Talkspace, Inc. (NASDAQ: TALK), today reported fourth quarter and 2022 full year financial results.
| Three Months | Full Year | |||||||||||||||
| Year Ended December 31, 2022 (Unaudited) | Results | Variance from Prior Year % | Results | Variance from Prior Year % | ||||||||||||
| (In thousands unless otherwise noted) | ||||||||||||||||
| Number of B2B eligible lives at year end (in millions) | 92 | 33% | 92 | 33% | ||||||||||||
| Number of completed B2B sessions | 128.4 | 57% | 426.4 | 56% | ||||||||||||
| Number of B2C active members at year end | 15.4 | (35)% | 15.4 | (35)% | ||||||||||||
| Total revenue | $ | 30,241 | 4% | $ | 119,567 | 5% | ||||||||||
| Gross profit | $ | 16,175 | 1% | $ | 60,338 | (10)% | ||||||||||
| Gross margin % | 53.5% | (1.2) pts | 50.5% | (8.2) pts | ||||||||||||
| Operating expenses 2 | $ | 37,206 | (16)% | $ | 143,496 | (11)% | ||||||||||
| Net loss | $ | (18,307 | ) | 13% | $ | (79,672 | ) | (27)% | ||||||||
| Adjusted EBITDA 3 | $ | (8,869 | ) | 50% | $ | (58,671 | ) | 4% | ||||||||
| Cash and cash equivalents at year end | $ | 138,545 | (30)% | $ | 138,545 | (30)% | ||||||||||
(1) Q4 2022 run-rate operating expenses exclude a non-recurring goodwill impairment charge and other non-recurring litigation expenses, partially offset by one-time savings related to marketing expenses.
(2) Includes a non-recurring goodwill impairment charge of $6.1 million and non-recurring litigation expenses of $5.5 million.
(3) 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.”
Dr. Jon Cohen, CEO of Talkspace, said, “We are pleased with our fourth quarter and full year results showing progress against our strategic priorities, as we continue to expand the business-to-business (“B2B”) payor and direct-to-enterprise (“DTE”) categories while further reducing our cost base and realizing operational efficiencies through our integrated marketing efforts. We are excited about the demand tailwinds we see in our industry and the continued expansion of access to mental health care. We have clearly defined our operational priorities to serve this growing market and we have a clear operational focus on the company’s path to profitability.”
Jennifer Fulk, CFO of Talkspace said, “Our fourth quarter revenue was $30.2 million, with the growing payor and DTE segments representing 64% of revenue in the quarter. We also made important progress on reducing our cost structure and further optimizing our media spend, positioning our company to support strong growth with minimal investment going forward.”
Full Year 2022 Key Performance Metrics
- Revenue grew 5% to $120 million, driven by a 65.5% growth in B2B revenue, partially offset by a 26% consumer revenue decline. B2B revenue performance was driven by growth in eligible lives, payor session volume, and enterprise account growth. Consumer revenue declined, as expected, due to our decision to continue to optimize marketing spend.
- Gross Profit declined 10% to $60 million, and gross margin declined to 50.5% primarily driven by revenue mix shift from consumer to B2B categories and an increase in clinician compensation.
- Net loss was $(80) million compared to $(63) million in the prior year driven primarily by a reduction in financial income related to the warrant revaluation, lower margins from the shift in revenue mix and an increase in clinician compensation, a non-recurring goodwill impairment charge and other non-recurring litigation expenses, offset by lower operating expenses.
Fourth Quarter 2022 Key Performance Metrics
- Revenue increased 4% over the prior-year period to $30 million, driven by a 52% increase in B2B revenue year-over-year and 15% increase sequentially, partially offset by a 13% sequential consumer revenue decline.
- Gross profit remained relatively flat at $16 million, while gross margin declined slightly to 53.5% from the same period a year ago, driven by revenue mix shift.
- Operating expenses were $37 million, down 16% year-over-year, driven by a reduction in our cost base, partially offset by a non-recurring goodwill impairment charge of $6.1 million and other non-recurring litigation expenses in the fourth quarter 2022.
- Net Loss was $(18) million, an improvement from $(21) million in the fourth quarter of 2021, primarily driven by lower operating expenses, offset by a non-recurring goodwill impairment charge and other non-recurring litigation expenses.
Financial Outlook
The following guidance is based on current market conditions and expectations and what we know today.
For the Fiscal Year 2023, we expect:
- Revenue to be in the range of $125 million to $135 million
- Adjusted EBITDA loss to be in the range of $(32) million to $(28) million