Q4 2024 Talkspace Inc Earnings Call
Operator: Ladies and gentlemen, thank you for standing by.
Ladies and gentlemen, thank you for standing by my name is desert rain I will be your conference operator today at this time I would like to welcome everyone to the talk speak fourth quarter and full year 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Desiree: My name is Desiree, and I will be your conference operator today.
Desiree: At this time, I would like to welcome everyone to the Talkspace fourth quarter and full year 2024 earnings call. All lines have been placed on mute to prevent any background noise.
Desiree: After the speaker's remarks, there will be a question and answer session.
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Desiree: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question again, press the star 1.
Speaker Change: I would like to ask a question trying this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again press Star one.
Desiree: I would now like to turn the conference over to Jeannine Feyen, Director of Communications.
Speaker Change: I would now like to turn the conference over to Janine fan director of Communications you may begin.
Desiree: You may begin.
Jeannine Feyen: Good morning and welcome to Talkspace's earnings conference call for the fourth quarter and full year of 2024. 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.
Janine Fan: Good morning, and welcome to talk basis earnings conference call for the fourth quarter and full year of 2024.
Janine Fan: I hope you've had the opportunity to access the press release, we posted on <unk> IR website in the presentation of our earnings results.
Speaker Change: We will use the presentation to walk you through todays remarks, leading today's call are our CEO, Dr. Jon Cohen our CFO.
Jeannine Feyen: Leading today's call are our CEO, Dr. Jon Cohen, and our CFO, Ian Harris. Management will offer their prepared remarks, and we'll then take your questions.
Speaker Change: Management will offer their prepared remarks, and we'll then take your questions.
Jeannine Feyen: 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, investors.talkspace.com.
Speaker Change: Certain measures we will discuss on this call are expressed on a non-GAAP basis and have been adjusted to exclude the impact of one off items reconciliations.
Speaker Change: Reconciliations of these non-GAAP measures are included in our earnings release and on our website investors Dot talk based dot com.
Jeannine Feyen: 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 and today's earnings press release.
Speaker Change: 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 called 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.
Speaker Change: 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.
Jeannine Feyen: For more information, please review our Safe Harbor disclaimer on slide 2.
Jeannine Feyen: Now I will turn it over to Dr. Jon Cohen.
Speaker Change: Now I will turn it over to Dr. Jon Cohen.
Jon Cohen: Good morning. I'm proud to share that 2024 was another great year for Talkspace. We achieved strong growth with revenue growing 25%, session volume of 45%, and EBITDA making a strong improvement of $20.5 million from a $13.5 million loss in 2023 to a $7 million gain in 2024, all while reducing operating expenses by $7 million. These results align with our vision as we continue to expand our reach, drive awareness, and adopt. deliver the best in class care.
Jon Cohen: Good morning.
Speaker Change: To share that 2024 was another great year for talk space, we achieved strong growth with revenue growing 25%.
Speaker Change: <unk> volume up, 45% and EBITDA, making a strong improvement of $25 million.
Speaker Change: From a $13 $5 million loss in 2000 $23 million to $7 million gain in 2024.
All while reducing operating expenses by $7 million.
Speaker Change: These results align with our vision as we continue to expand our reach drive awareness and adoption and deliver the best in class care.
Jon Cohen: in 13 years since our inception.
Speaker Change: And 13 years since our inception three years as a public company cost space is build a sustainable <unk>.
Jon Cohen: three years as a public. Talkspace has built a sustainable, profitable business model, offering a comprehensive solution that gives us a powerful competitive edge in the market. And with the mental health needs only growing, the future is bright for Talkspace. Over the past three years, we have meaningfully advanced our strategic shift from a consumer subscription-only model to a payer-focused approach. As a result, we have expanded our total covered lives to 179 million people and shifted our member acquisition strategy to support unlocking this audience. Our reach now extends beyond commercially insured adults to include teens, Seniors through Medicare, and active military members and their dependents.
Speaker Change: <unk> business model offering a comprehensive solution that gives us a powerful competitive edge in the marketplace.
Speaker Change: And with the mental health needs only growing the future is bright for telecom space.
Speaker Change: Over the past three years, we have meaningfully advanced our strategic shift from a consumer subscription only model to a payer focused approach as a result, we have expanded our total covered lives to 179 million people and shifted our member acquisition strategy to support.
Speaker Change: Port unlocking this audience.
Speaker Change: Our reach now extends beyond commercially insured adults to include teams.
Speaker Change: Seniors through Medicare and active military members and their dependents.
Jon Cohen: Throughout this journey, we have remained committed to the four pillars that define success as a high-quality health care provider. Availability, Affordability, Accessibility, and Sustainability. starting with Pillar 1, Availability. We have built a curated network of 6,000 experienced and available licensed providers, an increase of about 10% in 2024 across all 50 states, focusing on over 150 different areas of expertise. Our focus is on maintaining a best-in-class, provider-centric experience with a commitment to measuring and monitoring quality across five areas – service quality, clinical quality, client experience, documentation, and productivity. We've shifted our marketing model to one of awareness and performance marketing to potential members who are in the market for therapy and likely covered in some way.
Speaker Change: Throughout this journey, we have remained committed to the four pillars that define success as a high quality health care provider.
Speaker Change: Rail ability.
Speaker Change: Portability.
Speaker Change: <unk> ability and sustainability.
Speaker Change: Starting with pillar one availability.
Speaker Change: We have built a curated network of 6000 experience and available license providers, an increase of about 10% in 2024 across all 50 states focusing on over 150 different areas of expertise.
Speaker Change: Our focus is on maintaining our best in class provider centric experience with a commitment to measuring and monitoring quality across five areas.
Speaker Change: Service quality clinical quality.
Speaker Change: <unk> experience documentation have productivity.
We've shifted our marketing model to one of awareness and performance marketing to potential members, who are in the market for therapy and likely covered in some way.
Jon Cohen: We're asking that people simply check their coverage to unlock the benefits they probably did not know they had. In fact, every January 21st is now known as National Check Your Coverage Day, which was a new day founded by Talkspace to encourage people to check their coverage early in the year when there is typically a desire to set up changes. We want people to know that we are available to them and they are likely.
Speaker Change: We are asking that people simply check their coverage to unlock the benefits they probably did not know they have.
Speaker Change: That every January 'twenty, one is now known as National check your coverage day, which was a new day founded by Todd space to encourage people to check their coverage early in the year. When there is typically a desire to setup change for the year.
Speaker Change: We want people to know that we are available to them and they are likely covered.
Jon Cohen: Moving to pillar two, affordability. Affordability is one of the most significant barriers to seeking and getting care. Our shift to a payer-covered model addressed this issue, as over 60% of people with commercial insurance have a $0 copay or just $15 on average. As of last week, we are now live in the contiguous 48 states across the U.S. with traditional Medicare and are adding significant numbers of Medicare Advantage lives monthly. The largest Medicare Advantage plan in the U.S. is now lost. With this now near national coverage, we are starting to see significant traction.
