The company makes most of its money selling health insurance subscriptions
While there are currently a large number of companies offering virtual mental health services, the space is still relatively new. Even the most mature companies are only about a decade old. Take Talkspace, for example: it’s one of the earliest companies to offer these services, and it wasn’t founded until 2011.
The company, originally called Talktala, was founded as Israeli husband and wife Oren and Roni Frank after their marriage was saved through couples therapy. It started as a video platform for group therapy sessions before turning into individual therapy sessions with an emphasis on messaging and asynchronous chat.
The company enables users to send unlimited text, video, picture, and audio messages to providers who will contact them five days a week. Talkspace also offers psychiatric services and prescription fulfillment, youth therapy, and couples counseling.
“The behavioral health market has traditionally been underserved for a number of reasons including inadequate access, a limited universe of qualified providers, high costs and social stigma. We believe that virtual is the ideal modality for treating mental illness because it removes or reduces these burdens associated with traditional personal mental health services by improving convenience through 24-hour access to our platform, providing easily accessible entry prices and the associated scars by promoting transparency, increasing access and privacy will be reduced, “the company wrote in its S-4 filing with the SEC.
“Our platform connects needy consumers, many of whom have never had the opportunity to benefit from high-quality behavioral health care, with experienced providers in all 50 states.”
The majority of the company’s income comes from the sale of monthly memberships, one to three month subscriptions to the therapy platform, which come either directly from the consumer or through their insurance. For the first nine months of 2020, Talkspace generated revenue of $ 50.5 million, an increase of 85.8% from $ 27.2 million for the same period in 2019, of which $ 42.2 million was or 83.6% from subscriptions.
From March 2019 to September 2020, Talkspace increased the number of people covered by health plans from 2 million to 39 million, an increase of 1,850%. The number of members who pay the company directly is around 30,000.
The company also makes money from platform access fees paid by its corporate customers for providing therapy services to their members or employees. These are usually one-year contracts.
For the first nine months of 2019, $ 8.3 million, or 16.4% of revenue, came from businesses, but that side of Talkspace’s business is growing too: in 2019, consumer revenue was 94% of revenue, and the business was only $ 1.8 million 6.4%. From the first nine months of 2019 to 2020, the number of enterprise customer contracts increased from 19 to 52, an increase of 174%.
In January Talkspace announced that it had merged SPAC (Special Purpose Acquisition Companies) with Hudson Executive Investment Corp. will go public, valued at $ 1.4 billion. The deal also provides the company with $ 250 million in cash that it will use as growth capital.
SPACs are an alternative way for companies to enter the public market without going through a traditional IPO. Basically, a Shell company is set up that goes through an IPO; It then acquires an established company so it can take over the stock. This allows companies to go public faster without the need for a month-long roadshow.
These vehicles are particularly popular with health tech companies such as Hims & Hers, Ambulnz, Clover Health, Science 37, Sharecare and 23 & Me.
(Image source: talkspace.com)