All right, we'll go ahead and get started. Good afternoon. Thank you for attending the Canaccord Conference. I'm Richard Close covering digital and tech-enabled health here at Canaccord. Excited to have Talkspace with us for the August conference. We've had the company virtually before, as well as at our November conference. I appreciate them being here in person today. From Talkspace, CEO Jon Cohen and CFO Ian Harris are with us. Thank you both for coming and having a conversation with us. Maybe Jon and Ian, to begin with, it was whirlwind last week for us in terms of earnings season. You reported the second quarter last week. I was just curious, maybe to start off, set the table in terms of a quick snapshot on the quarter and what investors should be focused on the update and outlook. Yeah, I can start. Maybe Jon can jump in. I think we saw higher annual growth than we did in Q1. There's a lot of appreciation around the acceleration of both consolidated top line, and that was obviously led by our payer line of growth, which today is our largest line of revenue and our fastest growing. We did 35% growth in payer and 18% growth overall. We also, I think, pointed to our KPIs within payer just to give attention and sort of proper credence to the visibility we have in the continued acceleration in our overall growth through the rest of the year. One key KPI we pointed out was, again, within our in-network insurance-focused strategy, we actually saw the largest increase in net new users in Q2 than we've seen in over two years. We saw 10,000 net new users add to the platform. That was obviously over the course of Q2. We entered July, in many ways, on the payer business, sort of firing on all cylinders. The second aspect we pointed to was a little bit of a delay from Q2- Q3 in our direct-to-enterprise, which are sort of our direct-to-employer, and increasingly so are our SaaS contracts to schools, municipalities, other sort of quasi-public associations, trade unions. A couple of those slipped in timing from Q2- Q3, but given they're on the finish line, we actually announced three material ones on earnings. We expect those to be implemented in Q3 and we'll obviously start recognizing the SaaS revenue from that through the rest of the year. I think the third area, which I'll let Jon comment on, was a lot of excitement around the CapEx investments, the really material CapEx investments we've been public about around our AI and some of our LLM strategy. Yeah, no surprise, significant interest given what's going on in the market and where we've positioned ourselves relative to the two major beyond initiatives in the company. One is the AI support of the existing business, and every part of the member journey now has been impacted by AI initiatives, between sessions, keeping people engaged, improving therapists, you know, with our algorithms relative to suicide, homicide, violence, soon to be some others. We've had that going with an AI team for probably a year and a half now. Of course, the bigger thing is our decision to build an LLMs model around mental health, which was going to be very unique relative to what's going on in the marketplace. We could certainly get into that in more depth, but that's a CapEx investment on our side and a decision to really build something that is safe, clinical oversight, possibly HIPAA compliant, you know, in terms of comparing anything else that people are doing who are inappropriately going to ChatGPT or others to get therapy. Good. I do want to jump into that a little bit later, but maybe just to get into how the business has transitioned. You highlighted in some of your comments there, but since the very beginning when it originally de-spacked, just your thoughts, there's been a huge amount of investment in mental health over the last five years, like the top clinical area in digital health. You guys have been around for a good chunk of time. You're one of the only companies that have scale in the area. I'm just curious, you know, how you transitioned the business, how difficult it was, and where you are in terms of the three areas: direct to payer, direct to consumer, and direct to enterprise, or the payer business, I should say. I'll start. The journey started three or four years ago. It is a long, arduous journey to move with just a huge impact on the business. An insurance-based model is just a completely different consumer. The member journey is different. How you approach the patient is different. The whole idea is to get people on the platform and keep them on the platform. It's very different than a consumer model. Having done that and then getting a real curated network of providers that we have significant oversight, monitor their quality, we'll watch what they're doing, being part of community. You have that. You have to have all the therapists be qualified and be credentialed for the payers. We meet with the payers twice a year and join operating committees, and we have people designated for each payer that are talking to them daily. There's the patient journey. There's the network that needs to be built for a payer. Quite honestly, there's the issue of getting into network and being