Q3 2024 Talkspace Inc Earnings Call
Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the talk space third quarter, 2024 earnings conference call.
All Lions have been placed on mute to prevent any background noise. And after this speaker's remarks, there will be a question and answer session.
If you would like to ask a question, please press star, Ryan on your telephone, keep at it. And if you would like to withdraw that question, again, press star 1. Thank you. I will now, like to have the conference over to Janine Feyen, Director of Communications. You may begin.
Janine Feyen: Good morning and welcome to TalksBasis earnings conference calls for the third quarter of 2024.
Janine Feyen: I hope you've had the opportunity to access the press release be posted on talk spaces IR website and the presentation of our earnings results. We'll use the presentation to walk you through today's remarks. Lead in today's call, our CEO Dr. John Cohen and our CFO Ian Harris.
Speaker Change: Management will offer their prepare remarks and then we'll take your questions.
Speaker Change: Certain measures will discuss on this call are expressed on a non-gap basis and have been adjusted to exclude the impact of one off items. Reconciliation of these non-gap measures are included in our earnings release in our website, TalkSpace.com.
Speaker Change: I also want to remind you that we will be discussing forward-looking information today which may include forecast targets and other statements regarding our planned goals strategic priorities and anticipated financial results.
Speaker Change: While these statements represent our best current judgment about future results in 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.
Speaker Change: Important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release.
Speaker Change: For more information, please review our safe public disclaimer on slide 2. Now I will turn it over to Dr. Jon Cohen.
Speaker Change: Thanks, Jimmy. Good morning and thank you for joining us for our third quarter, 2024 call. Which reflects continued strength in our business and progress on our strategic initiatives.
Speaker Change: So, the third quarter, revenue increased 23% year over year to $47.4 million. And we delivered our third consecutive profitable quarter with adjusted EBITDA coming in at $2.4 million.
Speaker Change: We built on momentum from earlier than the year, working to further solidify our position as a trusted behavior health provider, addressing the nation's massive need for accessible and affordable mental health therapy.
Speaker Change: Our largest revenue category, Payner.
Speaker Change: Through 45% year over year as we continue to strengthen our relationships with the key payer partners and efficiently market our covered services.
Speaker Change: As a pure play, Behavioral Health Provider focused on clinical, excellent at scale, our approach to addressing the behavior of health crisis continues to resonate with the payer community.
Speaker Change: We've earned a respect of the payers with our commitment to research that proves the efficacy of our methods and defines best practices in virtual care and may trust us to connect their members with highly qualified vetted mental health providers without delay.
Speaker Change: Our competitive position in the payer space allowed us to grow our total covered lives in nearly 160 million people and increase of 40% year over year and our total sessions to 316,000 and increase of 38% year over year.
Speaker Change: In the third quarter, we continue to make progress on our goal to be in network for all Medicare beneficiaries.
Speaker Change: As of this month, we are now CMS approved in approximately 40 states and lies in 30 states, including Texas, Florida, California and New York. Therefore providing access to the majority of the senior population in the U.S.
Speaker Change: Our team is working diligently to complete necessary final state approvals and launch our services in the remaining 20 states so that we can begin to test our go-to-market strategies more broadly.
Speaker Change: In addition to traditional Medicare, we are pleased to report expansion into Medicare Advantage with our October 1st launch announcement into the nation's largest Medicare Advantage Plan. Furthering our reach to another 7 million plus lives.
Speaker Change: Reaching seniors will be focused for us and as a start we just announced our partnership with Wisdo and AI driven social-health platform focused on curing social isolation.
Speaker Change: This partnership will allow us to reach even more and do Medicare Advantage plans at to focus on challenges that seniors may have most specifically loneliness.
Speaker Change: In addition to seniors, we are launching our initiative to offer talks base to all active military personnel and their dependents. A population with a significant need for mental health solutions.
