Talkspace, Inc.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Talkspace first quarter 2025 earnings call. 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 star, followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Janine Supine. Please go ahead.

Good morning and welcome to Talkspace's earnings conference call for the first quarter of 2025. 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 the presentation to walk you through today's remarks. Leading today's call are our CEO, Dr. John Cohen, and our CFO, Ian Harris. Management will offer their prepared remarks and will then take your questions. 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, Talkspace.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.

Good morning. And thank you for joining the call today to review our first quarter results. We had a good start to the year with revenue growing 15%, session volume up 23%, and EBITDA up 153% over the first quarter of last year. May is Mental Health Awareness Month. This year, we are reaffirming our commitment to breaking down barriers to care for millions of Americans with our Let's Face It campaign. where we demonstrate how Talkspace members use our platform to confront what may be holding them back. As a leading behavioral health provider with meaningful scale and reach, we are actively leveraging multiple channels, several of which I'll touch on today, to raise awareness and drive members to our solution. We view the work we do across all areas of our business as part of a cohesive strategy aimed at building the most comprehensive approach and delivering behavioral health care to more Americans. With nearly two-thirds of Americans having access to Talkspace through their insurance plans or their employee assistance plans, we remain focused on the most significant opportunity, which is driving engagement within that population. We took meaningful steps in the quarter to optimize our funnel through a variety of technological improvements aimed at getting more people onto the platform, but even more importantly, delivered better quality of care by keeping them engaged in their therapeutic journey. Specifically, we enhanced our real-time benefits verification with proprietary algorithms to overcome user and eligibility errors at the onset of registration. These efforts have reduced our drop-off rate by more than 12% at the early stage of the funnel, driving additional new registrations this quarter. No matter how a member pays for Talkspace, they're able to seamlessly switch to other payment methods and keep their same provider. Coverage may change, as is often the case each January, but the continuity of care with the provider won't. An example of this optimization is the creation of a new easy button for our EAP members to convert to their employer's behavioral health insurance coverage when they exhaust their EAP plan sessions. Users are now notified when EAP sessions are running low, thus reducing friction related to checking coverage benefits and making a switch while continuing with their existing provider. This is an incredibly important step to facilitate our members' continuation on the platform, as well as to ensure the continuity and quality of care. These are just a few examples of the work our product team is implementing to improve our customer experience and provide care for as long as clinically necessary. We also remain relentlessly committed to delivering high-quality care and positive outcomes for users of Talkspace. Through our more than 30 peer-reviewed studies, we have consistently shown outcomes at parity with in-person traditional therapy, serving as proof of our efforts to show efficacy and quality across multiple modalities while ensuring this work is all backed by third-party academic review. The high-quality care our network of therapists provides remains a key differentiator for Talkspace as a service provider as opposed to just a directory of providers. This is very important to our payer partners, especially as value-based contracts become more prevalent. As I have discussed in the past, we use qualitative and quantitative data and metrics across five key areas to assess our providers and our network. Armed with that data, We work extensively to ensure the highest quality care platform through rigorous hiring and onboarding standards, extensive training, education, and outreach, continued network and quality management activities, and risk management support. During the first quarter, we made progress in broadening the reach of Talkspace as an affordable option for care, now with nearly 200 million covered lives. As a result of our broad member access and our high levels of clinical quality, we are working diligently with our payer partners to better integrate our solution into their online member experiences to make it easier for members to discover Talkspace, and I am extremely pleased with our progress in this area. In January, we rolled out additional military coverage, launching TRICARE West. ThoughtSpace now covers all of TRICARE's 10.5 million members, including families and dependents. Our reach into various military communities through a series of specialized grassroots efforts has been very successful and very cost-effective to date, with significant numbers of military personnel and their family members engaging in therapy. We are seeing that this audience relies extensively on word of mouth and loyalty from recommendations within their communities and are very open to therapy. In