Page 1

talk space Talkspace Reports Third Quarter 2021 Financial Results November 15 , 2021 Net Revenue grew 23 % year - over - year to approximately $ 26 million , driven by continued strong momentum in B2B B2B eligible lives and completed B2B sessions grew 92 % and 96 % , respectively , versus the prior - year period Active members grew 21 % year - over - year to approximately 60,300 NEW YORK , Nov. 15 , 2021 ( GLOBE NEWSWIRE ) -- Talkspace , Inc. ( " Talkspace " ) ( Nasdaq : TALK ) , a leading virtual behavioral healthcare company , today reported its financial results for the third quarter ended September 30 , 2021 . Jennifer Fulk , Chief Financial Officer of Talkspace , commented : " While Net Revenue grew 23 % year - over - year , driven by continued momentum in the B2B business , the overall financial results for the third quarter were disappointing . Q3 Net Revenue came in below management expectations due to a lower number of B2C customers and a one - time non - cash reserve adjustment for credit losses on receivables related to prior periods . The $ 223 million of available liquidity as of September 30 will allow Talkspace to invest in important operational enhancements and new initiatives that will continue to drive long - term growth . " Third Quarter 2021 Financial Highlights • Net Revenue of $ 26.4 million , a 23 % increase over the prior - year period • Gross Profit of $ 14.2 million ; Gross Margin of 54 % compared to 70 % in the prior - year period ● Adjusted EBITDA loss of ( $ 20.8 ) million , compared to ( $ 2.0 ) million in the prior - year period • Net income of $ 1.5 million , compared to a net loss of ( $ 2.7 ) million in the prior - year period Key Operating Metrics • Total active members grew 21 % year - over - year to approximately 60,300 as of September 30 , 2021 • B2B eligible lives grew 92 % year - over - year to over 75 million as of September 30 , 2021 71,300 completed B2B sessions , a 96 % increase versus the prior - year period Revenue • Net Revenue for the third quarter was $ 26.4 million , a 23 % year - over - year increase . This metric came in below expectations due to a lower number of acquired customers in the direct - to - consumer business and an adjustment to reserves , which was only partially offset by growth in B2B Gross Revenue . • In the third quarter we increased the allowance for credit losses on receivables by $ 3.4 million , of which $ 2.8 million related to prior quarters . Excluding the impact of this one - time non - cash adjustment , consolidated Revenue would have been $ 29.2 million , up 37 % year - over - year . • Direct - to - consumer Revenue was $ 18.6 million , a 10 % year - over - year increase in the third quarter . The slowdown in the B2C business resulted in part from delays in launching new products and features , as well as a decline in conversion rates . • B2B Revenue was $ 7.7 million , a 69 % increase year - over - year , with the continued strong performance of recurring revenue coming from PEPM fees , which approximately tripled year - over - year . Gross Margin • Gross profit was $ 14.2 million in the third quarter , compared to $ 15.1 million in the prior - year quarter . Gross margin was 54 % compared to 70 % a year ago . This decline was due to the increase in the reserve for credit losses on receivables , revenue mix shift towards B2B , and the continued investment in W2 therapist network . • Excluding the reserve adjustment related to prior quarters , gross profit and margin for the quarter would have been $ 17.0 million and 58 % , respectively . Net Income • Net income was $ 1.5 million compared to a net loss of $ 2.7 million in the prior - year period . This reflects a $ 26.9 million non - cash gain resulting from the revaluation of the warrants ' liabilities , driven by lower share price . The following table summarizes the Company's performance during the third quarter of 2021 , compared to the same period in 2020 : Three Months Ended September 30 , 2021 2020 ( Values in thousands , except B2B eligible lives and percentages ) Period - Over - Period Change