Speaker Change: Recent studies suggest that 23% of active military are living with depression and 11% of active military have attempted suicide or have suicidal ideations and these numbers are growing.
Speaker Change: In addition, military families and their spouses reported elevated need for mental health support, given that over 30% of military deployments and separations are a month or longer, and a significant number of military children have a treatable mental health condition.
Speaker Change: We launched TriCare East in August covering 6 million active duty and retired military lives, as well as their partners and team dependents.
Speaker Change: We expect to be a network nationally for the remaining trichair beneficiaries in early 2025.
Speaker Change: The End
Speaker Change: Building on this launch, we have entered into a new Direct to Enterprise pilot program with the US Navy where we will provide talk-says access to six naval bases across the US representing more than 25,000 sailors and their dependents, 13 years and older.
Speaker Change: The opportunity to support the mental health of our military and their families is an honor that is profoundly inspiring to our providers and deeply appreciated by our organization as a whole.
Speaker Change: With the addition of Medicare, military and several other large regional plans, we expect to be in network for approximately 200 million lives in 2025, about 2 thirds of the US in short population.
Speaker Change: Our priority is to unlock the potential of this enormous opportunity by focusing our efforts to first increase the number of people who recognize and try talks base as their therapy option.
Speaker Change: and second, keep them engaged and on the platform for subsequent sessions under our providers' care to improve their long-term outcomes.
Speaker Change: We will accomplish this by first continuing to optimize our marketing efforts, second making significant technology improvements to the patient journey and therapist experience, and third increasing outside referrals.
Speaker Change: to elaborate further one.
Speaker Change: Our core marketing focus will continue to be about driving awareness, engagement and activation of these 200 million covered lives.
Speaker Change: Our efforts are specifically designed to improve capture and engagement to ensure that people are aware that talk space is available to them at little or no direct at a pocket cost.
Speaker Change: 2.
Speaker Change: We are laser focused on continuing to improve every step of the member journey, including enhancing user-friendly processes for determining coverage eligibility.
Speaker Change: Therapist Matching Registration, Verification and Intake. These improvements include further innovation in the product design to get people to their second and subsequent sessions. Improve methods to establish better rapport between the member and the therapist.
Speaker Change: Provide better line of sight for the patient as to how to achieve improved clinical outcomes and improving the tools our therapists use to understand how they can be their professional and financial goals.
Speaker Change: These product improvements to the patient journey will be a strong factor in further optimizing performance in 2025 at the launch.
Speaker Change: Three.
Speaker Change: Developing partnerships that referirpations to us because of our national footprint of high quality clinician and in network status
Speaker Change: To that end, last month we announced our launch of Amazon Health Services as the first behavior held company within the Amazon Health Conditions Program.
Speaker Change: This collaboration makes it easier for millions of people across the U.S. to discover their behavior health benefits while shopping on Amazon.
Speaker Change: When people search Amazon for mental health related topics or services, they can now discover an easy way to check their eligibility for therapy and psychiatry services if they so choose.
Speaker Change: Customers can also visit the Amazon Health WebBage to see if their insurance covers TalksBase and explore TalksBase's various offerings.
Speaker Change: eligible individuals would be guided to talk space's website to complete being a role in the process, get paired with a licensed therapist in their state and schedule online therapy or psychiatry sessions through audio, video or live chat or message asynchronously with their therapist.
Speaker Change: We're excited about what this means for the discoverability of talk space and look forward to similar search programs with other potential partners.
Speaker Change: With the addition of seniors in military and our experience with teens and teachers, we have become an easy solution for primary care physicians to refer these high knee populations. And we'll continue to pursue these additional types of partners.
Speaker Change: Moving to our direct-to-end surprise segment, we grew revenue in the quarter 17% year over year to $9.4 million driven by our teams initiatives, including our team space program with New York City, which just celebrated its one year anniversary.