Speaker Change: Moving to pillar to affordability.
Speaker Change: Portability is one of the most significant barriers to seeking and getting care our shift to a payer covered model address this issue as over 60% of people with commercial insurance have us.
Speaker Change: Zero dollar co pay or just $15 on average per cost base.
Speaker Change: As of last week, we are now live in the contiguous 48 states across the U S with traditional Medicare and are adding significant numbers of Medicare advantage lives monthly.
Speaker Change: The largest Medicare advantage plan in the U S is now live.
Speaker Change: With this now near National coverage, we are starting to see significant traction.
Jon Cohen: With our military expansion, after successfully launching Tricare East in August, we extended our reach to Tricare West in January, making Talkspace available to approximately 9.5 million active duty and retired military personnel and their dependents as an in-network benefit with minimal out-of-pocket costs. As with Medicare, adoption is gaining momentum, and we're excited about the impact ahead. Our recently announced partnership with U.S. Rowing strengthens our commitment to mental health in high-performance sports, complementing our existing collaboration with the Professional Tennis Players Association. Like Michael Phelps, these initiatives reinforce our dedication to supporting athletes and their mental demands of their sport.
Speaker Change: With our military expansion after successfully launching Tricare east in August we extended our reach to Tricare West in January making talk space available to approximately $9 5 million active duty and retired military personnel and their dependents as an in network benefit with minimal out of pocket.
Speaker Change: Costs.
Speaker Change: As with Medicare adoption is gaining momentum and we're excited about the impact ahead.
Speaker Change: Our recently announced partnership with U S rowing strengthens our commitment to health and high performance sports complementing our existing collaboration with the professional tennis players Association.
Speaker Change: Michael Phelps these initiatives reinforce our dedication to supporting athletes and their mental demands of their sport.
Jon Cohen: In the teen population, over 500,000 teens in the U.S. now have free access to Talkspace through their city, county, or school. That includes New York City, Baltimore County, multiple private schools, and as announced in December, the City of Seattle, with more than 55,000 teens and young adults between the ages of 13 and 24, now having access to care. We continue to partner with city governments, including the City of Memphis, with whom we recently entered our fifth consecutive year providing mental health support to their 8,000 employees, and for the first time this year, to their dependents, including Our asynchronous platform is a significant differentiator for us as 95% of teens on the platform utilize texting to access therapy.
And the team population over 500000 teens in the U S. Now have free access to talk space through the city County or school.
Speaker Change: That includes New York City, Baltimore County, multiple private schools and as announced in December the city of Seattle with more than 55000 teens and young adults between the ages of 13% and 24 now having access to care.
Speaker Change: We continue to partner with city governments, including the city of Memphis, with whom we recently entered our fifth consecutive year, providing mental health support to their 8000 employees and for the first time this year to their dependents, including teams.
Speaker Change: Our asynchronous platform is a significant differentiator for us at 95% of teens or the platform utilized testing to access therapy. In addition, we are engaging teams and traditionally hard to reach communities at 57% of teens accessing therapy live in areas of high economic disparities.
Jon Cohen: In addition, we are engaging teens in traditionally hard-to-reach communities as 57% of teens accessing therapy live in areas of high economic disparity. The availability of the therapist network and affordability only work if people can easily and effectively access a provider.
Speaker Change: The availability of the therapy network and affordability only work if people can easily and effectively access a provider to improve the third pillar of accessibility one of the most important initiatives. We are carrying over from 2024 into this new year is our focus on <unk>.
Jon Cohen: To improve the third pillar of accessibility, one of the most important initiatives we are carrying over from 2024 into this new year is our focus on using technology to optimize and improve the member journey, from checking eligibility to registration and scheduling, to session experience, and finally, to billing. Every phase of the member journey is being evaluated for As a result of some new technology efforts among certain test populations, we've seen an 18.5% decrease in no-show rates, a 30% increase in patients completing three sessions within one month, and an increase of 15% in sessions per member.
Speaker Change: Using technology to optimize and improve the member journey from checking eligibility to registration and scheduling to session experience and finally to bill it.
Speaker Change: Every phase of the member journey is being evaluated for improvement as a result of some new technology efforts amongst certain test populations. We've seen an 18, 5% decrease in no show rate a 30% increase in patients completing three sessions within one month.
Speaker Change: And an increase of 15% in sessions per member.
Jon Cohen: Improvements such as these are clinically-backed to demonstrate better outcomes. Our AI innovation team continues to develop tools across four areas within namely to assist providers as well as improve clinical and network quality, operational excellence, and the member experience.
Speaker Change: Improvements such as these are clinically back to demonstrate better outcomes for members.
Speaker Change: Our AI innovation team continues to develop tools across four areas within the company, namely to assist providers as well as improved clinical and network quality operational excellence and the member experience.
Jon Cohen: I'm very excited about our recent development of TalkCast, a new personalized podcast feature for adults over the age of 18 that will help drive member engagement between sessions, keeping them focused on their own progress and ultimately assist in their clinical improvement. Essentially, providers will be able to generate a three to five minute audio episode tailored to their clients, reinforcing key takeaways and themes from their therapy session. This is yet another tool in our Expanding Provider AI. which leverages one of the largest mental health databanks in the world with over 10 billion proprietary clinical data points helping to power our AI.
Speaker Change: I am very excited about our recent development of tuck cast a new personalized podcast feature for adults over the age of 18 that will help drive member engagement between sessions, keeping them focused on their own progress and ultimately assist in their clinical improvement.
Speaker Change: Essentially providers will be able to generate a three to five minute audio episode tailored to their clients reinforcing key takeaways and themes from their therapy sessions.
Speaker Change: This is yet another tool in our expanding provider AI toolkit, which leverages one of the largest mental health data banks in the world with over $10 billion proprietary clinical data points, helping to power our AI engine.
Jon Cohen: This clinical data bank is designed to analyze redacted session transcripts to build detailed, anonymized client vignettes and map care. by categorizing interventions and identifying significant patterns across therapy journeys. The Data Bank provides the insights to personalized care. Our longstanding relationship in virtual care delivery and innovation is reflected in our financial performance.
Speaker Change: This clinical data bank is designed to analyze redact obsession transcripts to build detailed anonymised clients and yes and map care paths.
Speaker Change: By categorizing intervention and identifying significant patterns across therapy journeys. The data bank provides the insights to personalized care.
Speaker Change: Our long standing relationship with virtual care delivery and innovation is reflected in our financial performance, which gets us to the fourth pillar of sustainability.
Jon Cohen: This gets us to the fourth pillar of sustainability. As you can see in our financials, we have built a model that is scalable and profitable, all of which Ian will comment on along with his review of the Q4 and full year results. In conclusion, we believe we have a competitive advantage in the marketplace because of the comprehensive nature of our solution, a highly qualified clinical network of 6,000 therapists. in network coverage approaching 200 million lives. all virtual modalities to deliver care, a robust infrastructure to deliver high quality clinical care, and an advanced technology platform including AI and a data set to support and grow a profitable business.
