Talkspace, Inc.

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Talkspace fourth quarter and full year 2022 earnings conference call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I'd like to turn the conference over to Janine Fyand from Talkspace.

Good morning, and welcome to Talkspace's earnings conference call for the fourth quarter and year-end 2022. I'm Janine Fyand, Director of Communications. I hope you've had the opportunity to access the press release we posted on Talkspace's IR website and the presentation of our earnings results. We'll use this presentation to walk you through today's remarks. Leading today's call are our CEO, Dr. John Cohen, and Jennifer Falk, Chief Financial Officer. Management will offer their prepared remarks and will take your questions at that point. Certain measures we'll discuss on this call are expressed on a non-GAAP basis and have been adjusted to exclude the impact of one-off items. Reconciliations of these non-GAAP measures are included in our earnings release and on our website, TalkBase.com. I also want to remind you that we will be discussing forward-looking information today, which may include forecasts, targets, and other statements regarding our plans, goals, strategic priorities, and anticipated financial results. While these statements represent our best current judgment about future results and performance as of today, our actual results are subject to many risks and uncertainties that could cause actual results to differ materially from what we expect. Important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release. For more information, please review our safe harbor disclaimer on slide two. Now I will turn it over to Dr. John Cohen.

Thanks, Janine, and welcome to Talkspace's fourth quarter and full year 2022 earnings call. Thank you all for joining us today. As this is my first full quarter earnings call since becoming CEO back in November, I want to reiterate my continued optimism about the current and future state of the business. As you will hear on this call, our positive results from the last quarter, the sustained trajectory through January, and our positive guidance for 2023 confirms my impressions on the positive future of this business. I'd like to spend a moment discussing how awareness for mental health has drastically changed in the short term and the positive tailwinds we continue to see for the industry. The federal government, multiple states, large employers, colleges, and grade schools have all announced new funding initiatives in support of mental health services. Barely a day goes by when there is not some news event highlighting the need for enhanced mental health services in the country. Talkspace was created as a technology-driven platform to address the fundamental lack of access and the significant stigma related to mental health care. The initial market growth was accelerated by the COVID-19 crisis when we saw incident rates of anxiety and depression rise significantly. Telehealth solutions were significantly accelerated by COVID, and telehealth mental health emerged quickly as an effective system to deliver mental health services. Two weeks ago, Talkspace released our early findings that text therapy was highly effective for frontline healthcare workers at the onset of the COVID-19 pandemic. Over 600 healthcare workers from major hospitals across the United States participated. We found that 56% of healthcare workers reported clinically significant improvements in their anxiety and depression symptoms with just three weeks of therapy. Our business model allows us to take advantage of the large, growing, under-penetrated addressable market. Our extremely strong brand and success from exceptional outcomes helps bring in more potential users. Our brand strength built on our experience is a fundamental part of our competitive edge in the market. Unlike our competitors, Talkspace is a pure play mental health company. We offer the full spectrum of mental health services, self-guided texting voice live video multiple subspecialties and psychiatric services in q4 very well mind conducted a comprehensive analysis of digital therapy platforms to help readers find options that suit their individual needs to serve as a starting point as to where to begin they awarded talkspace the best large service of 2022 out of 55 online therapy companies evaluated. With that, let me turn to our near-term strategic initiatives. In the past several months, we have aligned the company around our overall priority to achieve profitability while making Talkspace the platform of choice for people seeking therapy, enterprises seeking to provide their constituents access to therapy and to providers. We have developed four specific strategic objectives to focus the management team and employees to deliver on the financial plan. These objectives have a clear operational program and metrics behind them to deliver on that plan. Number one, grow our behavioral health and employee assistance plan member business. The investment of resources to establish Talkspace as an in-network provider has been substantial. and is the foundation of our competitive edge to serve the mental health care addressable market now and in the future. Let me elaborate on some aspects of this important capability. First, we are able to onboard payer lives efficiently while supporting often complex technical requirements when integrating with the payers. Second, we have established vigorous credentialing processes for our clinicians to serve as in-network providers. And third, We have built our revenue cycle capabilities, including real-time eligibility assessments and in-house claims processing to effectively bill and collect from the payers. These are critical competencies that take years to build and help establish our competitive edge in the market. Our specific goals to grow this part of the business include increasing revenue from existing covered lives, adding new covered lives, increasing sessions per day, and increasing therapist ratings. Second, our intention to build a bigger and more focused direct enterprise business solutions. More specifically, focus our sales teams on