able to build the payers, negotiating rates. We just announced that we got into the Texas Blues and the Illinois Blues in Idaho. I'll tell you, those discussions have been going on for a year and a half. In terms of the journey, it's a long one. It's just a completely different business than it is being a consumer. Ian, maybe on direct-to-consumer, I mean, that'll always be part of the business to some extent, but you know, how do you think in terms of, is this steady state around where we are now? I was smiling because you asked about, you know, how painful, how easy, how hard was that transition? I would say, look at our share price over that timeframe and the P&L. I think to trade out intentionally so high margin consumer revenue, which on the flip side is very high churn. Think of that as sort of cheap calories where you need to constantly refill the top of the marketing funnel to replenish that. There are certainly direct-to-consumer models that are continuing down that path. To swap that out for much lower gross margin payer revenue, which is on a fee-for-service basis, the positive trade-off really comes in the long-term unit economics where there's a long tail of revenue coming from those payer members. It's a trade-off that makes total economic sense. It's just when you're a public company reporting out each quarter, it can be very painful in that interim period. You have seen, I think, in 2022, 2023, 2024, really robust payer growth, a small part of that coming from the cannibalization of our, what had there to have been our pure business model of direct-to-consumer. That's now kind of run rating in the low $4 million per quarter. Our hypothesis is, for whatever reason, there will always be someone marginal coverage that we don't cover, anonymity, some sort of preference of wanting an unlimited plan and paying out of pocket. I think it's probably just, you know, famous last words, but just about sort of bottomed in this sort of low $4 million range. I would expect that to continue. Payer, to Jon's point, we stopped disclosing this metric a quarter ago when we got to approximately 200 million covered lives, compared to where we ended Q2 last year, sort of in the 130 million- 140 million range. We have effectively now covered all of the insured U.S., ex-Medicaid, and VA. All of our marketing messaging is targeted towards the in-network check your eligibility messaging, which is why you're seeing sort of that message resonate, which comes through in better CAC and those higher users we saw. Jon, I'm curious in terms of going back to that scale and all these companies that were funded that don't have scale. You have all these payer relationships. There was a big rush by the managed care to fill these networks. You've talked a little bit about ghost networks in the past. How do you think that all shakes out with some call out on higher behavioral health spending by some of the companies? Yeah, the payers have made it very clear that they're now in the process of narrowing their networks. They've said, okay, they had all these in. I don't think they're that interested for when I hear bringing new ones on, and they're changing and they're narrowing the ones that exist. The next phase for the payers is we do some value-based contracting now, and it's pretty kind of rudimentary. It's, you know, time to first appointment, time to second appointment, NPS scores, how good are the therapists, churn rate, etc. They're really looking for a quality network, because when they audit us, they audit us every six months, if not more often. They take 100 or 200 charts. They look and see what the documentation is. We're just like a primary care provider. I think what'll happen is the networks will narrow, and they will begin to concentrate more on value, which they've all said they will do, as opposed to people out there who are what I'll call matching services, who just match the therapists and don't do anything else relative to the therapy network. That's pretty much what I think, what I'm sure is going to happen now. Since you brought up matching, there was news this morning, if I'm not mistaken, you had a partnership announced this morning. Yeah, it's something express. It's another provider-type matching network. It's an ability, it's a national network where you can actually go online and make it easier for you to schedule. We're in network now with that express matching service. I think it's as important, but it's important to understand that the relationship between the payers and the payer directory is a big initiative for us. When you have a full integration with a payer directory, meaning when you go on to Optum or Aetna or Cigna, whoever it is, and you find us, Talkspace, what we're working now is that at the same time that you find us, you can then make an appointment with us. That's a huge plus for the payers and for us because it makes the patient journey extremely easy. Otherwise, you may go on and say, okay, I want to have mental health support, I find Talkspace, then you have to leave just like you're finding your doc and you have to go to Talkspace. Right here, what happens is if we're fully integrated at the time