January, we also began to deploy initiatives to address the Medicare population, and as a result, we are seeing growth in our Medicare registration. In addition, we are witnessing strong patient outcomes with this population, as 84% of Medicare members showed clinical improvement, surpassing typical expectations of around 70%. We will continue to focus on initiatives that feed organic awareness that Talkspace has now covered for Medicare beneficiaries. In fact, We just announced last week that Gary Livingston, a fan favorite from the popular Golden Bachelor franchise, is our Medicare spokesperson as we enter Mental Health Awareness Month. We believe that psychiatry is an important growth opportunity for the company. In the first quarter, we reconfigured a dedicated team to refine and relaunch our psychiatry offering for individuals 18 and older, which include medication initiation and management for commonly treated conditions such as anxiety and depression. As a covered benefit, we have seen a significant increase in demand for this offering from our partners and from internal referrals via our own providers treating therapy members that need this additional level of care. In addition, we recently expanded our relationship with ZocDoc to include our psychiatry offerings. Our direct-to-enterprise pipeline remains strong, including a renewal with the City of Memphis and meaningful contributions from recent additions, including U.S. rowing, the U.S. Navy, and most recently, students at the University of Alaska Anchorage. Last week, we announced another exciting agreement with Bark Technologies, the leader in online safety technology for kids. Through their phone and app, Bark covers 7 million children. Along with their technology installed in over 3,700 school computers, They provide safety alerts in 45 different categories and scan messages in over 30 social media apps, web browsers, and emails. They have detected and alerted parents to over 2.7 million episodes of possible severe self-harm situations. Talkspace will now be available on all Bark phone and Bark app users and will come preloaded on Bark phones, connecting teens and parents to Talkspace help them navigate the many emotional challenges these teens face today this partnership with bark in addition to our teen initiatives with multiple cities and schools around the country builds on our commitment to addressing the teen mental health crisis in the country in the past several months we have announced several ai applications including Artificial intelligence augmented intake systems that surface key symptoms, psychosocial contacts, and diagnostic considerations. Streamlining client onboarding and clinical assessments, including real-time clinical documentation, summarization, and decision support to reduce administrative burden. Client engagement tools that increase therapeutic adherence and continuity, including TalkCast, our personalized podcast feature for adults over the age of 18. Our goal with this product is to drive member engagement between sessions, keep members focused on their progress, and ultimately assist in clinical improvement. We have generated 6,000 podcasts in the first several weeks and are already receiving very positive member and provider feedback. In the last several weeks, we have validated a new risk assessment tool, a home aside violence ideation algorithm that is over 90% accurate in determining risk for violent behavior, including homicidal ideation, and surfaces this risk to clinicians in real time. I am purposely highlighting these AI initiatives in the context that utilizing advanced technology to deliver better mental health care solutions has been at the core of Talkspace since its inception when we developed asynchronous messaging as an effective method for delivering therapy. The next chapter in innovation and growth is to further integrate AI to deliver even better mental health support. With over a decade of experience in applying advanced technology to behavioral health care and owning the largest behavioral health data sets in the industry, we are now actively working on the development of a first of its kind foundational large language model. Talkspace is uniquely positioned to build this foundational model trained on de-identified clinical data aligned with evidence-based therapeutic frameworks. Unlike horizontal general purpose models, this vertical AI platform will not only enhance existing Talkspace services, but also serve as a launchpad for future AI applications and behavioral services, unlocking new possibilities in clinical innovation. Finally, I'd like to proactively address a common question we've received amid recent market volatility. Our business is not directly affected by tariffs. More importantly, our long-term strategy has shifted the core of our business to an insured patient base, reducing reliance on out-of-pocket spending. As an in-network provider for nearly 200 million covered lives, we remain accessible and affordable. We are a national provider for Medicare, including Medicare Advantage, and continue to benefit from the federal investment in senior mental health. Since we're not in Medicaid, we are insulated from potential changes to those programs. To conclude my comments, I am very pleased with how we started the year and confident in our trajectory for the course of 2025. We expect continued demand for our convenient, affordable, in-network care and remain confident in our full year guidance. And now I turn it over to Ian.