both small and large companies, universities, schools, and government entities. Our goals include improving and upgrading the talent within the organization and improving the product offerings. Along those lines, we recently hired a new Senior Vice President, Steve Smolich, who brings a wealth of experience to the HR benefits sector specifically and to lead the DTE sales organization. Recent product innovations to help reduce the friction in adoption and usage, including Talkspace SLEC solution. This is our offering for employers who want a low-cost solution to help employees gain knowledge of and appropriately utilize their behavioral health benefits from their employee assistance plans and their behavioral health plans. We help them with two products, Talkspace Engage, a product for human resource executives. Engage is an entire mental health engagement suite that helps HR professionals promote mental health awareness internally and drive employee utilization. It does this via a step-by-step monthly awareness plan to prop their people to take action. A huge selection of live and on-demand therapy workshops and downloadable worksheets with mental health exercises. Next is the Talkspace Self-Guided, a product for the employees. Talkspace Self-Guided is one of the most popular self-guided wellness apps in the market. It provides users with daily reflections, a huge selection of self-guided sessions on topics like burnout, depression, parenting, substance abuse, et cetera, and five live workshops every week, each led by licensed clinicians. Third of our major objectives is to continue to be the platform of choice for providers with the specific goals of increasing the network hours work, improving NPS score, and decreasing monthly churn. Talkspace has thousands of licensed providers across all 50 states. Each of them have a master's degree or higher and have, on average, nine years of experience. And, of course, each is required to pass a thorough screening and onboarding process. For the fourth quarter, we continued to grow our provider network, increasing the total number of providers 11% quarter over quarter. Utilization and productivity from our full-time therapists trended positively as we saw an 11% increase in their billable hours quarter over quarter. Provider retention rates improved as well, as monthly churn has approximately halved in the fourth quarter, versus the prior period. And finally, under the last bucket, we significantly improved our time-to-access metrics with average match times declining by more than 50% in Q4 versus Q3. Fourth objective is, as Jennifer will dive more deeply into, we will continue to work on achieving operational and compliance excellence, which entails focusing more on our cost structure, collection rates, and compliance. As we have previously said, our focus on driving down operating expenditures includes labor cost efficiencies, optimizing market spend for revenue and profit growth, vendor contract renegotiation, sales force productivity, network productivity, and streamlining corporate spend. Going forward, we will continue to adopt a disciplined approach to spending, leveraging the scalable nature of our fixed cost basis, which enables growth at lower cost. And now let me turn to the full 2022 financial highlights, which the results demonstrates that we are delivering on the strategic priorities and business transformation. Beginning with revenue, year-over-year revenue grew 5%. Total B2B revenue, which includes both member payer, which is the Employee Assistance Program and Behavioral Health, and direct-to-employer or enterprise, increased 66% year-over-year, while consumer revenues decreased 26% during the same period. For the year, we grew our covered lives by 33% to 92 million covered lives. B2B payer sessions volume grew 56%, and we grew the B2B DTE account base over 43%. Of note, we ended the year with B2B revenue representing more than half of the company's revenue for the year, an inflection point that started in the third quarter and widened in this quarter's results. So now let me turn to the fourth quarter results. In the fourth quarter of 2022, revenue for B2B, which includes payer, the EAP, and behavioral health, and the direct-to-employer, increased 52% over the same period fourth quarter for 2021, a year ago, and 15% sequentially. In the fourth quarter, we added an additional 6 million new covered lives while also launching another national health behavioral payer. We continue to experience meaningful growth in sessions in the fourth quarter compared to the fourth quarter of last year as well as over the previous quarter. It is important to note that we achieved these strong results in what is traditionally a slower quarter due to seasonality, which includes the therapists going on holiday or decreasing their work hours and users skipping their sessions over the holidays. From a profitability standpoint, you can see the tremendous work the team has achieved in reducing our adjusted EBITDA loss in the fourth quarter as compared to the same period a year ago on the back of our focus on reducing operating expenses that were not driving revenue growth or efficiencies in the business. Jennifer will expand more on our financial results on her section, but I want to note our commitment that we will remain very disciplined in our spending with a focus on efficiency and funding, only our highest priority investments. And with that, let's turn to our guidance. With the disciplined and focused plan we have put in place to deliver on our fiscal 2023 goals, we are providing the following break-even guidance. We will be within a range of $125 to $135 million in revenue with a minus $32 to minus $28 million in adjusted EBITDA loss for the full year of 2023. These guideposts will help mark our progress on the way to break-even adjusted EBITDA with a cash balance of at least $95 million by the end of the first half of 2024. Note that this targeted approach to cash preservation while on our path to profitability provides us with sufficient room for additional strategic initiatives. I will now turn the call over to Jennifer for a more detailed discussion on results and outlook.