Speaker Change: The result of the teen space program when New York City have been excellent. We are reaching thousands of teens in neighborhoods traditionally hard to penetrate, meeting the needs of a very diverse group of teens, and significantly improving clinical results.
Speaker Change: We also expand that our specialized support for Teas with the September 4th launch of our new peer-to-peer community called Teen Space Community. This product is built into the existing platform that allows Teas to talk and share in a safe form and connect with other Teas anonymous way.
Speaker Change: Our successful partnership with the nation's largest city has led to significant interest for offering from other municipalities and school districts who are interested in applying our team model to their team populations.
Speaker Change: The demand for these programs remains strong as we recently signed seven new school districts across the country.
Speaker Change: Our D.T.P. pipeline remains strong and we are pleased with the new deal activity in the quarter. On the employer side, we saw a number of new wins in the third quarter, including a partnership with the Professional Tennis Player of the Association.
Speaker Change: Talkspace will serve as the PTPAs exclusive mental health technology partner, granting players, their families and their support teams 24-7 access to Talkspace.
Speaker Change: Through the lot to be proud of at Talkspace right now, and I want to close out my context by expressing my gratitude to our exceptional team.
Speaker Change: Their dedication term mission of making mental health care accessible to all continues to drive our success.
Speaker Change: I'm pleased to share the talk space as Rebecca Knife as one of Crane's 2024 best places to work in New York City for the second year in a row serving as a testament to the positive and supportive culture we build together.
Speaker Change: As we move forward, I'm confident that without talent to team, strong financial position and innovative approach, talks base is well positioned to continue leading the transformation of mental health care delivery.
Speaker Change: Thank you all for your continued support and belief in our mission. With that, I'll turn the call over to Ian to review our third quarter results.
Ian Harris: Thank you, Jon and good morning everyone.
Ian Harris: My comments will be based primarily a year over year basis unless otherwise noted.
Ian Harris: Total revenue for the third quarter was 47.4 million, a 23% increase from a year ago.
Ian Harris: Adjusted EBITDA was approximately 2.4 million in the third quarter, an improvement of 5.2 million from a year ago, and an increase of approximately 100% sequentially. This also marks our third consecutive quarter of profitability on an adjusted EBITDA basis.
Ian Harris: Moving to results by Revenue Category.
Ian Harris: Payer, our largest segment accounted for revenue of 32 million, a 45% increase versus the prior year period.
Ian Harris: Pay your sessions completed by behavioral health and EAP members grew 6% sequentially and 38% year over year to approximately 316,000.
Ian Harris: Unique Active Payer members completing a session, crew by 24% year on year to just over 93,000.
Ian Harris: Additionally, we experience a 12% year-on-year improvement in the number of sessions completed proactive member, which was driven by some of the early successes we're seeing in the product enhancements that Jon touched on earlier, which are aimed at increasing member attention and engagement.
Ian Harris: In the direct enterprise category, 3rd quarter revenues 9.4 million, up 17% from last year, driven by our team's contracts, such as New York City.
Ian Harris: as well as several other recent Wednesdays across schools, municipalities and employers.
Ian Harris: Sequentially, DTE revenue was down 2% as a result of certain contract expirations from earlier in the year, which we discussed the last two quarters.
Speaker Change: In Q3, we grew net ARR, and as Jon mentioned, we see good momentum overall in our direct-to-enterprise pipeline.
Speaker Change: In the consumer category, where members pay out-of-pocket, revenue is $6 million in the third quarter.
Speaker Change: This was an 8% sequential decline and a 30% decline year-over-year, which was in line with our expectations and a result of our strength and payer growth.
Speaker Change: This is driven by our efforts to optimize both traffic conversion and checkout mix towards the highest long-term return on ad spend in our payers segment.
Speaker Change: Moving to gross profit.
Speaker Change: Our third quarter gross profit increased 15% versus the prior year period to $21.6 million.
Speaker Change: Growth margin for the third quarter was 45.6% in line with last quarter and lower than last year as expected due to the further net revenue mix shift towards payer.
