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DATE

Thursday, February 19, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Jon R. Cohen
  • Chief Financial Officer — Ian Harris
  • Head of Investor Relations — Jeannine Feyen

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TAKEAWAYS

  • Total Revenue -- $63,000,000, representing a 29.3% year-over-year increase driven mainly by payer business expansion.
  • Payer Revenue -- $47,700,000, up 41% year over year due to higher session volume and expanded footprint with existing clients.
  • Payer Sessions -- 450,000, up 36.3% year over year, reflecting improved patient engagement across the platform.
  • Active Payer Members -- 124,000 unique members, a 29.7% increase year over year.
  • Direct-to-Enterprise (DTE) Revenue -- $11,600,000, up 21.8% year over year, with growth supported by the Wizzo acquisition and implementation revenue.
  • Consumer Revenue -- $3,700,000, down 30.4% year over year as a result of continued de-emphasis on this channel.
  • Gross Profit -- $26,900,000, a 24.4% year-over-year increase, with gross margin at 42.7%, down 169 basis points mainly due to payer revenue mix shift.
  • Operating Expenses -- $23,100,000, reflecting a 9.6% year-over-year increase, mainly from the Wizzo acquisition team integration.
  • Operating Expenses as Percentage of Revenue -- 36.7%, down 660 basis points compared to fourth quarter 2024, indicating operating leverage improvement.
  • Adjusted EBITDA -- $6,600,000, up 147.1% year over year, with an adjusted EBITDA margin of 10.4%, an expansion of almost 500 basis points.
  • Full-Year Revenue -- $229,000,000, a 22% increase year over year, with payer channel up 38% and more than doubling adjusted EBITDA from $7,000,000 to $15,800,000 (adjusted EBITDA margin of 7%).
  • Cash on Balance Sheet -- $92,600,000 at period-end, representing a decline of $25,200,000 year over year due primarily to $17,200,000 in share repurchases and the acquisition of Wizzo.
  • 2026 Revenue Guidance -- $275,000,000 to $290,000,000, projecting 20%-27% growth year over year.
  • 2026 Adjusted EBITDA Guidance -- $30,000,000 to $35,000,000 in adjusted EBITDA, implying 90%-122% growth, with expected year-end adjusted EBITDA margins in the mid-teens (12%-15% range).
  • Payer Coverage -- Platform now covers over 200,000,000 lives via insurance and employer benefits; ongoing expansion in directory integrations and single sign-on capabilities.
  • Medicare and Military Enrollment -- Medicare and military program enrollments increased month over month, supported by the Wizzo acquisition and Navy contract expansion.
  • TeenSpace Program -- Over 45,000 New York City teens enrolled, with 66% demonstrating measurable clinical improvement; 82% of enrolled teens identify as BIPOC.
  • Network Management -- Curated clinician network refined to match state-by-state demand, with over 400 psychiatry providers now in the network.
  • AI and Platform Investment -- Ongoing deployment of AI enhancements; TalkAI agent in beta, with market launch expected late Q2; 49% increase in patients completing a third session in first month attributed to these advancements.
  • Talkcast Engagement -- Over 76,000 individualized AI podcast episodes produced, with 95% positive provider reviews and 92% positive client reviews.
  • Wizzo Acquisition -- Closed October 1; business contributed "single digit millions" to 2026 projections, mainly benefiting DTE and payer lines, with additional interest from pharma via partnerships such as Novo Nordisk.
  • Share Repurchases -- $17,200,000 in buybacks completed in 2025, with additional authorization available.

SUMMARY

Management indicated that payer channel initiatives, directory integrations, and expanded partnerships are expected to drive both sustained revenue visibility and new member growth throughout 2026. Executives described TalkAI and generative optimization strategies as channels for total addressable market expansion, with distinct marketing plans for AI-driven offerings. Value-based reimbursement models are gaining traction, as management noted comfort with outcome-based agreements and highlighted early-stage value contracts encompassing timely care delivery metrics. The provider network is actively curated and expanded, especially in psychiatry, to support anticipated growth and meet partner requirements. Ongoing cash deployment priorities include organic investments, support of AI initiatives, and potential for further share repurchases under existing authorization.