Thank you, John, and good morning, everyone. My discussion today will be based on fourth quarter results on a sequential quarter-over-quarter basis. I will cover highlights across our financial results, provide more detail on our corporate operational objective, and lastly, I will share some guideposts for our expected break-even timeline, including 2023 guidance. Starting on slide seven, revenue for the fourth quarter was $30.2 million. an increase of 3% from the third quarter of 2022. This increase was driven by continued strong momentum in payer sessions and DTE revenue, partially offset by continued and anticipated lower consumer revenue. Our fourth quarter gross margin was 53.5%, and gross profit grew approximately 11% sequentially to $16.2 million. primarily due to the full quarter effect of Q3 price improvements in DTE and higher provider productivity from actions finalized in the network in the third quarter. These benefits were partially upset by the mixed shift toward B2B revenue categories. On slide eight, you will see the breakout of our three revenue categories. Consumer revenue was $11 million, down 13% from the previous quarter, driven by a 14% reduction in active consumer members from the end of Q3 to the end of Q4. This was the result of continued optimization of the unit economics in this category. We further reduced media in the quarter, which is now down 60% from Q3 2021, with revenues down 41% over the same period. B2B payer revenue was $10.7 million, up 13% compared to the third quarter as sessions completed by members covered through their EAP benefit or their insurance increased 15% to 128,000 sessions in the fourth quarter. As John mentioned, we had anticipated a possible reduction in sessions in Q4 due to seasonality as providers take time off for the holidays and members reduce their consumption. We were pleased with only a moderate impact on session growth in the quarter, and as John mentioned, we see good momentum in sessions so far in Q1. as more and more members are leveraging their in-network health benefits to access Talkspace. Lastly, B2B direct enterprise revenue for the fourth quarter was $8.6 million, driven in large part by new accounts, which totaled 226 at year end, as well as the full quarter impact from Q3 account renewals on favorable terms. Turning to slide nine, fourth quarter gap operating expense increased to $37.2 million. primarily due to a non-recurring expense of $6.1 million for the impairment of goodwill, as well as an estimate for one-time legal expenses. Excluding these charges, other favorable non-recurring items and stock-based compensation, Q4 expenses were approximately $25 million. Compared to $30 million in the third quarter and demonstrating important progress that we have made not only in optimizing advertising spend but in driving efficiencies across our entire expense base. As planned, we reduced advertising spend 16% from third quarter levels in anticipation of seasonal adjustments to volume described earlier and higher advertising unit costs. As I previously mentioned, we have made meaningful strides to optimize the economics in our consumer category. We now have unified our product funnel, marketing function, and advertising spend to leverage our brand, traffic, and expansive covered live space to drive member growth. We are very encouraged with the early trends we are seeing, and this is reflected in our guidance, which I will discuss in a moment. Besides the continued reduction in advertising spend, and as we highlighted on our last call, in the fourth quarter, we took important actions to further reduce our cost base, which came primarily through a reduction in corporate employee headcount and through the elimination of several third-party vendors. The fourth quarter adjusted EBITDA loss narrowed to $8.9 million, an improvement of $6.6 million compared to the third quarter, driven primarily by these cost reductions. Turning to the balance sheet, cash burned for the quarter outpaced adjusted EBITDA loss by approximately $5 million, of which $4 million is attributable to non-recurring cash flows, including the timing of certain vendor and customer invoices. As a result, we ended the year with a very healthy balance sheet with $138.5 million of cash and cash equivalents. Going forward, we expect our cash flow to trend largely in line with adjusted EBITDA, with the exception of net working capital expansion related to our growing payer business, where the claims process typically takes a few weeks. Turning to slide 10, I would like to share the key elements of our strategic priority addressing operational excellence. Importantly, we have an operational plan in place that comprehensively supports our financial plan. This means that each employee has objectives that tie directly to our company priorities. This is important to us as it drives engagement and accountability in execution at every level. Next is operating efficiency. Ensuring our fixed cost base is commensurate with our gross profit. As John described, We made meaningful investments in 2022 to our systems, processes, and controls to ensure our ability to leverage and scale the operations as we grow. And we continue to optimize capital allocation across the business, prioritizing our most compelling and profitable growth initiatives. Third, we continue to manage our advertising spend with the aim of maximizing total company profit at the member level. Leveraging analytics applied to our platform with flexible programmatic investment channels and optimized creative and targeting to continue to maximize ROI. And finally, revenue cycle management is an important core competency and, as John described, a competitive advantage. We have invested substantial time and effort to build this critical function to serve payer clients, which is vital as we scale the B2B payer business. We're also hard at work continuing to build out our Sarbanes-Oxley compliance program, refining processes and controls across the business. Turning to slide 11, I would like to offer some context for the guidance we are providing today. For 2023, we expect revenue to be between $125 and $135 million, and we expect adjusted EBITDA loss to narrow within a range of $32 to $28 million. Each of these points are supported by what we have discussed throughout this call and highlighted in the strategic priorities that John described. First is demonstrated in our Q3 and Q4 results and further supported by our view that the mental health care market growth will be primarily driven by expansion of access and members leveraging health benefits. We believe B2B payer revenue growth will outpace other revenue categories.