Speaker Change: As you can see in our financials, we have built a model that is scalable and profitable all of which Ian will comment on along with his review of the Q4 and full year results.
Speaker Change: In conclusion, we believe we have a competitive advantage in the marketplace because of the comprehensive nature of our solutions are highly qualified clinical network of 6000 therapists in.
Speaker Change: Network coverage approaching 200 million lives all virtual modalities to deliver care, a robust infrastructure to deliver high quality clinical care and in advanced technology platform, including AI and a data set to support and grow a profitable business and now ill turn it over to you.
Jon Cohen: And now I turn it over.
Speaker Change: Yes.
Ian Harris: Thank you, Jon, and welcome, everyone. As Jon mentioned, Talkspace has transformed into a uniquely scaled business over the past two years. In 2024, we achieved our second consecutive year of 25% revenue growth, culminating in $187.6 million in revenue for the full year. Further, a significant milestone for the company was achieving profitability in Q1 of last year. which we've maintained throughout all of 2024, resulting in full year adjusted EBITDA of $7 million. Gap in net income was $1.2 million for the year, a $20.3 million improvement versus 2023. In addition to the business's growth and profitability, our robust financial position is further bolstered by the strength of our balance sheet, with $118 million in cash and cash equivalents, including available for sale securities.
Janine Fan: Thank you John and welcome everyone.
Janine Fan: John mentioned talks maintenance transformed into a uniquely scaled business over the past two years.
Janine Fan: In 2024, we achieved our second consecutive year of 25% revenue growth, culminating in 187 $6 million in revenue for the full year.
Janine Fan: Further.
Janine Fan: A significant milestone for the company was achieving profitability in Q1 of last year.
Janine Fan: Which we've maintained throughout all of 2024, resulting in full year adjusted EBITDA of $7 million.
Janine Fan: GAAP net income was $1 2 million for the year of $23 million improvement versus 2023.
Janine Fan: In addition to the businesses growth and profitability our robust financial position is further bolstered by the strength of our balance sheet.
Janine Fan: With $118 million in cash and cash equivalents, including available for sale Securities.
Ian Harris: and Zero Debt at the close of 2024.
Janine Fan: And zero debt at the close of 2024.
Ian Harris: This solid foundation puts us in control of our own destiny and affords us great flexibility in pursuing strategic growth initiatives.
Janine Fan: This solid foundation puts us in control of our own destiny and affords us great flexibility in pursuing strategic growth initiatives.
Ian Harris: Now let me review our financial performance for the fourth quarter of 2024. We're pleased to report continued strong results, building on the momentum we discussed on our third quarter earnings call. Our total revenue for Q4 was $48.7 million, representing a 15% increase compared to the fourth quarter of 2020. This growth was primarily driven by the continued strength in our payer business, which grew 33% year-on-year, and demonstrated solid performance across key metrics, such as payer sessions, which totaled nearly 330,000 in the quarter, an increase of 32% year-over-year. We also saw a 21% growth in unique payer members completing a session in the quarter, reaching nearly 96,000 in the quarter.
Janine Fan: Now, let me review, our financial performance for the fourth quarter of 2024.
Janine Fan: We're pleased to report continued strong results building on the momentum we discussed on our third quarter earnings call.
Janine Fan: Our total revenue for Q4 was $48 7 million, representing a 15% increase compared to the fourth quarter of 2023.
Janine Fan: This growth was primarily driven by the continued strength of our payer business, which grew 33% year on year and demonstrated solid performance across key metrics, such as payer sessions, which totaled nearly 330000 in the quarter, an increase of 32% year over year.
Janine Fan: We also saw a 21% growth in unique payer members completing especially in the quarter, reaching nearly 96000 in the quarter.
Ian Harris: And we achieved a 9% year-on-year improvement in utilization of sessions per active member. DTE revenue for the quarter grew 7% versus a year ago, with notable new launches in the quarter, including the City of Seattle and the U.S. Navy.
Janine Fan: And we achieved a 9% year on year improvement in utilization of sessions per active member.
Janine Fan: ETE revenue for the quarter grew 7% versus a year ago with notable new launches in the quarter, including the city of Seattle and the U S label.
Ian Harris: Consumer revenue declined by approximately $3 million versus the same quarter in 2023. Gross profit for the quarter was $21.5 million, up 3% from the previous quarter. Our gross margins came in at 44.2% in Q4 compared to 45.6% in Q3 and 49.4% a year ago. As a reminder, as we shift overall revenue mix more towards our payer business, we expect our gross margins to decline slightly, which we view as an attractive tradeoff given the superior long-term unit economics and lifetime value for the new members under the payer-focused strategy. During the quarter, we also maintained our focus on operational efficiency.
Janine Fan: Consumer revenue declined by approximately $3 million versus the same quarter in 2023.
Janine Fan: Gross profit for the quarter was $21 5 million up 3% from the previous year.
Janine Fan: Our gross margins came in at 44, 2% in Q4 compared to 45, 6% in Q3, and 49, 4% a year ago.
Janine Fan: As a reminder, as we shift overall revenue mix more towards our payer business, we expect our gross margins to decline slightly.
Janine Fan: Which we view as an attractive trade off given the superior long term unit economics and lifetime value for the new members under the payer focused strategy.
Janine Fan: During the quarter, we also maintained our focus on operational efficiency.
Ian Harris: Operating expenses decreased by 11% year-over-year to $21 million. representing 43% of revenue in the quarter versus 56% a year ago. We achieved a gap net income of $1.2 million in the quarter, a significant improvement from a loss of $1.3 million a year. And adjusted EBITDA for Q4 was $2.7 million, up from a loss of approximately $300,000 in the same period last year.
Janine Fan: Operating expenses decreased by 11% year over year to $21 million.
Janine Fan: Representing 43% of revenue in the quarter versus 56% a year ago.
Janine Fan: We achieved a GAAP net income of $1 2 million in the quarter, a significant improvement from a loss of $1 3 million a year ago.
Janine Fan: And adjusted EBITDA for Q4, it was $2 7 million up from a loss of approximately 300000 in the same period last year.
Ian Harris: I'm pleased with our cost optimization efforts in 2024, and looking ahead to 2025, we will selectively invest some of these G&A savings into revenue-generating areas. Such as increased marketing efforts and additional technology and product enhancements that we anticipate will help to drive member attention and engagement.
Janine Fan: I am pleased with our cost optimization efforts in 2024, and looking ahead to 'twenty five we will selectively invest some of these G&A savings into revenue generating areas.
Janine Fan: Increased marketing efforts and additional technology and product enhancements that we anticipate will help to drive member retention and engagement.