  • CEO Jon R. Cohen said, "we expect single digit increases in our payer reimbursement pay reimbursements on our fee for service," underscoring positive pricing dynamics in payer negotiations.
  • Chief Financial Officer Ian Harris stated, regarding incremental payer revenue, that "30% to 50% range of our revenue is actually coming from folks we already have on the platform" at the start of the year.
  • Wizzo’s peer platform and group coaching partnership with Novo Nordisk were identified as an entry point for pharma collaborations previously untapped by the company.
  • AI-driven process and engagement enhancements resulted in lower registration drop-offs and improved multi-session patient retention.
  • Management highlighted "very, very I'd say promising, sort of engagement and retention thus far." engagement from nearly 1,000 beta users of TalkAI and described the direct-to-consumer commercial rollout ahead of enterprise offerings.
  • Directory integration pipeline now includes at least three additional payer partnerships in early 2026, matching or exceeding 2025 population impact.
  • Ian Harris confirmed minimal inorganic revenue impact from Wizzo, describing its 2026 contribution as "modest" and embedded within segment results.
  • Company leaders reported ongoing "month over month" enrollment increases in both Medicare and military programs.
  • The company maintained its stance that national trends in healthcare costs are unlikely to disrupt Talkspace’s outpatient mental health focus, with outpatient mental health currently a "very, very small piece" of overall healthcare spend.
  • Executives noted that intentional reduction in direct-to-consumer revenue is largely offset by payer channel conversion, minimizing future headwind from this line.

INDUSTRY GLOSSARY

  • Payer: Insurance or employer benefit plans reimbursing for Talkspace services.
  • DTE (Direct-to-Enterprise): Contracts and services delivered directly to organizations rather than individual consumers or insurers.
  • BIPOC: Black, Indigenous, and People of Color—demographic cohort referenced in youth enrollment.
  • LLM (Large Language Model): Advanced machine learning model trained on vast data, used to power generative AI and chat-like applications.
  • TalkAI: Talkspace, Inc.’s proprietary AI mental health support agent, designed for safe, real-time interaction within clinical standards.
  • Talkcast: Individualized AI-generated podcast content for patient engagement between live care sessions.
  • CAC (Customer Acquisition Cost): The cost to acquire a new customer or member, a metric cited in relation to payer integrations.

Full Conference Call Transcript

Jon R. Cohen: And thank you for joining the call today to review our fourth quarter and full year 2025 results. When I joined Talkspace at the 2022, the strategic pivot had already begun shifting from our consumer model to a payer fee for service model. Today, I am proud to look back at the progress we've made financially operationally, and towards our mission to deliver comprehensive personalized mental health care to all. Since 2022, we have grown revenue at a CAGR of 24% driven by payer session annualized growth of about 56%. During this time, our operating expenses as a percentage of revenue continued to decline, helping to drive operating leverage and improved EBITDA margins.

For the full year of 2025, we delivered revenue of approximately $229,000,000 an increase of 22% year over year driven by payer growth of 38%. In addition, we more than doubled adjusted EBITDA growing from about $7,000,000 in 2024 to $15,800,000 in 2025 which represents an adjusted EBITDA margin of 7%. Our growth in PARE where we now cover well over 200,000,000 lives through insurance and employer benefits is driven by two factors. One, strategic initiatives we have put in place to bring people to Talkspace, including targeted efforts to increase awareness and drive high intent referrals, as well as deepen partnerships with the payers to improve the patient journey and make it easier to find care.

And two, our expanding offerings within the payer channel to cater to new populations and differing levels of acuity. Both of these initiatives are underpinned by our continuous improvements to the member journey and our clinical network. We continue to drive increased consumer awareness through our paid media strategies search optimization, partnerships, and scaling brand recognition. Our awareness campaigns have been very successful over the last three years as recognition of the Talkspace brand continues to go up while our spending on marketing has significantly decreased over the same period. Our initiatives to drive high intent referrals has been successful. With increasing volumes month over month from Amazon Zocdoc, our strategic partners.