This will be driven

primarily through continued growth and utilization, as well as expansion in covered lives. We also expect that consumer revenue will begin to stabilize this year as a result of our improvement to the member experience. Over the course of the year, we expect gross margin to trend slightly lower from the Q4 2022 level as the revenue makes shifts towards B2B categories, partially offset by price optimization initiatives and continued increase in provider network efficiency. We also believe we have significant operating leverage from our current infrastructure and have the ability to continue to optimize our costs to deliver on our path to profitability. We expect the company to reach break-even adjusted EBITDA by the end of the first half of 2024 and will have more than $95 million of cash remaining on the balance sheet at this time. This cash balance factors in the increase in networking capital required by our growing B2B category and also the investments we will make to continue to grow revenue and profitability over time. As John noted, this ample cash reserve provides us with the flexibility to adjust to any market trends while capitalizing on future strategic initiatives. We believe these four points outlined in our guidance demonstrate our enthusiasm about the fundamentals of our B2B payer and DTE categories, and our confidence in our ability to leverage our OPEX base to scale the business to profitability. And with that, I'll turn the call back over to John.

Thanks, Jennifer. In summary, we are excited by our opportunity to leverage our existing operating base and capabilities to capitalize on the growing mental health total addressable market and shift towards members leveraging their health care benefits. By driving growth across our B2B payer as well as the DTE categories, focusing on becoming the platform of choice for providers and striving to achieve operational excellence, we have put ourselves on a path that we believe will enable us to reach break-even adjusted EBITDA by the end of the first half of 2024 while maintaining a strong cash balance that provides us with the operational flexibility to opportunistically capitalize on our other strategic initiatives. With that, we will open it up to Q&A.

Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We ask that you please limit yourselves to one question and one follow-up to allow everyone an opportunity to ask a question. We'll go first to Charles Wright at Cowen.