Speaker Change: Turning to operating expenses.
Speaker Change: Our GAAP operating expenses for the third quarter decreased 10% year-over-year to $21.5 million.
Speaker Change: Excluding stock-based compensation and certain non-recurring items, our Q3 operating expenses amounted to approximately $19.3 million.
Speaker Change: a reduction of 2.4 million or 11% versus the same period last year.
Speaker Change: As mentioned on our last call, we initiated a number of cost optimization initiatives earlier in the year, which benefited the third quarter.
Speaker Change: These savings provide us additional flexibility to reinvest into strategic growth initiatives as well as product improvements benefiting both our members and our providers.
Speaker Change: One example of this is our AI Smart Notes, which we launched last quarter.
Speaker Change: This new feature drove a 3% increase in efficiency, where providers were able to conduct more sessions during the same working hours.
Speaker Change: Scaling new features like these will continue to be an area of focus, which allows our network to operate at high volumes while supporting our providers administrative burdens, thereby reducing costs and increasing productivity.
Speaker Change: Moving to profitability.
Speaker Change: Gap net profit was $1.9 million versus a loss of $4.4 million a year ago.
Speaker Change: Adjusted EBITDA was $2.4 million, an improvement of $5.2 million year-over-year driven by higher revenue and gross profit with a lower cost base of normalized off X compared to the same period a year ago.
Speaker Change: Turning to the balance sheet, we ended the quarter with $119 million in cash and cash equivalents, up from $115 million the prior quarter.
Speaker Change: Finally, we reaffirm our 2024 financial guidance, which, as a reminder, calls for $185 to $195 million in revenue.
Speaker Change: and adjusted EBITDA between $4 million and $8 million for the full year.
Speaker Change: With that, we can open up the call for questions.
Speaker Change: Thank you. We will now open the line for the Q&A session.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.
Speaker Change: And if you'd like to withdraw that question, again, press star 1. And please limit yourself to one question and one follow-up. Your first question comes from the line of Stephanie Davis with Barclays. Please go ahead.
Stephanie Davis: Hey guys, congrats on the quarter and thanks for taking my questions.
Speaker Change: Good morning, Stephanie.
Stephanie Davis: How are you? I really wanted to dig in a little bit in that Amazon partnership because I'm good but that that win is better.
Stephanie Davis: So, I was hoping you'd give us some color around maybe any associated investments in marketing or affiliate fees you need to ramp up on the platform, and maybe how we could think about the halo effect, your activation rate, as a result.
Speaker Change: Sure. So...
Speaker Change: So, you know, we had been in discussions with them for, you know, a while.
Speaker Change: You know, being the only behavioral health, you know, partner on the health conditions platform is a very, you know, important deal for both them and for us.
Speaker Change: relative to exposing Amazon shoppers to mental health services.
Speaker Change: and products. So I think you probably saw it. The way it works is, you know, you're looking for several things on Amazon and we come up and then you check of eligibility.
Speaker Change: And then they flip it over and we, you know, confirm eligibility and then you go through the process.
Speaker Change: You know what we've
Speaker Change: What we've seen is, you know, we're very, very excited and we're very, very happy with early results. You know, obviously we're not disclosing...
Speaker Change: What, where, how, or what that means, except that I could tell you that it's been a very, very positive launch thus far. I guess it's four to five weeks, five weeks into it.
Speaker Change: We
Speaker Change: You know, Amazon, just, you know, for a background, has their health conditions program, they have Amazon Rx, and then of course, they have One Medical. Right now, you know, this is about our relationship with them on the health conditions program. So I don't, I don't know what else you want me to talk about relative to them. We're obviously very excited about the opportunity. It goes under the
Speaker Change: What I, you know, call the referral category of increasing the number of BH sessions, you know, first is
Speaker Change: How do we, you know, how do we even get better at our, at our
Speaker Change: really advertising marketing initiatives. The second category is referral and then of course the third category you heard me talk about is the issues around really significantly improving the journey, the patient and actually the therapist's journey through the product.