We're also seeing a strong and growing presence of Talkspace in large language models due to the work our team has done to optimize on and off our website for increased visibility and citations. In the fourth quarter, general purpose LLMs drove an increasing percentage of traffic and checkouts as we continue to expand this new and growing channel. Recognizing that we provide high quality clinical care, the payers have partnered with us on several new initiatives to further simplify the patient experience. This includes directory integrations with several of our payer partners and some utilizing single sign on so that patients can log into both platforms with ease.

Others are embedding Talkspace scheduling into their directories so that patients can book sessions without leaving the payer site. We are currently working with one partner to launch the capability for their care coordinators to schedule talk space appointments on behalf of patients a tool we will expand with other partners and payers. During the year, we also expanded our offerings within the payer channel. We invested in our psychiatry business, grew both military and Medicare enrollment and acquired Wizzo, the lower acuity AI powered social health platform specializing in peer to peer community and coaching.

On military, our enrollment continues to grow month over month, following our January 2025 launch as does patient engagement through our direct to enterprise contract with the Navy. Our Medicare enrollment also continues to grow, and with the acquisition of Wizzo, we've seen increased interest in Medicare Advantage plans given Wisdom's proven impacts on loneliness and social isolation. In addition, Wizzo's partnership with Novo Nordisk to provide group coaching for patients on GLP ones opens a new door for us into a previously untapped category of pharma partnerships. Our youth programs which we initially launched at the 2023, across major markets, including New York, Baltimore, Seattle, and North Carolina continue to deliver strong measurable impact on scale.

New York City alone, more than 45,000 teams are enrolled in our TeenSpace program. Sixty six percent of enrolled teens showed measurable clinical improvement the most common presenting needs being anxiety, depression, relationship challenges, and stress management. The program is reaching historically underserved communities with nearly forty five percent of participants living in areas with high health and income disparities and eighty two percent identifying as BIPOC. Engagement remains very strong with over ninety percent of teens actively texting with their therapist and more than half choosing messaging as their exclusive modality. The results of these programs reinforce TeamSpace as a scalable public private partnership model and TalkSpace's leadership in youth mental health solutions.

Specifically, in psychiatry, we expanded our network of psychiatry providers to over 400 providers and we made a number of improvements to the patient journey to streamline processes like simplifying medication management workflow to be able to send medications directly to the member's pharmacy of choice. In April, we launched our integration with Amazon Pharmacy, allowing members to seamlessly fill prescriptions from their tox space provider and get fast, free home delivery making for a more convenient patient experience. Further, we created an easy pathway for members using Talks SPACE for therapy to receive an internal referral to a Talkspace psychiatrist and investments for which we are seeing strong traction. Turning to AI.

We are continuing to utilize the technology to improve business operations and incorporate AI enhancements into the platform, to further improve the patient journey and provider workflow. These enhancements have reduced friction in several areas, lowering the number of registration drop offs and leading more patients to successfully begin their care journey. Once a member is onboarded, we have also made it easier to schedule their appointments increasing the number of patients that continue care after a first session. These efforts have resulted in an increase in the number of checkouts and a 49% increase in the number of patients completing a third session in the first month of care.

Another factor contributing to our increased succession growth has been the success of Talkcast, our individualized AI generated podcast that I've talked about in the past. When members open a Talkcast episode between their first and second sessions, they are 20% more likely to complete second and third session. To date, we have produced over 76,000 episodes which have been overwhelmingly well received 95% of provider reviews and 92% of client reviews have been positive. In addition, our network management strategy has continued focus on curating our network of clinicians to optimize for the specific utilization trends we are seeing. Ensuring we have clinicians available in the right states at the right times to align with patient demand.

Now let me turn to the TalkAI agent that we have been developing over the last year. Although general purpose large language models are now being utilized by a huge number of the global population, they were never built to support mental health. While these models have democratized access for millions, which is a good thing, they have unfortunately led to a rash of reported harmful outcomes. Mental health support requires something far more specialized and nuanced including challenging distorted thinking, recognizing delusions, and identifying risk in real time.