that you find us, we'll say, oh, do you want to make an appointment? You don't have to leave. You have to leave the site. That's a really big, and we've seen it on other provider directories. We had a huge uptick as a result of those kinds of relationships. Which is extremely important in behavioral health and reaching the end. It's like any time you need, it's like a purchasing decision, right? You want when high intent is a good time to get people to sign up. Part of your business over the last, you know, call it two years in terms of going through the process, but you've signed Tricare and Medicare. These are two new patient populations for you. Can you talk a little bit about the differences in those two businesses and like the go-to-market in terms of outreach and whatnot? I think that they're both distinctive. Yeah, I'll talk about the military first. It's a little easier. The military is 10 million lives. It's Tricare East and West. We're in for both the active military and their families. Most of the uptick has been on the family side. Even early on, it's been very successful. There are a lot of reasons for it. The most important reason is we know where you are. We know where the bases are. We know exactly who they are and how to get to them, both on the marketing side and resources on the ground, and what bars they go to and what movies they watch. In other words, we know a lot about the military, so it's really easy to target to get them to know about Talkspace. Medicare is a much bigger challenge because it's 65- 66 million Americans, half of which are in Medicare Advantage. I'll move the MA aside for a second. It's very diffuse and there are very significant subpopulations with Medicare. We're doing well. We keep growing Medicare each month, but there are really subpopulations within Medicare. There's the pickleball crew, literally. There's the dialysis crew. There are people, quite honestly, over the age of 75 or 80 who are not going to come on to Talkspace probably for therapy, or it's going to be hard to get to them. It's diffuse. They are in every state, in every community. They may be in retirement communities. It's a much harder population to penetrate because of how big it is, as opposed to the military where we know exactly where you are. The good news is we're learning every month about what works and what doesn't work. Ian, maybe as you think about guidance in terms of, you know, there's a pretty decent, you know, you kept the ranges after this last quarter. Is how you attack Medicare or Tricare, is that like sort of baked into those upper and lower ends? How do you think about that? It is implicitly. I've said before, we take a sort of portfolio approach to our marketing allocation. We, when we, and it's funny, we time to time check in on sort of the makeup of our quarterly revenue cadence based on where we're thinking during our forecasting at the beginning of the year. We certainly had goals in mind for both military and Medicare. What we've always said though is both being new populations, I'm not going to force my way to success at the expense of lower contribution margin, right? The marketing team works very closely with the financial team. I talk to the CMO every day. We're very, very nimble, not quite day-to-day, but almost day-to-day, week-to-week in terms of pivoting our spend, making sure the channels we're leaning into have the sort of return thresholds, the payback periods that we're underwriting to. If they're not there, we'll pivot somewhere else. If military CAC goes way up and we're not having success, we're going to pause and sort of reset. As we figure that out, reallocate that spend to a channel that is working to make sure that we're continuing to drive the new user growth that we need to hit our numbers. I have a lot of flexibility in sort of how we land within our guidance. It's a little bit fungible is the answer. How do you think about, you know, therapists, recruitment, retention? I mean, that's a big thing in the industry as well. Does it get easier in terms of if some of these companies go away? Any general thoughts on the clinician side? I would just say that right now there's not been a supply side issue. There hasn't been an issue with us. Yes, I mean, I think we do, we are making changes to some of the reimbursement that we're allocating to certain regions of the country that are more expensive than others. We are going through that process now. Right now we've had no trouble matching. We're still matching people within hours. If you want to text or message us, you're going to do it within 24. If you want a video, it's going to be probably five to seven days. Right now the supply side has not been an issue. There are therapists that work on multiple platforms. I don't think many of them do more than two. There are a lot of them who are doing this. Several of them, a certain percentage are doing part-time, a certain percentage have a small practice on site in addition to this. A fair number of them only work with us. The supply side has not been an issue right now. We're not having any issues addressing the need. Are you thinking about, you know, a greater presence in