Speaker Change: Well, maybe one of the things we could dig in is, I assumed when you would be ramping up, the amount of lives you're ramping up, you would maybe see some impact to your utilization rate, but it actually held up pretty strong in the quarter.
Speaker Change: So how much of that is from something like the Amazon partnership where there's more awareness?
Speaker Change: How quickly could that improve upon kind of the future quarters? Anything like that would be helpful.
Speaker Change: And maybe as a follow-up, any further color, you talked about this is the first of many partnerships to come. What direction do you want to go in with that?
Speaker Change: So on the, hey Stephanie, this is Ian, good morning. On the first piece, just a reminder, we announced the partnership at the very, very end of September. I think it was the 27th of September.
Speaker Change: you know, de minimis to no impact in the Q3 results we put out. I would view this more
Speaker Change: It's sort of from a strategic lens, it's obviously a testament to the quality of our network, to our brand, and also our national coverage, right? So the fact that we're able to have those three pieces really resonate with a partner like Amazon, which
Speaker Change: whether it's financial resources, or probably more importantly, just the depth of human capital they have, for them to look at us and realize the therapist network that we have cannot be built overnight, and them wanting to partner with us, we view as really sort of validation of
Speaker Change: The sort of moat we've created for ourselves on the on your question around the referral
Speaker Change: So what that looks like, I would view it, as we do internally, as really just part of another marketing channel. I mean, they obviously will help drive brand awareness given their size and volume and ultimately
Speaker Change: They're going to be driving very, very high intent, the way this is structured and the way their health conditions program works. It's about driving high intent, potential users of Talkspace to us.
Speaker Change: in a manner that's in-network, so.
Speaker Change: Your other question was on further... So this is, you know, goes under the...
Speaker Change: You know, really the capture rate, you know, more than I would say utilization across the platform once we get somebody but it really is the
Speaker Change: part of the bigger strategy of
Speaker Change: You know, 200, eventually 200 million covered lies, and how do you increase people's awareness?
Speaker Change: All right, awesome to hear. Thank you guys. Congrats again.
Speaker Change: You, Stephanie, you want to know about other, so this is...
Speaker Change: Amazon is one. We've talked about ZocDoc. So there are other relatively large...
Speaker Change: channels like this that we are definitely pursuing.
Speaker Change: Your next question comes from the line of Charles Rhee with TD Cowan. Please go ahead.
Speaker Change: Hi guys, this is Adam on for Charles. You've seen over four million dollars in EBITDA year-to-date and we see the guidance for entry but it was reiterated in the four million to eight million dollar range. Given the trajectory you're on, can you talk about what would get you to the top end versus the bottom end of that range?
Speaker Change: Keep it up.
Speaker Change: Hey Adam.
Speaker Change: Thanks for the question. So while we don't give quarterly guidance, I understand, given where we are in the year, the ask, I'll help you out on sort of both components of our guidance. So just to give you a bit of a guidepost on modeling the rest of the year, I would say as it relates to revenue,
Speaker Change: looking towards our sort of sequential quarter over quarter revenue growth rates over the last few quarters in 2024 as a framework is the best, the sort of best help I can give, which
Speaker Change: You do that math and it lands you a little bit below the midpoint on revenue.
Speaker Change: And then to your question on EBIDTA, conversely, for EBIDTA, you're exactly right, year-to-date, where we stand. We actually would expect, based on what we know today, to land at the high end of the range.
Speaker Change: A lot of that on the EBITDA side is sort of the OPEX initiatives. We actioned shortly after I joined in May. We've seen a lot of success from those already and had a little bit of benefit from those in Q3, and we'll see sort of continued benefit of that in Q4.