The TalkAI agent we have built is designed to be the first safe AI agent specifically developed for mental health support, utilizing clinically recognized standards of care with continuous human oversight and privacy HIPAA protection. The LLM is trained and fine tuned on Talkspace, Inc.’s massive mental health data set. Identifies 10 areas of risk in real time, supports appropriate decision making and avoids the pitfalls already seen in general purpose LLMs. It keeps clinicians constantly in the loop with clear escalation pathways to connect users at risk to a licensed human clinician in real time. Talk.ai does not replace clinicians, but rather extends their reach adhering to strict clinical standards while identifying new users who may need human interaction.

I believe that the need for human care by trained therapists will increase as millions more people will be identified that need professional help beyond what our agent will provide. We are currently beta testing this quarter with the expectation to be in the market late in Q2. In summary, as you can see, we have come a long way in three years. There remains a tremendous opportunity in front of us and one we are positioned to continue to aggressively pursue. In addition to the core business, we believe we have strategically positioned ourselves to be a leader in the application of AI to mental health services in this rapidly moving current environment.

I am pleased with the Q4 results and our full year business performance. Looking ahead to 2026, I'm very optimistic about our capability and opportunity to continue to grow the business expand profitability and an encouraged by the strong momentum we have seen thus far in 2026, And now I'll turn the call over to Ian. Good morning, and thank you for joining us. I want to first echo John's sentiment that we ended the year with some really solid momentum. We're well positioned for that to continue. Today, I'll review our fourth quarter financial results before walking you through our financial outlook for 2026. Turning to the fourth quarter results.

Total revenue for the quarter was $63,000,000 representing 29.3% year over year increase. Our payer business continued to be the primary growth driver, with revenue of $47,700,000 up 41% year over year. Growth was driven by increased session volume and expansion across existing clients. Specifically, the number of sessions for the quarter was 450,000. Representing a 36.3% year over year increase. Furthermore, the number of unique active payer members for the quarter 124,000. Representing a 29.7% year over year increase. Within direct to enterprise, revenue was $11,600,000 an increase of 21.8% year over year.

As we noted on our third quarter call, several new launches shifted from the third quarter into the fourth and DTE also benefited from the inclusion of the Wizzo acquisition, which closed on October 1, and benefited from revenue associated with implementation work for certain new accounts. Consumer revenue was $3,700,000. Down 30.4% year on year consistent with our intentional prioritization both enterprise and payer channels. Gross profit was $26,900,000 up 24.4% year over year, resulting in a gross margin of 42.7% in the quarter. This was down 169 basis points year over year primarily reflecting revenue mix shift towards payer.

Operating expenses were $23,100,000 an increase of 9.6% year over year as we incorporated the team from the Wizzo acquisition. Importantly, operating expenses as a percentage of revenue improved meaningfully to 36.7% six sixty basis points compared to the fourth quarter in 2024. Adjusted EBITDA was $6,600,000 representing a 147.1% year on year growth with an adjusted EBITDA margin of 10.4% up nearly 500 basis points versus the prior year.

Ian Harris: Turning to the balance sheet, we ended the quarter with $92,600,000 in cash a decrease of $25,200,000 year on year, driven primarily by our share repurchases, totaled $17,200,000 in 2025 for the full year, as well as the acquisition of Wizzo. Now turning to the guidance. For the full year 2026, we are providing initial guidance as follows. We expect revenue to be in a range of $275,000,000 to $290,000,000 representing 20% to 27% year on year growth. We expect adjusted EBITDA to be in the range of $30,000,000 to $35,000,000 representing growth of 90% to 122%.

Looking back at our three year outlook introduced in early 2024, which extends through this year, we expect to deliver a three year revenue CAGR of approximately 23% using the midpoint of our 2026 guidance. Which is consistent with the three year outlook stated target of 20% to 25%. From a profitability perspective, we anticipate exiting 2026 with EBITDA margins in the mid teens towards the high end of our 12% to 15% target range from that outlook. I wanna share a few points on the underlying assumptions behind our outlook.

