Talkspace, Inc. (Nasdaq: TALK), a leading virtual behavioral
healthcare company, today reported 2022 third quarter and nine
months results as summarized below. All financial results refer to
2022 third quarter or nine months and the related prior-year period
unless otherwise stated.
|
|
Three Months |
|
|
|
Nine Months |
|
|
Period ended September 30, 2022 |
|
Results |
|
|
|
Variance fromPrior Year % |
|
|
Results |
|
|
|
Variance fromPrior Year % |
|
(In thousands unless otherwise noted) |
|
Unaudited |
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
Number of B2B eligible lives (in millions) |
|
|
86.1 |
|
|
|
|
52% |
|
|
|
86.1 |
|
|
|
|
52% |
|
Number of completed B2B sessions |
|
|
111.4 |
|
|
|
|
56% |
|
|
|
298.0 |
|
|
|
|
55% |
|
Number of B2C active members 1 |
|
|
17.9 |
|
|
|
|
(36)% |
|
|
|
17.9 |
|
|
|
|
(36)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
29,332 |
|
|
|
|
11% |
|
|
$ |
89,326 |
|
|
|
|
6% |
|
Gross profit |
|
$ |
14,595 |
|
|
|
|
3% |
|
|
$ |
44,163 |
|
|
|
|
(13)% |
|
Gross margin % |
|
|
49.8% |
|
|
|
(4.0) pts |
|
|
|
49.4% |
|
|
|
(10.7) pts |
|
Operating expenses |
|
$ |
34,446 |
|
|
|
|
(13)% |
|
|
$ |
106,290 |
|
|
|
|
(8)% |
|
Net loss |
|
$ |
(17,983) |
|
|
|
* |
|
|
$ |
(61,365) |
|
|
|
|
(47)% |
|
Adjusted EBITDA 2 |
|
$ |
(15,463) |
|
|
|
|
26% |
|
|
$ |
(50,835) |
|
|
|
|
(17)% |
|
Cash and cash equivalents |
|
$ |
152,639 |
|
|
|
|
(32)% |
|
|
$ |
152,639 |
|
|
|
|
(32)% |
|
(1) Reflects active members at the end of the
period. (2) 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.” * Percentage not meaningful.
“Our third quarter performance was characterized
by a significant acceleration in business-to-business (“B2B")
revenue growth, driven by higher penetration of our in-network
services and new enterprise client wins, offset by an anticipated
decline in business-to-consumer (“B2C") revenue as we continue to
optimize consumer marketing spend,” said Chief Financial Officer,
Jennifer Fulk. “We are working with renewed emphasis on downsizing
our cost base and extracting operating efficiencies, while
continuing to focus on our B2B franchise and investing in
compelling and profitable growth initiatives.”
Nine Months Key Performance and Financial
Metrics
- Revenue grew 6% to $89 million, driven by a 72% growth in B2B
revenue, partially offset by a 24% decline in B2C revenue. B2B
revenue performance was driven by growth in eligible lives and a
greater number of completed B2B sessions. B2C revenue declined, as
expected, due to our decision to continue to optimize marketing
spend.
- Gross profit declined 13% to $44 million, and gross margin
declined to 49.4%, due primarily to the revenue mix shift toward
the B2B business, in line with our strategy, and higher therapist
hourly compensation expense.
- Net loss was higher compared to the prior period at $61 million
as lower marketing spend was offset by higher cost of revenues
driven in part by higher therapist-related expenses, and a decrease
in gains resulting from the revaluation of warrant liabilities.
Adjusted EBITDA loss was $51 million, compared to $43 million in
the prior-year period.
Third Quarter 2022 Key Performance and
Financial Metrics
- Revenue grew 11% to $29 million, driven by a reported 117%
growth in B2B revenue, partially offset by a 33% decline in B2C
revenue.
- Gross profit declined 3% to $15 million, and gross margin
declined to 49.8%.
- Net loss was $18 million, compared to net income of $2 million
in the prior-year period, driven primarily by lower marketing
spend, offset by higher cost of revenues and a decrease in gains
resulting from the revaluation of warrant liabilities. Adjusted
EBITDA loss was $15 million, compared to $21 million in the
prior-year period.
Conference Call, Presentation Slides,
and Webcast Details
The conference call will be available via audio
webcast at investors.talkspace.com and can also 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 days.