Ian Harris: turning to the balance sheet. As I referenced in my opening remarks, our balance sheet remains roadblocked. We ended the fourth quarter with $118 million in cash and cash equivalents, a slight decrease from $119 million in the third quarter.
Janine Fan: Turning to the balance sheet.
As I referenced in my opening remarks, our balance sheet remains robust.
Janine Fan: We ended the fourth quarter with $118 million in cash and cash equivalents, a slight decrease from the $119 million in the third quarter.
Ian Harris: and compares to 124 million a year ago. The $6 million year-on-year delta was driven by $11 million of open market share repurchases we completed throughout 2024, including $3 million in the fourth quarter, which kept our shares outstanding, effectively flat versus a year ago.
Janine Fan: And compares to $124 million a year ago.
Janine Fan: The $6 million year on year Delta was driven by $11 million of open market share repurchases, we completed throughout 2024, including $3 million in the fourth quarter, which kept our shares outstanding effectively flat versus a year ago.
Ian Harris: As we look ahead to 2025, we introduce this morning our full year financial outlook consisting of revenue between $220 and $235 million, representing 21% growth at the and Adjusted EBITDA of $14 to $20 million, an increase of 144% at this time. In 2025, our activation strategy will remain consistent with our previous approach, balancing increased marketing spend with sustainable, profitable growth. As we look to leverage our expanded reach, we will maintain a keen focus on maximizing ROI through strategic partnerships to optimize efficiency. With our coverage now extending to approximately two-thirds of the American public, an increase of more than 85 million lives from two years ago, every marketing initiative we invest in has the potential for significantly greater impact.
Janine Fan: As we look ahead to 2025, we introduced this morning, our full year financial outlook, consisting of revenue between 202002 hundred $35 million, representing 21% growth at the midpoint.
Janine Fan: And adjusted EBITDA of $14 million to $20 million, an increase of 144% at the midpoint.
Janine Fan: In 2025, our activation strategy will remain consistent with our previous approach balancing increased marketing spend with sustainable profitable growth.
Janine Fan: As we look to leverage our expanded reach we will maintain a keen focus on maximizing ROI through strategic partnerships to optimize efficiency.
Janine Fan: With our coverage now extending to approximately two thirds of the American public.
Janine Fan: An increase of more than 85 million lives in two years ago every marketing initiative, we invest in has the potential for significantly greater impact.
Ian Harris: As is typical for us, our marketing investments are anticipated to be more heavily weighted in the first quarter of the year, allowing us to reap the benefits of those investments throughout the full year. And this will again be the case, in part, driven by the broadening of our payer outreach aligned with the launch of military and Medicare. As such, we would expect a similar EBIDTA trajectory throughout 2025 as we experience in 2024.
Janine Fan: As is typical for us our marketing investments are anticipated to be more heavily weighted in the first quarter of the year, allowing us to reap the benefits of those investments throughout the full year.
Janine Fan: And this will again be the case in part driven by the broadening of our payer outreach align with the launch of military in Medicare.
Janine Fan: As such we would expect a similar EBITDA trajectory throughout 2025 as we experienced in 2024.
Ian Harris: As we assess our capital allocation priorities for the year ahead, our primary focus will continue to be on organic growth opportunities, such as further investments in our technology platform to enhance the experience for both providers and members. Second, we remain committed to keeping our share count neutral just as we did in 2024 through our share repurchase programs under which we have approximately $29 million of remaining capacity, allowing us to be more opportunistic with our buybacks if we so choose. As demonstrated this past year, our cash flow profile can support these first two areas and affords us the flexibility to consider a third.
Janine Fan: As we assess our capital allocation priorities for the year ahead, our primary focus will continue to be able to organic growth opportunities such as further investments in our technology platform to enhance the experience for both providers and members.
Janine Fan: Second we remain committed to keeping our share count neutral just as we did in 2024 through our share.
Janine Fan: Purchase programs under which we have approximately $29 million of remaining capacity, allowing us to be more opportunistic with our buybacks. If we so choose.
Janine Fan: As demonstrated this past year, our cash flow profile can support these first two areas and affords us the flexibility to consider a third.
Ian Harris: Utilizing our well-capitalized balance sheet to explore potential inorganic opportunities that may further strengthen our market position. As always, we will continuously evaluate the highest and best use of our capital.
Janine Fan: Utilizing our well capitalized balance sheet to explore potential inorganic opportunities that may further strengthen our market position.
Janine Fan: As always we will continuously evaluate the highest and best use of our capital.
Ian Harris: Thank you all for your continued interest in the Talkspace story. We are very excited about the year ahead and about continuing to build towards a Rule of 40 company.
Janine Fan: Thank you all for your continued interest in the <unk> space story, we're very excited about the year ahead and about continuing to build towards the rule of 40 company.
Desiree: We'll now open the call to questions. Operator?
Janine Fan: We will now open the call to questions operator.
Desiree: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the call. If you would like to withdraw your question, simply press star 1 again.
Janine Fan: Thank you we will now begin the question and answer session. If you have dialed in and we would like to ask a question. Please press star one on your telephone keypad duration hannan joined the queue.
Janine Fan: If you would like to withdraw your question simply press Star. One again, if you are called upon to ask a question in a listening via speakerphone. Please pick up your handset to ensure that your phone is not on mute when asking your question again.
Desiree: If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star 1 to join the call.
Janine Fan: <unk> wanted to join the queue.
Stephen D. Shirt: And our first question comes from the line of Stephen D. Shirt with Key Bank.
Speaker Change: And our first question comes from the line of Steven <unk> with Keybanc. Your line is open.
Stephen D. Shirt: Your line is open. Hey, guys, thanks for the questions. Operating expenses as a percentage of revenue continues to come down.
Steven: Hey, guys. Thanks for the questions operating.
Speaker Change: Operating expenses as a percentage of revenue continues to come down can you talk about what is driving these efficiencies and where you think you could see further reductions.
Stephen D. Shirt: Can you talk about what is driving these efficiencies and where you think you could see further reductions?
Stephen D. Shirt: And then as a follow up, what factors would determine if you reach the high end of your guide versus the low end of your guide for 2025?
Speaker Change: And then as a follow up what factors would determine the hearings the high end of the high end of your guide versus the low end of your yard you guide for 2025.
Ian Harris: AC. Yeah, I mean, it's sort of generally across the board, as you know, I joined in May and took the first couple quarters to really review all across the board. I mean, headcount, GNA, org structures, can we be doing things more efficiently, vendor spend, so there's no Specific area I'd highlight on the G&A, and then of course, you know, to cut in nominal terms with revenue growing 25% in the year, you get that decline as a percent of revenue pretty, pretty naturally.
Speaker Change: Hey, Steve Yes, I mean, it's sort of generally across the board as you know I joined in May and took the first couple of quarters to really review all across the board I mean head count and G&A.
Speaker Change: Org structures can we be doing things more efficiently vendor spend so theres no.