From a quarterly cadence perspective, we anticipate revenue growing over the course of the year and similar to last year with the first half representing a little less than 50% of annual revenue as active payer members and sessions grow throughout the year. In terms of our revenue mix, we expect payer revenue growth to be in line with the payer growth rate we experienced in 2025, driven by the activation strategies John outlined earlier.

As we've discussed in the past, the payer business brings a high degree of visibility given the longer retention of a payer member compared to someone paying out of pocket, and the material portion of our 2026 payer revenue will actually come from payer members already on the platform as of year end 2025. We expect D2E to grow in the low single digit percentages again this year, As a reminder, the first quarter historically has the highest number of accounts up for renewal and therefore sees the highest attrition of any quarter in the year. Q4 performance also benefited from certain implementation revenue, So we would expect DDU revenue in Q1 to be sequentially lower than Q4.

And finally, consumer revenue will continue to decline by design, However, it's a much smaller headwind overall given the less material starting point in 2026. While the midpoint of 2026 revenue guidance represents 23% growth year over year, Our Q4 run rate revenue is over $250,000,000 implies 12% growth at the midpoint, This is thanks to the accelerating growth we drove over the course of 2025. These trends, along with the internal efficiency measures that we can to implement, drive further operating leverage through the P and L.

Specifically, for adjusted EBITDA margins, anticipate starting the year in the high single digit percentages and exiting 2026 in the mid teens which will result in a similar quarterly cadence of adjusted EBITDA as we saw in 2025. In summary, we believe Talkspace is well positioned for sustainable growth and continued margin expansion, supported by strong momentum in our payer business improving operating leverage increasing visibility into future demand. With that, we'll open the call for questions. Operator?

Operator: Thank you. And we'll take our first question from Steven Dechert with KeyBanc. Your line is open.

Ian Harris: Congrats on a solid quarter, and thanks for the questions. Just around your large language model that you're currently beta testing, what do you see as the key challenges in getting people that are currently using the general purpose large language models to using yours as you roll it out? Thank you.

Jon R. Cohen: Thanks, Steve. This is obviously very much work in progress. As we stated, we're in beta with people registering as we speak to go through the testing of what this thing looks like. This thing is positioned as a place to have a serious conversation where your information is protected and where you have both security and safety behind you. I can't tell you

Ian Harris: yet

Jon R. Cohen: because it's such early days about what kind of movement we'll have, what kind of people will use this versus the other LLMs that is it's just absolutely a work in progress. So, know, my message right now is to stay tuned. We will a lot more information once we finish the beta. We've seen a little bit early results, but right now, it's it's my answer really is to stay tuned and let's just see what happens. It is being it will be positioned as somewhat different than the general purpose LLMs. I'm not obviously trying to fee based. I'm just telling you, it's just early days.

And we have a lot of lot of effort interesting information right now. But we'll certainly get to talk about it more as the next several months evolve.

Ian Harris: Got it. Yes, totally understand. And then Ian, you just mentioned on the '26 guide that most of the revenue is already from members in the platform. So I guess I'm wondering does the high end of the guide perhaps imply that's from additional new members that aren't currently on the platform? Just maybe what gets us to the high end of the guide, said more simply? Thank you. Yes. Hey, Steve. And just to clarify, I my prepared remarks, I said a material amount of payer revenues from existing members on the platform.

I wanna call that out just because people forget, right, under the payer model, that sort of longer lifetime on the platform and that sort of longer tail of revenue, allows us from a visible bit a visibility standpoint to have a much higher level of conviction in terms of modeling out payer revenue, right? So as we start January 1, it's not it's not a majority, but it think of it as, you know, 30% to 50% range of our revenue is actually coming from folks we already have on the platform.

But in addition to that, obviously, we're gonna to John's comments, keep driving both from paid marketing work additional organic work we're doing on the marketing front, which there's a lot of really exciting LLM of optimization work we're doing. And then very importantly, the directory integration for doing with the payers and getting sort of more embedded with the payers to lower that friction for people that find us through their insurance portal. So that'll all drive new users throughout the year as we've done sequentially throughout '25, which then obviously has that long tail of sessions pulling through. As well. Okay. Makes sense. Thanks, guys.

