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Talkspace CEO Jon Cohen told investors during an earnings call Tuesday that some employers have decided to drop mental health as a benefit, a hit for a teletherapy service that sells to both health plans and employers.
“There are some employers that have tried mental health benefits and decided for one reason or another that they don’t want to offer the benefit anymore,” Cohen said during the call.
Jon CohenSome of those reasons include employers realizing their employees already have access to Talkspace through their health plans, he said. The teletherapy giant also faced increased competition, and employers have continued to carefully control their overall spending budgets too, Cohen said.
Despite achieving its first quarter of adjusted EBITDA profitability, Talkspace’s shares $TALK dropped on Tuesday, closing down 15%.
While the drop in share price was a reflection of Cohen’s comments on employers pulling back, selling to employers remains a significant way for Talkspace to bring in revenue, TD Cowen analysts wrote in a note Tuesday.
Talkspace’s overall revenue increased 36% compared to the same period last year to $45.4 million, boosted by a 92% increase in revenue from health plans.
Though there’s been a 29% decrease in revenue from consumers compared to Q1 2023, the company attributed the drop to more consumers being covered by insurers.
Talkspace also plans to go live with traditional Medicare plans in multiple states later this month and expects to be in network with all 50 states by the end of the year. Even though Medicare plans have been rife with regulatory hurdles and high medical costs, it’s a large market for Talkspace to tap into if it’s successful in getting older Americans to use its services.