About Talkspace
Talkspace (Nasdaq: TALK) is a leading virtual
behavioral healthcare company 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 healthcare 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 from self-guided products to
individual and couples therapy, in addition to psychiatric
treatment and medication management. With Talkspace’s core
psychotherapy offering, members are matched with one of thousands
of licensed providers across all 50 states and can choose from a
variety of subscription plans including video, text or audio chat
sessions and/or unlimited text messaging.
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. Talkspace
covered approximately 86 million lives at September 30, 2022,
through our partnerships with employers, health plans, and paid
benefits programs.
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: our history of
losses; the rapid evolution of our business and the markets in
which we operate; our ability to continue growing at the rates we
have historically grown, or at all; the development of the virtual
behavioral health market; COVID-19 and its impact on business and
economic conditions; a deterioration in general economic conditions
as a result of inflation, increased interest rates or otherwise;
competition in our industry; and our relationships with affiliated
professional entities to provide physician and other professional
services. The foregoing list of factors is not exhaustive. You
should carefully consider the foregoing factors and the other risks
and uncertainties described under the caption “Risk Factors” in our
Annual Report on Form 10-K for the annual period ended December 31,
2021 filed with the Securities and Exchange Commission (“SEC”) on
February 25, 2022, 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. We do not give any assurance that we will achieve our
expectations.
Contacts
For Investors: Jeannine Feyen Director,
Communications (917) 748-5325 jeannine.feyen@talkspace.com
For Media: SKDK John Kim 310-997-5963
jkim@skdknick.com
Talkspace, Inc.
Consolidated Statements of Operations
(Unaudited)
|
|
Three Months Ended September
30, |
|
|
Variance |
|
|
Nine Months Ended September
30, |
|
|
Variance |
|
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
(in thousands, except percentages, share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2B revenue |
|
$ |
16,793 |
|
|
$ |
7,728 |
|
|
$ |
9,065 |
|
|
|
117.3 |
|
|
$ |
45,129 |
|
|
$ |
26,213 |
|
|
$ |
18,916 |
|
|
|
72.2 |
|
B2C revenue |
|
|
12,539 |
|
|
|
18,631 |
|
|
|
(6,092 |
) |
|
|
(32.7 |
) |
|
|
44,197 |
|
|
|
58,286 |
|
|
|
(14,089 |
) |
|
|
(24.2 |
) |
Total revenue |
|
|
29,332 |
|
|
|
26,359 |
|
|
|
2,973 |
|
|
|
11.3 |
|
|
|
89,326 |
|
|
|
84,499 |
|
|
|
4,827 |
|
|
|
5.7 |
|
Cost of revenues |
|
|
14,737 |
|
|
|
12,187 |
|
|
|
2,550 |
|
|
|
20.9 |
|
|
|
45,163 |
|
|
|
33,698 |
|
|
|
11,465 |
|
|
|
34.0 |
|
Gross profit |
|
|
14,595 |
|
|
|
14,172 |
|
|
|
423 |
|
|
|
3.0 |
|
|
|
44,163 |
|
|
|
50,801 |
|
|
|
(6,638 |
) |
|
|
(13.1 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development, net |
|
|
6,182 |
|
|
|
4,278 |
|
|
|
1,904 |
|
|
|
44.5 |
|
|
|
16,793 |
|
|
|
12,023 |
|
|
|
4,770 |
|
|
|
39.7 |
|
Clinical operations |
|
|
2,222 |
|
|
|
1,896 |
|
|
|
326 |
|
|
|
17.2 |
|
|
|
6,314 |
|
|
|
5,886 |
|
|
|
428 |
|
|
|
7.3 |
|
Sales and marketing |
|
|
18,375 |
|
|
|
26,431 |
|
|
|
(8,056 |
) |
|
|
(30.5 |
) |
|
|
58,714 |
|
|
|
75,125 |
|
|
|
(16,411 |
) |
|
|
(21.8 |
) |
General and administrative |
|
|
7,667 |
|
|
|
6,794 |
|
|
|
873 |
|
|
|
12.8 |
|
|
|
24,469 |
|
|
|
23,112 |
|
|
|
1,357 |
|
|
|
5.9 |
|
Total operating expenses |
|
|
34,446 |
|
|
|
39,399 |
|
|
|
(4,953 |
) |
|
|
(12.6 |
) |
|
|
106,290 |
|
|
|
116,146 |
|
|
|
(9,856 |
) |
|
|
(8.5 |
) |
Operating loss |
|
|
(19,851 |