Specific area I would highlight on the G&A and then of course to cut in nominal terms with revenue growing 25% in the year you get that decline as a percent of revenue.
Jon Cohen: The high end versus low end, I'll let Jon speak to a little bit. The military and Medicare, as we've sort of previewed the last couple of quarters, we're really now finally in our first position where we're at what we would describe as critical mass to really launch. So while we spent the last couple quarters adding these lives, we're only just this quarter in earnest Q1 that is seeking to activate those lives. So early indications are very positive. We feel quite bullish about both categories, as well as our general commercial line of business for payer. We just, you know, need some degree of flexibility just because they are new populations overall.
Speaker Change: Pretty pretty naturally the high end versus low end I'll, let I'll, let John speak to a little bit.
Speaker Change: The military and Medicare.
Speaker Change: Sort of previewed the last couple of quarters.
Speaker Change: We're really now finally in our first tradition, where.
Speaker Change: Correct.
Speaker Change: Scribe is critical mass to really launch so while we spent the last couple of quarters, adding these lives just this quarter in earnest Q1 that is.
Speaker Change: Seeking to activate those lives.
Speaker Change: Early indications are very positive we feel quite bullish about both categories as well as our general commercial line of business for payer.
Speaker Change: We just need some degree of flexibility just because they are new populations overall.
Jon Cohen: So. Your question is the top line about, you know, the it's it's exactly what Ian just said, we, we remain, you know, very encouraged by what we're seeing in both military, Medicare, and of course, the commercial business plus. You know, what you've seen is our leaning in on the technology side of the member journey, which is which I've talked about as a significant initiative this year to to improve the quality of what we're doing. Really leaning in on keeping people on the platform and messaging them through some of the mechanisms we've talked about, but we remain really bullish on the growth on the top line.
So.
Speaker Change: Your question is the topline.
Speaker Change: It's exactly what you just said.
Speaker Change: We remain very encouraged by what we're seeing is both military Medicare and of course the commercial.
Speaker Change: <unk> plus.
Speaker Change: What youre seeing is our leaning in on the technology side of the member journey, which is which I've talked about is a significant.
Speaker Change: The initiative this year to improve the quality of what we're doing.
Speaker Change: Really leaning in on keeping people on the platform and messaging them to some of the mechanisms we've talked about.
Speaker Change: But we remain really bullish on the growth on the top line.
Ryan Macdonald: Great, thank you. And our next question comes from the line of Ryan MacDonald with Needham and Company. Your line is open. Hi, thanks for taking my questions. Maybe as we think about 2025 and the marketing strategy, as you're going after sort of these obviously new and very large populations, particularly with Medicare, can you talk about the role and sort of the mix of channels that you're focused on, particularly given, you know, social media has historically been a pretty big channel, and that has been getting a bit more restrictive on health and wellness ads and how you target there.
Speaker Change: Great. Thank you.
Speaker Change: And our next question comes from the line of Ryan Macdonald with Needham <unk> Company. Your line is open.
Speaker Change: Alright, Thanks for taking my questions, maybe as we think about 2025 and the marketing strategy as Youre going after sort of these obviously, new and very large populations, particularly with Medicare can you talk about the role and sort of the mix of channels that youre focused on particularly given social media has historically been a pretty big channel and.
Speaker Change: That has been getting a bit more restrictive on health and wellness ads and how your target there.
Ryan Macdonald: Just, you know, are you seeing any impacts from that right now? And then, you know, given those changes, how are you maybe broadening out or diversifying the marketing strategy? Thanks.
Speaker Change: Are you seeing any impacts from that right now and then.
Speaker Change: Given those changes how are you maybe broadening out to diversifying the marketing strategy. Thanks.
Ryan Macdonald: Sure. So first off, we held back a little bit on the marketing, or more than a little bit on the marketing spend to really begin this quarter, because we really wanted to be in essentially all, you know, 50 states, as you saw, we're in 48 of the 50. Plus, we wanted to see not just on Medicare, Santa Medicare, but where we were heading on Medicare Advantage, because The more people who are in MA in addition to the standard Medicare, the more people who will actually come onto the platform when they look to see if they're actually covered.
Speaker Change: Sure.
Speaker Change: So first off we we held back a little bit on the marketing or whether a little bit on the marketing spend to really begin this quarter.
Speaker Change: Because we really wanted to be in essentially all 50 states as you saw were at <unk> 48 to 50.
Speaker Change: Plus we wanted to see not just Medicare Santa Medicare, but where we were heading on Medicare advantage because.
Speaker Change: The more people who are an MAA. In addition to the standard Medicare the more people, who will actually come on to the platform when they look to see if there actually.
Ryan Macdonald: So having said that, we know, and we've done a fair amount of research up to this point about how to, we think, how to get to seniors. It is very different than some of the other social media channels that we use. We know, for instance, that there are much, there are bigger users of Facebook than any of the other social platforms. And then we also know that they read newspapers, they read direct mail, they're very attuned to on-site visits. So all of that information is going into the marketing plan, which includes putting people, which we already have, on the ground to begin to expand and explore actually what's going to work and what's not work.
Speaker Change: Cover so having said that we know and we've done a fair amount of.
Speaker Change: Research up to this point about how do we think how to get the seniors. It is very different than some of the other social media channels that we use we know for instance that they're much bigger users of Facebook than any of the other social platforms.
Speaker Change: And then we also know that they are they reduce paper they redirect mail.
Speaker Change: We're very attuned to onsite visits so all of that information is going into the marketing plan, which includes putting people, which we already have on the ground.
Two two.
Speaker Change: To begin to expand and explore actually what's going to work and what's not work, but it is early days is what I am telling you, we really really have not even begun to scratch the surface.
Ryan Macdonald: But it is early days is what I'm telling you. We really, really have not even begun to scratch the surface on what the Medicare population will respond to and what the strategy will be. Although we've built it, we can't tell you what the results are yet. We are seeing, though, some early positivity, to say the least, in terms of people who are coming to the site and registering.
Speaker Change: What the Medicare population will respond to and what the strategy will be although we've we've built it we can't tell you. What the results are yes, we are seeing though some early positivity to say the least in terms of people who are coming to the site.
Speaker Change: And registering.
Ryan Macdonald: Right, specifically to your question on meta. We've been I've been monitoring that very closely with the team. We've not seen any negative impact. Since any of the recent changes. It's a fairly small channel for us overall. So we don't anticipate that being much of a headwind at all.
Speaker Change: Alright, so specifically to your question on matter, we've been I've been mined.
Speaker Change: Monitoring that very closely with the team we have not seen any negative impact since any of the recent changes it's a fairly small channel for us overall, so we don't anticipate that being much of a headwind at all.
Ryan Macdonald: Okay, I appreciate the color there. And maybe just given the early stage of the Medicare and military rollout this year, obviously, nice to hear some optimism about sort of the early stages of that.