psychiatry and other areas? Sure. Yeah, we don't give it a ton of airtime to our fault, which we're trying to correct for that this year. We do have actually a pretty sizable, call it 10% of payer revenue psych business. Think of it as meds management effectively. We don't prescribe controlled substances, but otherwise think of it as a traditional medication management platform. That has been, in many ways, up until a year ago where Jon really made clear we had to have a sort of stated focus on this business, have a Divisional Leader who's leading it, have a Senior Executive Team overseeing it. Up until then, it had really been sort of this orphan asset that by accident we sort of came across. It was growing at a significant premium to where the overall business is growing. In this past quarter, we saw sessions grow to the tune of just about 40%. Very, very nice clip. There's a lot of opportunities there given the sort of lack of focus historically. For example, making it easier both for the underlying consumer and the provider to cross-reference, cross-referral from therapy into psych or vice versa. The investment we made in having Amazon Pharmacy as our preferred pharmacy partner to make it very convenient for the provider and the consumer to sort of one-click fulfill. A lot of things like that, two years ago we would have never considered. Just jumping back to the supply question, I do want to flag, which I don't think is the most obvious or easily appreciated by investors, the complexity around the sort of network operations and infrastructure is, we're joking this morning, sitting here at a technology growth conference. It's not the sexiest topic with investors, but I do think in terms of a defensive moat, it's really material. There's a reason why, as you point out, a lot of the venture money that's come into the industry the last five years have pursued more of a marketplace sort of capital-light model, because it's actually build out, manage, train, credentialize, have the clinical safety and oversight managing a network, and actually be the HIPAA interfacing, HIPAA compliant interfacing provider to the payers. It's a huge regulatory, operational, logistical undertaking, which candidly, I did not appreciate that workload from the outside in. We have about three and a half minutes left, Jon. Let's go into the AI a little bit deeper, because there's two things here, right? There's the internal, what you're doing internally, and then the external aspect to it, how you're keeping the individual, the member, patient engaged and throughout their care journey. I just want to hit on that a little bit. Then the LLM that you were talking about, what are the opportunities? Yeah, as I said, the internal, probably the best example is you may have heard we launched a personalized podcast in between sessions, which has been very successful, where we personalize what you've told the therapist, and it gets generated by the AI engine into a personalized two to five-minute podcast that's just for you. It gets reviewed by the therapist before it gets released, and then you listen to it, and it's all about you and what you should do between sessions. It's quite honestly, it's remarkable. We've had a 13%-15% uptick between sessions one and two as a result of it, and almost 25%-30% uptick between the second two and three, just with the podcast, just to give an example of how impactful some of the AI capabilities are. We're saving the therapist four hours a week right now on just administrative issues because of smart notes, intake notes, summary notes, submitting bills and all that. The LLM is different. The LLM, we've decided to build this LLM model for mental health, which we believe should have significant clinical oversight and some other HIPAA-related issues. We want it to be very safe. We have 5-10 use models without even thinking much about it where it can apply. Beyond that, I think there's probably multiple other uses for it. The idea for us is as an innovation company who really put texting and messaging therapy on the map 10 years ago, to continue to lead in innovation mental health. We believe that a specific LLM trained on a data set that's one of the largest in the country or the world is the right way to go. What's going on right now in terms of people accessing ChatGPT, Anthropic, etc, for therapy is totally inappropriate. I think if you listen to any of the podcasts by any of the leaders in AI, they will tell you the same thing. They will tell you, do not go to these LLMs right now for mental health therapy, because it is basically dangerous. We decided that we will build one that is safe. That's our plan right now. We've made a capital investment. As you probably know, Talkspace is profitable with essentially no cash burn. We are taking our $100+ million in cash and going to make some part of that investment into the LLM model, which I don't know when it'll be out in the market yet, but we're trying to get something out relatively soon to test it and see where it goes. It's pretty exciting, to be honest. Thank you for being here today and sharing your time and thoughts on Talkspace. Thank you. Thank you for the invite.