) |
|
|
(25,227 |
) |
|
|
5,376 |
|
|
|
21.3 |
|
|
|
(62,127 |
) |
|
|
(65,345 |
) |
|
|
3,218 |
|
|
|
4.9 |
|
Financial income, net |
|
|
1,885 |
|
|
|
26,743 |
|
|
|
(24,858 |
) |
|
|
(93.0 |
) |
|
|
889 |
|
|
|
23,700 |
|
|
|
(22,811 |
) |
|
|
(96.2 |
) |
(Loss) income before taxes on income |
|
|
(17,966 |
) |
|
|
1,516 |
|
|
|
(19,482 |
) |
|
* |
|
|
|
(61,238 |
) |
|
|
(41,645 |
) |
|
|
(19,593 |
) |
|
|
(47.0 |
) |
Taxes on income |
|
|
17 |
|
|
|
11 |
|
|
|
6 |
|
|
|
54.5 |
|
|
|
127 |
|
|
|
29 |
|
|
|
98 |
|
|
|
337.9 |
|
Net (loss) income |
|
$ |
(17,983 |
) |
|
$ |
1,505 |
|
|
$ |
(19,488 |
) |
|
* |
|
|
$ |
(61,365 |
) |
|
$ |
(41,674 |
) |
|
$ |
(19,691 |
) |
|
|
(47.3 |
) |
Net (loss) income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.11 |
) |
|
$ |
0.01 |
|
|
$ |
(0.12 |
) |
|
* |
|
|
$ |
(0.39 |
) |
|
$ |
(0.64 |
) |
|
$ |
0.25 |
|
|
|
39.1 |
|
Diluted |
|
$ |
(0.11 |
) |
|
$ |
0.01 |
|
|
$ |
(0.12 |
) |
|
* |
|
|
$ |
(0.39 |
) |
|
$ |
(0.64 |
) |
|
$ |
0.25 |
|
|
|
39.1 |
|
Weighted average number of common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
158,330,684 |
|
|
|
152,267,870 |
|
|
|
|
|
|
|
|
|
156,056,900 |
|
|
|
64,638,182 |
|
|
|
|
|
|
|
Diluted |
|
|
158,330,684 |
|
|
|
165,179,012 |
|
|
|
|
|
|
|
|
|
156,056,900 |
|
|
|
64,638,182 |
|
|
|
|
|
|
|
* Percentage not meaningful
Talkspace, Inc.
Consolidated Balance Sheets
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
(in thousands) |
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
152,639 |
|
|
$ |
198,256 |
|
Accounts receivable, net |
|
|
8,692 |
|
|
|
5,512 |
|
Other current assets |
|
|
4,606 |
|
|
|
9,562 |
|
Total current assets |
|
|
165,937 |
|
|
|
213,330 |
|
Property and equipment, net |
|
|
845 |
|
|
|
624 |
|
Intangible assets, net |
|
|
2,714 |
|
|
|
3,436 |
|
Goodwill |
|
|
6,134 |
|
|
|
6,134 |
|
Other long-term assets |
|
|
— |
|
|
|
82 |
|
Total assets |
|
$ |
175,630 |
|
|
$ |
223,606 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
Accounts payable |
|
$ |
10,360 |
|
|
$ |
7,429 |
|
Deferred revenues |
|
|
5,458 |
|
|
|
7,186 |
|
Accrued expenses and other current liabilities |
|
|
13,206 |
|
|
|
12,562 |
|
Total current liabilities |
|
|
29,024 |
|
|
|
27,177 |
|
Warrant liabilities |
|
|
3,649 |
|
|
|
4,070 |
|
Other long-term liabilities |
|
|
288 |
|
|
|
86 |
|
Total liabilities |
|
|
32,961 |
|
|
|
31,333 |
|
Commitments and contingencies |
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY: |
|
|
|
|
|
|
Common stock |
|
|
15 |
|
|
|
15 |
|
Additional paid-in capital |
|
|
375,549 |
|
|
|
363,788 |
|
Accumulated deficit |
|
|
(232,895 |
) |
|
|
(171,530 |
) |
Total stockholders’ equity |
|
|
142,669 |
|
|
|
192,273 |
|
Total liabilities and stockholders’ equity |
|
$ |
175,630 |
|
|
$ |
223,606 |
|
Talkspace, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
|
Nine Months Ended September
30, |
|
(in thousands) |
|
2022 |
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(61,365 |
) |
|
$ |
(41,674 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,006 |
|
|
|
1,458 |
|
Amortization of debt issuance cost |
|
|
— |
|
|
|
175 |
|
Stock-based compensation |
|
|
9,386 |
|
|
|
20,584 |
|
Warrant issue costs and change in fair value |
|
|
(421 |
) |
|
|
(23,842 |
) |
(Increase) decrease in accounts receivable, net |
|
|
(3,180 |
) |
|
|
596 |
|
Decrease (increase) in other current assets |
|
|
4,848 |
|
|
|
(8,515 |
) |
Increase in accounts payable |
|
|
2,931 |
|
|
|
7,113 |
|
(Decrease) increase in deferred revenues |
|
|
(1,728 |
) |
|
|
3,130 |
|
Increase (decrease) in accrued expenses and other current
liabilities |
|
|
1,465 |
|
|
|
(134 |
) |
Increase in other long-term liabilities |
|
|
202 |
|
|
|
— |
|
Net cash used in operating activities |
|
|
(46,856 |
) |
|
|