Speaker Change: Okay I appreciate the color there and maybe just given the early stage of the Medicare and Medicaid.
Speaker Change: Terry rollout this year.
Speaker Change: Obviously, some nice to hear some optimism about sort of the early stages of that but when we think about the sort of range of outcomes. In your guidance can you maybe just provide a bit more color directionally on how youre thinking about growth across payer versus DTE versus consumer.
Ryan Macdonald: But when we think about the sort of range of outcomes in your guidance, can you maybe just provide a bit more color directionally on how you're thinking about growth across payer versus DTE versus consumer in sort of the implied guidance range? Thanks.
Speaker Change: And sort of the implied guidance range. Thanks.
Jon Cohen: So the first component of your question. Military Medicare as a percentage of payer, we're really approaching it opportunistically, right? So we're, we're optimizing to the best returns. Obviously, we view an early indications, what we're trying to convey is that It's a very positive interest for military and Medicare members.
Speaker Change: So the first component of your question.
Speaker Change: Larry Medicare as a percentage of payer.
Speaker Change: We are really approaching it opportunistically right. So we're we're optimizing to the best returns obviously, we view and early indications what we're trying to convey is that.
Speaker Change: It's very positive interest from military and Medicare members.
Jon Cohen: So while we're optimistic on it, if it, for whatever reason, it's not as attractive or not as good of returns that we see over time, we're not going to, you know, keep pushing on a string. We'll pivot the budget and drive it to commercial. So we're solving to the best outcome economically overall. In terms of payer-consumer DTE mix, I think you should expect continued sort of outsized growth from payers, sort of pulling up the consolidated numbers. DTE, while we don't break out sort of line of business level insights into revenue guidance, what I would say is obviously 24 benefited from a very material new contract in New York City.
Speaker Change: So while we're optimistic on it if it for whatever reason it it's not as attractive or not as good of returns that we see over time.
We're not going to.
Speaker Change: Keep pushing on a string we'll pivot the budget and drive it to commercial so we're solving to the best outcome economically overall.
Speaker Change: In terms of payer consumer DTE mix.
Speaker Change: I think you should expect continued outsized growth from payers are pulling up the consolidated numbers.
While we don't break out sort of.
Speaker Change: Line of business level insights into revenue guidance, what I would say is obviously 24 benefited from a very material new contract in New York City.
Jon Cohen: which we now have the base effects to sort of deal with in 2025, right, kind of lapping the initial year of New York. So you saw in Q4, 7% year-on-year growth in DT, and just as a reminder, Q4, 23 was the first quarter where we had New York. So I'd point you to that sort of annual growth rate as a sort of base case for DT.
Speaker Change: Which we now have in the base effects to sort of deal with.
Speaker Change: In 2025 rate growth kind of lapping the initial year of New York.
Speaker Change: So you saw in Q4, 7% year on year growth in.
Speaker Change: In DT and sort of a reminder, Q4 23 was the first quarter, where we had new York. So I'd point, you to that sort of annual growth rate as a as a sort of base case.
Speaker Change: For DTE consumer.
Jon Cohen: Consumer would just echo what I said on the last call in Q3, will decline slightly, obviously as a result of the payer strategy and as we grow covered lives, that becomes more and more the case as a better alternative for members to go through the payer route. Obviously, the numbers will be much smaller. So the sort of headwind on a consumer continues to dissipate.
Speaker Change: I'll just echo what I said on the last call in Q3.
Speaker Change: Will decline slightly obviously as a result of the Payor strategy and as we grow covered lives that becomes more and more of the case as a better alternative for members to go to the payer out.
Speaker Change: Obviously, the numbers will be much smaller so the sort of headwind on the consumer continues to dissipate.
Ryan Macdonald: I appreciate the call and I'll hop back in the queue.
Speaker Change: Awesome I appreciate the color I'll hop back in the queue.
Jack Senft: Next question comes from the line of Ryan Daniels with William Blair. Yeah, good. Good morning, everyone. This is Jack Senft on for Ryan. Thanks for taking the questions. So gross margin decrease sequentially this quarter, you're at 44.2% versus above 45%, you know, last quarter, and just really the majority of the year. And I know you're calling out a shift towards payer mix. But, you know, is there anything else that really attributed to the contraction? Like, I'm assuming some of it could be onboarding with the new partnerships. But if you could elaborate on that, that'd be appreciated.
Speaker Change: Next question comes from the line of Ryan Daniels with William Blair. Your line is open.
Speaker Change: Yes. Good good morning, everyone. This is Jack stamped on for Brian. Thanks for taking the questions. So gross margin decreased sequentially. This quarter you are at 44, 2% versus about 45% last quarter and just really the majority of the year and I know you are calling out a shift towards payer mix, but is there anything else that really attributed to the contraction.
Speaker Change: Like I'm, assuming some of it could be onboarding with the new partnerships, but if you could elaborate on that that'd be appreciated and then just kind of how we should think about that going forward in 2025.
Jack Senft: And then just kind of how we should think about that going forward in 2025.
Ian Harris: Thanks. Sure. No, I mean, it really is.
Speaker Change: Sure.
Speaker Change: No I mean, it really is.
Speaker Change: <unk>.
Ian Harris: almost a coefficient of one in RevityMixShift. That that is really the sole driver of it. I would say just echoing my comments in the prepared remarks. A slight decline in 25 as a result of continued mix shift, but the step down you saw in consolidated growth margin from 23 to 24 was much more pronounced than what we would expect going forward. We've identified a bunch of sort of mitigating factors which were actioning throughout the year which will help sort of offset that. But again, we viewed that trade off, so to speak, as a no brainer.
Speaker Change: Almost a coefficient of one in revenue mix shift that is really the sole driver of it.
Speaker Change: I would say.
Speaker Change: Yes that going my comments in the prepared remarks.
Slight decline in 25% as a result of continued mix shift, but the step down you saw in consolidated gross margin from <unk> from <unk>.
Speaker Change: 'twenty three 'twenty four it was much more pronounced than what we would expect going forward. We've identified a bunch of sort of mitigating factors, which we're actioning throughout the year, which will help sort of offset that but again, we view that trade off so to speak as a no brainer.
Ian Harris: The long term unit economics and also the contribution margins we're getting by pursuing that slightly lower gross margin member session is just far, far more attractive.
The long term unit economics, and also the contribution margins, we're getting by pursuing that slightly lower gross margin remember session is yes far far more attractive. So we will continue to do that.
Ian Harris: So we'll continue to do that.
Speaker Change: Yeah.
Jack Senft: Okay, understood. And then maybe another modeling question here to GNA also decreased this quarter. And I think you alluded to it too in the total OPEX question before, but it's really kind of been the lowest it's been all year.
Speaker Change: Okay understood and then maybe another modeling question here too G&A also decreased this quarter and I think you alluded to two and the total opex question before but.
