CFO certifications and XBRL data - The report includes required certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL data files (Exhibits 101, 104)155
TALKSPACE EQUITY WARRANT(TALKW) - 2024 Q3 - Quarterly Report