Speaker Change: That will get us to the higher end of the EBITDA range. Just to double click on the revenue side, I think this is important nuance that is maybe a little bit hard to parse through on the surface, so.
Speaker Change: Since I joined in the middle of Q2, substantially all of the covered lives we've added have come from Medicare and military.
Speaker Change: which was obviously very intentional focus for us. We knew that this...
Speaker Change: The work that goes into launching with these two cohorts are multi-year initiatives that have been going on long before I got here. So it's a lot of work behind the scenes, whether it's RevCycle, compliance, legal, security.
Speaker Change: takes a lot of time and focus of the team, and that's been a lot of our 2024.
Speaker Change: As we've talked about in the past, I just want to emphasize, we expect to begin testing these segments this quarter in Q4.
Speaker Change: But as it relates to your modeling, it's really a 2025 impact. So you can think about all of these initiatives we've been talking about the last few quarters around Medicare.
Speaker Change: And you heard Jon's comments say focusing on military, which we're actually really excited about. It's really about setting the foundation for growth in 2025.
Speaker Change: The subtext there is that
Speaker Change: Substantially all the revenue growth we've seen in payer in Q2 and Q3 has actually come from driving further capture rate in our call it you know the existing base of covered lives as of basically March 31st.
Speaker Change: Because since then there's been, like I said, all of the covered lives have been pretty much Medicare and military.
Speaker Change: So we'll come back to you with obviously more refined detail in 2025, but I hope that's helpful guidance. So 2024, I was looking at potential growth and then a re-acceleration on the top line in 2025.
Speaker Change: I'm going to be talking about the the the the the the the the the the the the the the
Speaker Change: Yeah, that's very helpful. Thank you for all the color.
Speaker Change: Also wondering, additionally, if you can talk about how you're seeing the trajectory of the B2C business and whether there's a steady state you'd expect to hit there at some point, understanding that B2B is the core for the enterprise going forward. But wondering if you can talk about the degree to which you're seeing the conversion of B2C members to B2B members contribute to B2B growth, or is it more so a drop-off of B2C members without converting to B2B?
Speaker Change: No, we don't, it's, you know, people, people come to, to look for therapy, and they, you probably know you get a choice. And the big, the number one choice is let us determine your eligibility to see if you're covered by insurance. And then, of course, if not, you can
Speaker Change: pay for it as a consumer.
Speaker Change: So think of it as people are showing up. Remember, 50% of people showing up at the door are new to therapy. So it's not like we're, I don't, we're not cannibalizing our consumer business. What's happening is more people are moving.
Speaker Change: towards a insurance model being fee-for-service because they don't have to pay for it. So what you're seeing is a natural decrease in the percent.
Speaker Change: only be well partially you know significantly because the number of
Speaker Change: Eligible lives increase.
Speaker Change: So let's say, let's say you were looking, I'm just going to make it, give you, let's say you were looking six months ago. A certain percentage of people had coverage. If now you're looking, now there were Medicare and military, obviously many more people will choose the other option because they are now eligible.
Speaker Change: So what you're seeing is a natural decrease in the percent. We and we've talked about this before. There will always be a consumer market. There will always be people with high deductibles. There will always be people who choose to pay for it as opposed to using their insurance. There will be people who.
Speaker Change: For whatever personal reasons don't want their employer to know that they're getting therapy or whatever. So there will always be a consumer I don't I can't tell you what that percentage will be in the end, but you know, it'll always remain as a piece of the business
Speaker Change: And I would say that the step-downs we saw in 2023 and 2024 in consumer, which was again completely in line with the strategy to lead with a in-network marketing message.
Speaker Change: Those are much more substantial changes in dollar amounts than what we would expect going forward. So that sort of last holdout that Jon references of just folks who want to pay out of pocket no matter what for whatever reason, I'd say we're
Speaker Change: We're not quite there, but getting very close to approaching that sort of bottom, if you will.
Speaker Change: Very helpful. Thank you, guys.