Speaker Change: It's really kind of been the lowest it's been all year and I'm just kind of wondering is this improvement mainly from the investments you've made back into the business and then just as a follow up to like is this kind of a run rate. We should think of going into 2025 in terms of G&A or maybe how should we think about that cadence going forward. Thanks.
Ian Harris: And I'm just kind of wondering, is this improvement mainly from the investments you've made back into the business? And then just as a follow up to like, is this kind of a run rate we should think of going into 2025 in terms of GNA? Or maybe how should we think about that cadence going forward? Thanks. Some of it's, yes, the fruits of the investments we've made throughout 24. Some of it's just getting sort of full quarter impact of just general cost optimization actions that we took earlier in the year. And again, you know, I kind of took the summer to review things and then really started actioning them Q3, Q4.
Speaker Change: So some of it yes, the fruits of the investments we made throughout 2000 and for some of its just getting sort of full quarter impact of just general cost optimization actions that we took earlier in the year and again.
Speaker Change: Kind of took the summer to review things doing really started asking them Q3 and Q4. So it's really just that getting pulled to the P&L.
Ian Harris: So it's really just that getting pulled through the P&L. As I said in my prepared remarks, Well, we're obviously pleased with the nominal decline in OPEX dollars. The efficiencies we've gotten in our marketing effort overall, which is one just from the new team who came in two years ago and really revamped our whole marketing approach, number one. Number two, it's actually, you know, a lot of the partnerships we've announced, whether it's Amazon, ZocDoc integration, or some of our other sort of referral partners that we've talked about in the past couple of quarters, as well as working more closely with the payers to try to more effectively get to their members, which they're very aligned with.
Speaker Change: As I said in my prepared remarks.
Speaker Change: Lower while we're obviously pleased with the nominal decline in Opex dollars.
Speaker Change: The efficiencies we've done in our marketing effort overall, which is one just from the new team who came in two years ago, and really revamped our whole marketing approach number one.
Speaker Change: Number two it's actually.
Speaker Change: A lot of the partnerships, we've announced whether its Amazon Zac dock integration, where some of our other sort of referral partners that we've talked about in the past couple of quarters as well as working more closely with the payers to try to more effectively.
Speaker Change: Get to their members, which which they're very aligned with and so.
Ian Harris: And so Through all those things, the actual marketing efforts have become such higher ROI for us that what I said in my prepared remarks is we're going to take some of these G&A savings we've garnered out of other non-revenue generating OPEX lines, so think G&A, and reinvest that in 2025 into marketing. So as as we won because it's more efficient, so we're adding more members for every dollar we spend. That's also a function of the fact that we've grown covered lives as much as we have. But then also just echoing John's comments. We're really focused on technology and product improvements, which drive engagement, which in turn extends sort of retention and utilization for the member, i.e.
Speaker Change: Through all of those things.
Speaker Change: Actual.
Speaker Change: Sort of marketing efforts have become such that such higher ROI for us that what I said in my prepared remarks is we're.
Speaker Change: We're going to take some of the G&A savings, we garnered out of other sort of non revenue generating opex lines.
Speaker Change: Think G&A.
Speaker Change: And reinvest that in 2020 fives into marketing.
Speaker Change: So as we.
Speaker Change: One because it's more efficient so we're adding more members for every dollar we spend thats also a function of the fact that we've thrown covered lives as much as we have.
Speaker Change: But then also just echoing John's comments.
Speaker Change: We're really focused on technology and product improvements, which drive engagement.
Speaker Change: Which in turn extends sort of retention.
Ian Harris: for every member we're adding, they're doing more sessions, they're staying on the platform longer and are more attractive to us.
Speaker Change: Utilization for the member I E for I remember, we're adding there.
Speaker Change: Theyre doing more sessions theyre staying on the platform longer.
Speaker Change: More attractive to us so for all those reasons.
Ian Harris: So for all those reasons, what I'm trying to signal is we're going to lean in a little bit in 25, which will show up in the OPEX slide for marketing, obviously.
Speaker Change: What I'm trying to signal is that we're going to lean in a little bit in 'twenty five.
Speaker Change: Which will show up in the Opex line for marketing obviously.
Jack Senft: Okay, understood.
Speaker Change: Okay understood. Thank you again guys.
Jack Senft: Thank you again, guys.
Stephen Ballycat: And our next question comes from the line of Stephen Ballycat with Mizuho. Your line is open.
Steven Valiquette: And our next question comes from the line of Steven Valiquette with Mizuho. Your line is open.
Stephen Ballycat: Great, thanks.
Steven Valiquette: Great. Thanks, good morning.
Stephen Ballycat: Good morning. You know, just in regard to the payor book of business, just curious if you have any commentary on the pricing environment within this customer segment. You know, last time we spoke, you mentioned it was trending, I think, actually a little bit better than expected. You were getting pretty good rate increases. So I'm just wondering if that's still the case today as you negotiate and renew more contracts.
Steven Valiquette: Just in regards to that.
Speaker Change: Mayor bucket business, just curious if you have any commentary.
Speaker Change: On the pricing environment within this customer segment last time, we spoke you mentioned that was trending.
Speaker Change: Actually a little bit better than I expected you were getting pretty good rate increases. So I am just wondering if thats still the case today as you negotiate and renew more contracts.
Ian Harris: Next. Yeah, I would I would say a lot of the major contracts have been already negotiated and renewed recently. new ones coming on we're seeing we're not seeing any any we're not seeing any degradation you know we're seeing similar rates that we've had in the past so I would say there's really no change and no indication of any significant.
Speaker Change: Yes, I would say a lot of the.
Speaker Change: Major contracts have been already.
Speaker Change: Negotiated and renewed recently.
Speaker Change: The.
Speaker Change: New ones coming on we're seeing we're not seeing any any we're not seeing any degradation we're seeing.
Speaker Change: Similar rates that we've had in the past so I would say there's really no change.
Speaker Change: <unk>.
Speaker Change: And no and no indication of any significant.
Ian Harris: decrease in any sense or any way. Okay, that's helpful.
Speaker Change: Decrease in any sense or any way.
Speaker Change: Okay. That's helpful. Thanks.
Bobby Brooks: And our last question comes from the line of Bobby Brooks with Northland Capital Markets. Your line is open.
Bobby Groups: And our last question comes from the line of Bobby groups with Northland Capital markets. Your line is open.
Bobby Brooks: Hey, good morning guys. Thank you for taking my questions. In your slides under, I think it's on slide three, under unlocking the membership base, it mentions acquisition strategy optimized towards people checking coverage. Could you just expand on that? Like, what are acquisitions in this case? That's just sorry for the confusion, Bobby. Thanks for the question. That's just talking about customer acquisitions. Our entire marketing message, we revamped, call it a year and a half ago to lead with the check your eligibility, you may be a network. And obviously that that message will continue to resonate better and better as we've grown Covered Live.
Bobby Groups: Hey, good morning, guys. Thank you for taking my questions.