(41,109 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(254 |
) |
|
|
(622 |
) |
Net cash used in investing activities |
|
|
(254 |
) |
|
|
(622 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
(Payments) proceeds from reverse capitalization, net of transaction
costs |
|
|
(645 |
) |
|
|
249,428 |
|
Proceeds from borrowings |
|
|
— |
|
|
|
6,000 |
|
Repayment of borrowings |
|
|
— |
|
|
|
(6,000 |
) |
Payment of debt issuance cost |
|
|
— |
|
|
|
(50 |
) |
Proceeds from exercise of stock options |
|
|
2,696 |
|
|
|
1,970 |
|
Payments for employee taxes withheld related to vested stock-based
awards |
|
|
(558 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
1,493 |
|
|
|
251,348 |
|
Net (decrease) increase in cash and cash equivalents |
|
|
(45,617 |
) |
|
|
209,617 |
|
Cash and cash equivalents at the beginning of the period |
|
|
198,256 |
|
|
|
13,248 |
|
Cash and cash equivalents at the end of the period |
|
$ |
152,639 |
|
|
$ |
222,865 |
|
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. We 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. In addition, other
companies, including companies in our industry, may calculate
similarly titled non-GAAP measures differently or may use other
measures to evaluate their performance, all of which could reduce
the usefulness of our non-GAAP financial measure as a tool for
comparison. A reconciliation is provided below for this non-GAAP
financial measure to net (loss) income, the most directly
comparable financial measure stated in accordance with GAAP.
Investors are encouraged to review our GAAP financial measure 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.
Adjusted EBITDA
Adjusted EBITDA is a key performance measure that
our management uses 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 calculate adjusted EBITDA as net (loss) income
adjusted to exclude (i) interest and other expenses (income), net,
(ii) tax benefit and expense, (iii) depreciation and amortization,
(iv) stock-based compensation expense and (v) certain non-recurring
expenses, where applicable.
Talkspace, Inc.
Reconciliation of Non-GAAP Results to GAAP
Results
|
|
Three Months Ended September
30, |
|
|
Nine Months Ended September
30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in thousands) |
|
Unaudited |
|
|
Unaudited |
|
Net (loss) income |
|
$ |
(17,983 |
) |
|
$ |
1,505 |
|
|
$ |
(61,365 |
) |
|
$ |
(41,674 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
309 |
|
|
|
503 |
|
|
|
1,006 |
|
|
|
1,458 |
|
Financial (income), net (1) |
|
|
(1,885 |
) |
|
|
(26,743 |
) |
|
|
(889 |
) |
|
|
(23,700 |
) |
Taxes on income |
|
|
17 |
|
|
|
11 |
|
|
|
127 |
|
|
|
29 |
|
Stock-based compensation |
|
|
3,179 |
|
|
|
3,875 |
|
|
|
9,386 |
|
|
|
20,584 |
|
Non-recurring expenses (2) |
|
|
900 |
|
|
|
— |
|
|
|
900 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
(15,463 |
) |
|
$ |
(20,849 |
) |
|
$ |
(50,835 |
) |
|
$ |
(43,303 |
) |
1) For the three and nine months ended September 30, 2022,
financial income, net, primarily consisted of $1.6 million and $0.4
million, respectively, in gains resulting from the revaluation of
warrant liabilities.For the three months ended September 30, 2021,
financial income, net primarily consisted of $26.9 million in gains
resulting from the revaluation of warrant liabilities. For the nine
months ended September 30, 2021, financial income, net primarily
consisted of $28.3 million in gains resulting from the revaluation
of warrant liabilities, partially offset by $4.2 million in warrant
issuance costs in connection with the Closing of the Business
Combination.
2) For the three and nine months ended September
30, 2022, non-recurring expenses consisted of $0.6 million in legal
fees and $0.3 million in general and administrative expenses.
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