Speaker Change: Your next question comes from the line of Ryan Daniels with William Blair. Please go ahead.
Speaker Change: Yeah, hey guys, this is Jax. I'm done for Ryan. Thanks for taking the questions on. So in your prepared remarks, you mentioned the that the core marketing focus will continue to be about driving awareness. And I understand that this is most likely where it's most likely less about, you know, strictly paid marketing more about the partnerships. But I guess how should we think about the customer acquisition costs going forward for maybe the remainder of the year, and maybe have any expectations into 2025? Just kind of thinking with this being an election year, maybe it's less efficient, but just kind of thinking of curious if you're seeing any impacts on customer acquisition, customer acquisition costs and kind of how we should think about this going forward. Thanks.
Speaker Change: Hey Jack. Yeah I mean we've we've actually done a really great job avoiding sort of the and what from our perspective was anticipated inflation given the election year in the cost of acquisition.
Speaker Change: I think we've talked about this before, but it's.
Speaker Change: We have a 16-person marketing team who's...
Speaker Change: We do it, it's like a fully vertical marketing strategy, marketing operation. We do it, it is extremely dynamic. We're not setting budgets at the beginning of a quarter, a month, or a week and saying, hey, let's see what that yields us at the end of the period. It's, I mean, these folks were dynamically in the market every day.
Speaker Change: were
Speaker Change: We're in a great spot in terms of our scale where when we want to test something new, whether it's new content, a new channel, a new messaging, we can very quickly spin up.
Speaker Change: a statistically significant A-B test because we have that scale to run it sort of in real time and go from there. So it's a very, very nimble operation, and they've done an incredible job keeping our tax
Speaker Change: low and actually, you know, from where we were a couple years ago, making drastic improvements.
Speaker Change: as we start to talk more about these sort of affiliates and partnerships, all of that factors into our overall marketing strategy. So it's all about.
Speaker Change: driving awareness at the most efficient cost possible. Someone that's paid advertising, a lot of that's organic, and a lot of it's brand awareness and partnerships. I think last quarter, Q2,
Speaker Change: objective surveys that we've done every year for the last number of years. It was the first year ever where our awareness went up with our ad spend going down, right? So the sort of capital light, if you will, ways of driving awareness is definitely working.
Speaker Change: In terms of looking ahead, I don't want to give, you know, CAC guidance for competitive reasons, but suffice it to say, it's
Speaker Change: It's
Speaker Change: We're very data-driven about how we spend our money, and marketing is no different here. Yeah, also, I'd be careful about...
Speaker Change: you know generalizations because there is a there are
Speaker Change: There are multiple subcategories that go into acquisition. So, for instance, the acquisition costs on military personnel or their families is going to be pretty different than a Medicare person, which is also going to be different than a teen.
Speaker Change: So, you know, so we're very careful about making these sort of broad brush like this is what our CAC is Because it really is very different sub-segment to sub-segment. So I just want you to
Speaker Change: I want you to think about that in terms of how we approach this. It's like, you know, Ian said, it's very, very specific to what the needs of the group are almost day to day.
Speaker Change: Jennifer Fulk, Ryan Daniels, Jon Cohen, Jennifer Fulk, Ian Harris
Speaker Change: No, understood. I appreciate the color there. I guess just kind of along those lines then, too, when it comes to growing the capture rate, is there a differing strategy when it comes to the different populations you're bringing on? I mean, just along the lines of what you were just talking about. I mean, I think that that would, you know, growing the capture rate in Medicare might be different than, you know, military, for example. So can you just talk about the balance here and then just kind of how you think about that?
Speaker Change: So 100% it's there, right? So the go-to-market strategy on Medicare, so for instance, you may have heard me talk about, so we know Medicare, you know,
Speaker Change: Medicare seniors are very responsive to Facebook, for instance. We know, believe it or not, we know Medicare patients, particularly in senior communities, retirement communities, read direct mail. I mean, you and I may not, but they actually read direct mail. So those are just examples. We know on the military that there's a lot of different...