Bobby Groups: Your slides under I think it's on slide three under unlocking in the membership base had mentioned acquisition strategy optimize towards people checking coverage could you just expand on that like what are acquisitions in this case.
Bobby Groups: Okay.
Bobby Groups: That's just sorry for the confusion Bobby Thanks for the question not just talking about customer acquisitions, our entire marketing message and revamped call. It a year and a half ago to lead with the check their eligibility you may be in network, and obviously that that message will continue to resonate better and better as we've grown covered.
Bobby Groups: Lives.
Bobby Brooks: Fair enough. And then, you know, a couple weeks back, I kind of put out a note diving into some third-party data that ultimately highlighted your significantly more efficient marketing spend than your largest peer.
Bobby Groups: Fair enough and then.
Bobby Groups: Couple of weeks back I kind of did it.
Speaker Change: Put out a note diving into some third party data that ultimately highlighted you're significantly more efficient marketing spend than your largest peer and I was just wanted to ask could you maybe just discuss why your marketing team is generating such strong returns I mean, you mentioned it in the last question too since it came in it's been it's been.
Jon Cohen: And I just wanted to ask, could you maybe just discuss why your marketing team has generated such strong returns? I mean, you mentioned it in the last question, too. Since they've came in, it's been kind of a sea change. And so I just really kind of wanted to dive a little bit deeper into what you guys think is giving you an edge on marketing. I mean, not to puff up their chest too much, but they do an amazing job, number one. Secondly, though, and I've said this before, the value prop of our message of, hey, you may have this service for free, no surprise is going to resonate much better with folks than, hey, pay me, you know, X dollars on your type in your credit card.
Speaker Change: Kind of a sea change and so I, just really kind of wanted to dive a little bit deeper into what you guys think is giving you an edge on marketing.
Speaker Change: Okay.
Speaker Change: Not to pop up there just too much but they do an amazing job number one.
Speaker Change: Secondly, though and I've said this before the value prop of our message of Hey, you May have this service for free no surprise is going to resonate much better with folks in HAE.
<unk> X dollars on your type in your credit card.
Jon Cohen: you know, let me charge you for this. So I think we're just selling a much better value proposition to the underlying consumer, which leads to better conversion. And then I don't want to discount the impact of these large partners we have who have come to us because we're in network. We have, at this point now, 170 million-plus covered lives. We're in all 50 states. We're virtual or convenient. They come to us as a convenient solution for their underlying customers. And those partnerships really do drive very cost effective awareness for us. In order to give you an example, when we go up on our, someone goes onto the website, it doesn't cost us anything to add, though we're a network with Medicare and we're now in network with, you know, Tricare Military, think about it that way.
Speaker Change: Let me charging for that so I think we're just selling a much better value proposition to the underlying consumer which leads to better conversion.
Speaker Change: And then I don't want to discount the impact of these large partners, we have who have come to us because we're in network.
Speaker Change: We have at this point now of $170 million plus covered lives. We're in all 50 states, where virtual or convenient they come to us as a convenient solution for their underlying customers.
Speaker Change: And those partnerships really do drive very cost effective awareness for us.
Speaker Change: Got it.
Speaker Change: Just to give you. An example, when we go up on our someone goes onto the website.
Speaker Change: It doesn't cost us anything to add.
Speaker Change: Though we are in network with Medicare and we are now in network with Tricare and military to think about it that way.
Jon Cohen: So you have these very large populations. that are now entered into the fray, right, are looking for mental health. with the same basically spend that we're doing looking at customers holistically. You follow what I mean? I mean, we certainly look with dollars towards military and Medicare, look at how to improve our outreach to those populations, but in a general sense, right? It doesn't cost us much to add new populations up to the web. And then you get those additional signups as a result of that. That's the difference, right?
Speaker Change: These very large populations.
Speaker Change: That are now entered into the Fray right Theyre looking for mental health.
Speaker Change: With the same basically spend that we're doing looking at customers Holistically.
Speaker Change: I mean, we certainly up with dollars towards military in Medicare I look at it.
Speaker Change: How to improve our outreach those populations, but in a general sense right. It doesn't cost us much to add new populations up to the web.
Speaker Change: And then then you get those additional sign ups as a result of that that's the difference right.
Bobby Brooks: Yeah, no, that makes perfect sense. Yeah, it's just a kind of fishing, the pond is becoming ever bigger to fish in. And then just maybe the last one for me, you know, payer, number of payer sessions completed has kind of tracked, it pretty much tracked in line to payer revenue growth year over year.
Speaker Change: Yes, no that makes perfect sense, just to kind of fishing pond is becoming ever bigger deficient and then just maybe the last one for me.
Speaker Change: Payer number of payers session is completed.
<unk> tracked it pretty much tracked in line to payer revenue growth year over year.
Bobby Brooks: Is that how we should kind of expect things to trend going forward? Ultimately, payer revenue growth being kind of a result of the number of sessions completed. Because looking back the past couple of quarters, there's kind of a larger delta. I mean, 1Q of 24 is 92% payer revenue growth year over year versus 65% session growth.
Speaker Change: How we should kind of expect.
Speaker Change: Things to trend going forward ultimately pay a revenue growth being kind of a result of the number of sessions completed because looking back the past couple of quarters, there's kind of a larger delta I mean <unk>. This <unk> 24 was 92% payer revenue growth year over year versus 65% session session.
Speaker Change: Growth just kind of curious on like how to think about that trend going forward.
Ian Harris: Just kind of curious on like how to think about that trend going forward. Yeah, I mean, that's the largest driver. Think of it as like price times volume, that's our volume. On a contribution basis, which takes into account sort of time, right? And, and I guess like longitudinal performance, then that's where the technology and product and engagement new engagement efforts we have come into play, but in terms of actual session growth and how it ties to revenue, think of it as just like the volume of sales, and then obviously pricing, going back to Steve's question, would play a part in that as well.
Speaker Change: Yes, I mean, that's the largest driver.
Speaker Change: Think of it as like price times volume Thats our volume.
Speaker Change: On a contribution basis, which takes into account sort of time right.
Speaker Change: I guess like longitudinal performance then.
Speaker Change: That's where the technology and product and engagement.
Speaker Change: New engagement efforts, we have come into play.
Speaker Change: But in terms of actual session growth and how it ties for revenue think of it as just like the volume of sales and then obviously pricing going back to Steve's question.
Speaker Change: Would play a part in that as well.
Bobby Brooks: Okay, fair enough. Thank you guys.
Speaker Change: Okay fair enough. Thank you guys.
Operator: That ends the question-and-answer session. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining, and you may now disconnect.
Speaker Change: That ends the question and answer session, Ladies and gentlemen. This concludes today's conference call. Thank you all for joining and you may now disconnect.
Operator: Please wait, the conference will begin shortly.
Speaker Change: Please wait the conference will begin shortly.
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