Digital mental health company Talkspace has endured a rocky last 12 months. After going public through a special purpose acquisition company (SPAC) deal last year, it has seen a drop in its consumer revenue as well as the exodus of its two founders and chief operating officer.
Now Talkspace is facing a class-action lawsuit, which alleges it misled SPAC investors by not disclosing its “worsening growth.”
Interim CEO Doug Braunstein didn’t mention the lawsuit in his presentation at the JPMorgan Healthcare Conference on Thursday. But he did provide an update on the confusion over the company’s 8K filing in December, as well as share some details about upcoming plans.
Braunstein admitted that business-to-consumer revenue declined year-over-year and quarter-over-quarter. The decreases were “largely based on the fact that we slightly reduced our advertising spending over the quarter,” he said.
He noted Talkspace expects to generate $112 million in revenue in 2021, compared to its previous estimate of $125 million.
“While disappointed with the revenue, we’ve seen modest positive signs on the conversion rate and retention rate,” Braunstein added. “What I will say about B2C is that we continue to work to optimize that business.”
The company hopes to enhance future profitability by focusing on several channels. It will work on improving the operations of its therapist network, which it believes will boost customer retention and engagement.
Talkspace also wants to “unify the funnel” between its B2B and B2C network and leverage its “robust” website traffic, Braunstein said. One way to accomplish that is by rolling out a new procedure that will make reimbursement easier for out-of-network customers.
Braunstein also noted that Talkspace was “making good progress” in its search for a permanent CEO.
“To be fair, it will take time,” he said. “It will take us the time to develop the capabilities [and] hire the individuals and execute, but we think over time it’s a significant opportunity for us.”
Then there was the confusion over Talkspace’s recent 8K filing. In its third-quarter earnings report, Talkspace said that 75 million people (“covered lives”) were eligible for its services via its B2B business, due in part to discussions with a “very large payer.” That number turned out to be lower, at 69 million.
“There was a belief based on those conversations that we had access to a large portion of their network, and we included those lives in part when we announced our results for the third quarter,” Braunstein explained. “In subsequent conversations, it was clear that we did not have access to that payer’s covered lives, so we filed an 8K as a result of that.”
Despite Talkspace’s bumpy 2021, Braunstein stressed that high demand for mental health services in the U.S. presents a rebound opportunity for the company in 2022.
“Everyone is aware of the growing need for accessible and affordable mental healthcare,” Braunstein said. “Incidence of behavioral health conditions keeps growing across all ages and demographics, and this is creating one of the most significant large unmet medical needs in the U.S. We’re living through a major industry shift, where behavioral healthcare is finally recognized as an essential component of care.”