Speaker Change: strategies relative to how you approach the military bases and how do you approach the spouses and how the how the teams of military are very different.
Speaker Change: quite honestly moving city to city different times. So the point is, is each one of these have a strategy that's directed towards their specific entity. So the answer is they're just, they're very very different.
Speaker Change: The good news is we've we've done a lot of work on all of them to hopefully, you know Figure out what's going to work or what's not but like we've said we always test it You know, sometimes you have these impressions and they're wrong and then you move on and you try something else
Speaker Change: Perfect. Thank you again, guys.
Speaker Change: Your next question comes from the line of Ryan McDonald with Needham. Please go ahead.
Ryan McDonald: Thanks for taking my questions. Maybe to start on the DTE segment, as you look at the pipeline and how it's developing into year-end and in the next year, what's the mix between sort of the employer channel versus more of the municipal and district channel? And, you know, on the district side are you seeing a mix of ESSER funding being utilized for spend on Talkspace? Thanks.
Speaker Change: Thank you. Bye-bye.
Speaker Change: So let me go back to, let's go to the last one. Most of the extra funding you probably know is running out or is, you know, expired. And that also was tied to a lot of the COVID funding, which is also basically run out. So we don't, we don't report or distinguish.
Speaker Change: that much between employer versus municipalities versus states or you know municipalities being city, state, county
Speaker Change: Yeah, because there's another category in there which...
Speaker Change: We refer to in the press release for the, you know, the Tennis Association. They're really not an employer. They're actually a Organization there. They're an association is the best way to put it. So there's a lot there's another
Speaker Change: This other subgroup of we refer to as associations of large groups of people that belong to something that are really not employed by them. So there's multiple strategies, again, on DTE. The Salesforce and DTE actually
Speaker Change: approaches all of them and sometimes it's geographic based and not targeted based on what the entity is.
Speaker Change: So, for instance, we may have a rep in a particular region that may be talking to employers, municipalities, and associations, and actually teens, and sometimes even, you know, parent groups.
Speaker Change: So, it is variable region-to-region, it's variable type of vertical-to-vertical, so I can't...
Speaker Change: I can't parse it for you because it's, again, it's...
Speaker Change: There's just too many overlaps. The other is that we also have the channel of RFPs.
Speaker Change: So, not only are we going outbound, but there is a fair amount of inbound nowadays relative to people who know what we're doing, who know of Talkspace, who know of our national footprint, who are actually approaching us or sending us RFPs, requests for proposals, to ask us to bid on certain books of business.
Speaker Change: That's helpful, Jon. I really appreciate it. Maybe just as a follow-up on the payer channel, to the extent that you're, as you continue to deepen the relationships with these payer customers, are you starting to get into conversations around value-based care contracting? And if so, you know, what sort of metrics are, you know, are your payer partners looking to be tracking as they're measuring effectiveness moving forward? Thanks.
Speaker Change: So, the answer is yes. We've already signed some.
Speaker Change: some new value-based contracts. I will tell you that this is really really at early stage. We have no issue and no
Speaker Change: No problem at all dealing with what the metrics are. So I'll give you an example. Frequently, the metrics are
Speaker Change: What's your time to initial evaluation?
Speaker Change: I don't call it rudimentary, but they're, for us, because we've been in that work...
Speaker Change: None of this is an issue. All of this has been built way before these value-based contracts came up. So we encourage it. We see it more and more, but for us it's a non-issue relative to the contracting metrics that they're putting in front of us, quite honestly. It's stuff we already do, to be honest.
Speaker Change: Excellent. Thanks for taking my questions.
Speaker Change: And ladies and gentlemen, that does conclude our question and answer session. And with that, that does conclude today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Please wait, the conference will begin shortly. Please wait, the conference will begin shortly.
Speaker Change: Thanks for watching!