Hi, this is Lucas on for Charles. Thanks for taking the questions. Your guys' 2023 revenue guide implies around 5% to 13% year-over-year growth. Obviously, there's some moving pieces between the B2B and B2C segments. If we assume B2C revenue stays at this rate, at the 4Q rate through 2023, it implies B2B revenue is growing somewhere in the neighborhood of 30% to 35%. One, is that the right way we should think about the guidance? And then two, can you give us some detail on what you guys are seeing in terms of underlying demand in the B2B market, especially given the macro uncertainty that employers and consumers are facing?

Yeah, thanks for the question, Luca.

So I'll start with just kind of highlighting some points. around the revenue guidance that we've provided. And then I'll pass it to John on what we're seeing as far as demand in the B2B segment. So first of all, like I said, consumer revenues, we see that stabilizing this year. We see our product enhancements helping to offset any pressure that we could see in consumer spending, which is a factor, of course, as these are members that are paying out-of-pocket for Talkspace therapy. In the DTE space, this is an exciting category for us. John will talk more about that in a minute and expand on the comments that we've already made. This is also, though, our kind of lumpier revenue category. As we've talked before, we're pursuing larger employers and enterprises, which tend to have longer lead times, as well as refactoring in a macroeconomic factor that could just make those lead times be a bit longer. Having said that, we still see mental health care coverage for employees being the highest priority for decision makers for companies. On the B2B payer revenue, like I said, we see this being our biggest growth driver and becoming the largest portion of our revenue base. going forward. We've seen really strong growth in sessions completed in this category in the last several quarters. And like we said, we continue to see this growth in Q1. So with that, I'll pass it to John.

Thanks. I think that I've talked about before, the addressable market is unknown because it's so large. What we're seeing is a to reiterate a significant demand on what we're really calling the enterprise, and as Jennifer mentioned, BH and EAP side. But let me just talk about the enterprise side. The reason we call it enterprise is because it's a significant number of large employers. We divide it up by both large and smaller employees, depending on the number of employees. We've also seen other significant interests on the education side, universities, colleges, public schools. and actually also on the government side, cities and states. So the demand has been significant. We've built out the commercial organization. We continue to build out the commercial organization to address the needs as we see them come in during the year.

We'll go next to Ryan Daniels at William Blair. Hi, good morning. This is Jack on for Ryan.

It looks like we saw, you know, a decent step down in spend on clinical operations, both in absolute and relative terms this quarter. And, you know, I was kind of surprised to hear in your prepared remarks that you also experienced double-digit provider growth, you know, especially alongside this delta. Any commentary on what drove this lower clinical operating expense?

Yeah, thanks, Jack.

So two things of note. First is the cost of our therapists that are providing service to the network are captured in our cost of goods. So it will be captured in our margin line. The step down in clinical operations on a reported basis was the impact of some favorable, a reversal of an accrual that was favorable to our expense base that's captured in are non-recurring items for the quarter.

Okay, great. Thank you. And then I guess moving to marketing spend, we also saw a nice step down this quarter, down roughly $4.3 million. And this is something similar to what we've seen over the past five quarters. So you're now sitting at roughly 47% of the percentage of sales Any color into where you see this spend category sort of bottoming out? And with that, any insight into, you know, the forward cadence of this pullback? Thank you.

Yeah. So, yeah, thanks.

So, you know, we described $5 million removed in our cost base in the fourth quarter. So this included both the expected impact that we had from some significant cost reductions that we described earlier in the fourth quarter. At this point, I would describe our run rate Q4 OPEX of $25 million as our new high watermark. So we said earlier we're going to continue to scrutinize our cost structure, ensuring we're optimizing for efficiency. We did this with several actions in the fourth quarter, but going forward and as enabled by our operational plan that we described, Eliminating lower priority work or finding more cost effective ways of getting work done will be the way we operate going forward. So this makes it to where we can eliminate that lower priority work but also fund important investments that we see as we find them in organic revenue growth opportunities. So these two things make us confident that our current cost base provides us with that operating leverage as we scale the revenue line.

We'll take our next question from Stephanie Davis at SVB Securities.

