Talkspace’s shift to the enterprise paid off in the first quarter of 2023, according to financial results the company disclosed Tuesday.
The digital therapy company saw business-to-business revenue grow 70% to $23.4 million in the first quarter. Talkspace reported 171.7 million completed sessions through enterprise customers, which include health insurance companies and employers, a 90% increase. The company’s direct-to-consumer had 33% fewer active members and revenue declined 39.9% to $9.8 million.
Talkspace reported an $8.8 million net loss compared with $20.3 million in the year-ago quarter. Total revenue increased 11% to $33.3 million. The company expects to break even on an earnings before interest, taxes, depreciation and amortization basis early next year.
Dr. Jon Cohen came aboard as CEO in November, replacing Chair Doug Braunstein, who served on an interim basis. Co-founder Oren Frank departed in November 2021, 10 months after Talkspace went public, following poor financial performance.
Like other digital health companies, Talkspace has shifted away from targeting individual patients and toward enterprise clients. According to advertising insights company Vivvix, Talkspace spent about $10.4 million on digital advertising during the first quarter of 2021, $8.2 million in the second quarter and $9.6 million in the third. Last year, ad expenditures dropped significantly: During the fourth quarter, Talkspace spent less than $5 million.
Talkspace Chief Marketing Officer Katelyn Watson said in February that its shrinking consumer advertising budget derives from the company’s push toward profitability. Talkspace reduced operating expenses by 29% to $25.7 million in the first quarter. The company also laid off an undisclosed number of employees in recent months.
Talkspace shares opened at 78 cents on the Nasdaq Stock Exchange and closed at 79 cents Tuesday.