Operator: We'll take our next question from Ryan Michael MacDonald with Needham. Your line is open.

Jon R. Cohen: Hi, thanks for taking my questions and congrats on a great quarter. Maybe just to double down on the directory integrations you know, obviously, showing some great success with the first payer partner that you've that you've rolled that out with. Can you just remind us on sort of how many additional sort of

Ian Harris: deep integrations you'll have sort of with additional partners this year? And I guess, what have you learned from the first partner that can be replicable, you know, to sort of continue that strong utilization with these additional payers as we go throughout the year?

Ian Harris: Yes. I can start, and then I'll hand over to John. I mean on the first payer, like you said, it's been extremely successful. They're they're happy insofar as they're bringing a much friendlier consumer experience to their members and making it easier and, candidly, less frustrating right, that sort of finding your care journey.

Ian Harris: And we view it as obviously, from a CAC perspective, very accretive, right, to get that incremental conversion and additional traffic coming from the payer. So it's early in '26, Ryan. So you know, we're obviously working hard to do more. I would say line of sight we have today there's probably depending how you look at it, call it three directory integrations we're doing. In the early part of '26. So for sure, at least three. I think in terms of what that represents,

Ian Harris: materiality wise versus the one last year, it's probably about similar size

Ian Harris: all in all, population wise, maybe a little bit bigger in the aggregate. The three.

Ian Harris: So, you know, as big or bigger of an opportunity as we saw

Ian Harris: with the integration '25. What we're learning is

Ian Harris: it's interesting. Some of these directories, it's sort of the first time they're doing these integrations. So we sort of in this beneficial position where we're working in tandem with them on the design of how the directory works, which obviously gives us

Ian Harris: a level of influence to sort of shape that experience looks like from our own, knowledge having done this, right, for a decade as a marketplace business ourselves. So they really appreciate the sort of edification we're able to bring there, but also helps us candidly in terms of the algorithm, what helps screen

Ian Harris: providers hire,

Ian Harris: is it quality, is it schedule, and sort of how that sort of search algorithm is designed sort of have a seat at the table for that. Really helpful color there. And then obviously, a lot of the success that you've had in the payer business to date has been on the side and obviously in the military. Curious to get your thoughts about sort of the potential opportunity within Medicare sort of in 2026, particularly with CMS rolling out this access program? Is this sort of a potential opportunity to sort of supercharge or sort of fuel deeper Medicare efforts or to drive better utilization there? And you know, are you intending to participate in the program? Thanks.

Jon R. Cohen: Yeah. Thanks for the program. So the answer to that is on the access program is yes. We are acutely aware of the access program. We talked about it. We are classy. We are we have submitted. We wanna be part of it. It is, you know, outcome based. We are we are very comfortable with what, outcome based model would look like. So the answer to that is yes. We you know, so as you heard me say, we're the Wizzo acquisition, on Medicare and MA has been very positive and continues to grow. And as we say in the past, we continue to see month over month increases.

It's it's been you know, no surprises I've talked about in the past. It's a relatively difficult market to penetrate only because it's so ubiquitous and it's across all 50 states. But we are making just say we are making progress. So between WSDOW access program, the stuff we're doing on the ground, you know, we continue to be confident in how it will grow. Awesome. Congrats again.

Ian Harris: Thanks.

Operator: We'll move next to Richard Collamer Close with Canaccord Genuity. Your line is open.

Jon R. Cohen: Yes. Thanks for the question and congratulations on a strong year and outlook. John, at the end of your comments, you said something about

Ian Harris: momentum already here in 2026. And then it's just curious if you could go a little bit deeper in terms of what you're seeing already through almost two months the basis of that comment.

Jon R. Cohen: I would yes, the comment is because the beginning of the year, really does somewhat change things because people coming back on, they're looking at the assurances, they're beginning to reengage at a bunch of different levels. But, you know, most of what we're we're gauging everything is on is people coming onto the platform and doing sessions. So my comment was purposeful that we're continuing as we exit 2025 to see the this momentum continue early on in 2026.