Hey, guys. Thanks for taking my question. I've got a math one, so buckle up. When I think about your path to EBITDA break-even in 2Q24, that implies not just 37 points of margin expansion this year, but an acceleration of that pace in the first half of next year, 22 points. And that's despite gross margins trending down significantly. and some seasonality in the business. And then if you look at it another way, it's $70 million of EBITDA dollars that you need to regain to get to break even, which represents half of your total OpEx, despite John's prepared comment that sounded like there were some investments in a few of these OpEx categories. So talk me through this math. How are you getting there? How is this pace accelerating? And what levers are you pulling in order to – to make sure you're able to grow while still having your OpEx halved.

So, thanks Stephanie.

So, maybe a couple of things. One, earlier I further described what we're seeing on the revenue lines without getting specific between the categories. We see growth on B2B payer. We're excited about our B2B DTE category. and we see stabilization on the consumer line of move to margin. And again, we're not getting specific on category margins, but we've got, you know, we've noted before our B2B categories have a lower margin. Having said that, we've got a few efforts underway that help to offset that. So one is driving productivity within the network. There's a couple of items. There we took several actions last year related to our full-time therapist network, so eliminating lower productive areas of the network and then going forward only adding back full-time therapists as we're able to fulfill demand and they're done in an efficient way. This leaves us with a lot of leverage as we grow our contractor network in a way that's really efficient, essentially. It becomes a very variable, just purely variable item on our margin line. We're also working on the value of our offerings in terms of net price. I commented on both in the third quarter and in the fourth quarter having benefited from price renegotiations on more favorable terms, particularly in our DTE category. We have more opportunities here. I'll say mainly in the payer space by improving our collection rates with payers. We have some positive projects underway where we see that as being an opportunity for us. Having said that, then you go to OpEx and like I said, we're going to continue to make sure that we're managing OpEx in the most optimal way across scrutinizing headcounts, third-party spend, but also in terms of our advertising spend as we are focusing that spend on making sure we're maximizing profitability across the business.

Hey, Stephanie, it's John. Good morning. Yeah, I want to reiterate that if you're looking at the OPEX trajectory, there is actually, you know, not just in our mind, a plan, which is fairly significant and obvious for more room for us to take out OPEX costs. And, you know, that is part of the trajectory about how we're going to get there to break even, you know, by, as we said, the first half of next year. So the trajectory will continue is what I'm telling you. And we have – so we have room there to continue to take out costs as needed. At the same time, remember, the platform is essentially built – it's been the 10 years that we've built this base of a platform that functions extremely well. So although there will be some other – possible capital investments in some other areas, there is not a significant need on the base of operations to further improve the product. So that's a really important issue. We're not in a category of a digital company where we need to continue to invest significant dollars in a platform to make it functional. That is not the case here. So that is a really important issue for us as we move forward.

So let's maybe dig in a little bit into one of those areas, Sven, that you mentioned, the sales and marketing side of the world, where it sounds like you're looking at D2C stabilizing, but maybe getting more efficiencies out of that. How should we think about the forward arc of your investments in the D2C business?

Yeah, so I guess, you know, and we've

We've commented earlier about how we're viewing investments really on a kind of platform basis. So optimizing, you know, we've historically focused on consumer members as we've commented on advertising fund. You've heard us for the last several quarters comment on how at this point we have unified all aspects of our business. And that's really given the market trends that we described earlier. The market's driven by people looking to leverage health care to cover their therapy. So for us, this includes optimizing our channels for acquisitions, meaning our media spend, regardless of payment type, and explicitly leveraging our advertising messages to aid awareness of our expansive covered lives. So we're seeing really encouraging results so far. and the data that we've had with that messaging. So in short, we're maximizing overall profit, whether that acquisition and the denominator comes from a B2B payer or from a consumer member. And like I said, we're seeing really good momentum on the B2B payer demand from these efforts.

Yeah, and again, let me also reiterate that the investment in the marketing spend is – is targeted to all members. It is not a breakout like we're specifically targeting the B2C market. We're targeting members as that affects the broad platform of the people. So it's obviously somewhat of a different approach relative to how we address it, but it's no longer like we're saying this is the amount of money we're going to put into marketing on the B2C side.

All right. Understood. Thank you, Kay. We'll go next to Daniel Grosslight at Citi.

Hi, guys. Thanks for taking the question, and congrats on the quarter. I'm going to stick with Steph's line of questioning here because we, too, are surprised on the cadence of OpEx improvement over the next year, year and a half or so. So maybe if I could take kind of the flip side of that coin and focus on revenue growth you know, I guess, is there a way to dimensionalize how fast you have to grow the top line to get to that break-even point in the first half of 24? Because at some point, there's only so much juice you can squeeze out of the cost structure that you have. You're going to need, I assume, to accelerate growth at some point, or you're going to see some type of diseconomies of scale. So can you just talk about how much growth you will need to see on the top line to reach that break-even point in the first half of 24?

Maybe just a couple of points to add to what we already have, which is, you know, I guess there's an element of, well, first of all, just the growth in the B2B categories that we've already demonstrated that, like we said, we see continued momentum there even in the first quarter. I'll say that, you know, the difference between as we close this year and our revenue guidance for that versus any acceleration as we see in the first half would be impacted by our view of potential seasonality that we historically see. We did see a moderation of growth in the fourth quarter. Like I mentioned, we were really pleased that we didn't see a big impact for that. But that is something to think about as you look at kind of run rate revenue in our expectations.

Got it. Okay. And then maybe a bigger picture question and questions around controversies more broadly, not related to ToxBase specifically, but there's two controversies that came up recently in digital health more broadly. One, there was a news article a week or two ago, I'm not sure if you saw this, about an academic paper written by someone who used chat GPT to conduct mental health visits without the patients actually knowing I think and it performed pretty well chat GPT this AI tool so question one is you know how can you or do you intend to use some new AI tools that have come to market more recently to make your provider network more efficient that's controversy one controversy two is Just on the use of trackers, pixels, to do some performance marketing to some members, how are you using member data to do performance marketing? Are you using Facebook pixels and sharing data with Google and other performance marketers to advertise to your potential members? Thanks.

So, it's John. So, let me take the first. We have... for quite some time been, you may know we have a fairly robust research team, data analytics. So we have more than a fair degree of data that looks at issues that you're referring to around AI. I will, I'm going to reserve comments now to the, at least the next, probably the next quarter. But we already have in place substantial data analysis to look at how people perform and what those messages need to be to therapists. So what I mean by that is I've seen and understand exactly what you're talking about relative to chat PTT. Our approach on this is not right now is not going to be that a ChatGPT will provide a substitute in any way for the therapist. What the AI information can do, though, is what it will do is help direct the therapist in ways of which to provide better therapy for their patients. So that's where I see as the next obvious place for AI to begin to have an impact to improve Not just therapy, but the performance of the therapist to improve the quality of the product that we're delivering to people. So that's what I believe is going to happen. And as I said, I'll have more to talk about that in the future. But it is, to answer your question, it is very much on our radar. And we have substantial information and experience with it that I'll talk about in the future. So that's A. In terms of the data analysis relative to how the platform performs on social media, our marketing department is really, really good at this. They have now, they have for some time been able to analyze where the marketing dollars go, who actually clicks through. So we will have the information on our social media, from our social media data around the analytics to be able to track how we're performing relative to ad marketing spend. So that actually is already in place.

And just to add that, we do not share pixels once a member engages back with us. So we are very, very... No, we are absolutely confident we're not sharing personal information. I'm familiar with the article that you're describing, and I can assure you that is not how we are operating.

It's more so on the... spend, we know what the click-through is so that we can modify our spend rate. Makes sense. Thanks for the comment.

And that does conclude the question and answer session. At this time, I'll turn the conference back over to John for any closing remarks.

Okay. Well, first off, thank all of you again for joining us this morning. on Talkspace fourth quarter and year-end 2022 earnings call. As I noted earlier in the call, our positive results from the last quarter, our sustained trajectory through January, and our positive guidance for 2023 confirms my impressions on the absolute positive future of this business. We look forward to sharing updates on our progress sometime in the near future and certainly on our next earnings call. Thank you once again.

And that concludes today's conference call. Thank you for your participation. You may now disconnect.