Ian Harris: Yeah. And Richard, as you know, we

Ian Harris: you know, take January as a opportunity to do a bunch of sort of marketing campaigns, right, post holidays, post New Year's. Resolution season. So a lot of, sort of wood behind the ball from a marketing effort standpoint, The momentum John's willing to is just that. Right? The checkouts we're seeing, the CAC environment we're seeing, getting in front of folks, and all of that's contemplated in the guide consistent with the guidance.

Jon R. Cohen: Okay. Second question would be just like overall behavioral health care costs I know we've talked about this in the past, but I mean you look at

Ian Harris: some of the benefit brokers and they cite increased behavioral health as one of the topics. Expenses. And obviously, of that's inpatient, but playing a role as well. I'm just curious, your conversations with payers in terms of rising healthcare costs. And you just did mention with respect to Medicare, you're comfortable with outcomes based and whatnot. Just curious how you're thinking about potential utilization management or reimbursement changes and just the overall marketplace? With respect to behavioral health?

Jon R. Cohen: Yes. I think it's

Jon R. Cohen: consistent with some prior discussions. We know obviously watching what's going on in healthcare costs, people paying more for their premiums, But remember, the mental health not just the TAM, the market, but the more people engage in mental health, it actually saves people As you know, there's a huge amount of data out there already that a good mental health support program saves people on the medical side. So that's one. Number two is the majority of costs that people are looking at to reiterate, is really on the in hospital side. The in hospital diagnosis, it's really not it's not on what we're doing on the outpatient side.

The outpatient side of mental health is a very, very small piece of the pie right now for the healthcare spend nationally. And then we're know, some of the other products, you know, when the TalkAI agent comes to fruition, it'll be a lower cost option. The payers already know that. So I think there's a lot of positives from what we're doing. But I think that I don't think the global or national issues relative to the health care costs should have any impact on us. I just continue to see this to grow because it's it's actually a win for everybody. More people getting mental health.

As a follow-up to that, do you think your ability to show outcomes and the data that you have is a differentiator where maybe payers skinny down the number of providers that they're or vendors that they're actually utilizing

Ian Harris: for, these services?

Jon R. Cohen: Absolutely. So we already have a couple of early value based contracts. They're relatively rudimentary. Quite honestly. It's time to first appointment, time to second appointment, how many people show up. So all of those things we have in place. So we're very comfortable with anybody almost that comes to us for a value based arrangement because we really have the vectors in place. And one of the reasons that we are so comfortable is because of the network.

So the curated network is a really big deal, meaning we might monitor, as you know, we monitor the quality, we look at what therapists are doing, That's really important on a value based contract because you have to be able to measure outcomes. To measure outcomes, you've got to be able to control your network, what I mean by control the network, you gotta be able to look and see what the quality is that's being delivered. So having those having all of that in place is really, really important to be able to deliver on a value based contract. So we're pretty comfortable with all

Ian Harris: And that dynamic you alluded to, Richard, I think that is exactly what is playing out with the directory dynamics. Right? It's no coincidence we're being tapped to do these initial embedded directories. It's a function of years and years of providing

Ian Harris: them that data exactly as you allude to the clinical oversight,

Ian Harris: the QBRs we do with the payers, the audits. So they're, in some ways, rewarding us in that sort of

Ian Harris: I don't know if you

Ian Harris: use this phrase, Richard, but narrowing the network a little bit.

Ian Harris: Clearly, by

Ian Harris: doing these directories with us, we would expect, as we saw that one payer last year, to take sort of outsized portion of share of their payer portal traffic So it's sort of indirectly them doing exactly what you're hypothesizing.

Jon R. Cohen: Great. Thanks for the question. Questions, and congratulations. Thanks.

Operator: We'll take our next question from Charles Rhyee with TD Cowen. Your line is open.

Jon R. Cohen: Yes. Thanks for taking the question. Hey,

Charles Rhyee: John, wanted to ask a question, right? You kind of made the comment earlier, right? A lot of people are now seeking out information, but they you know, they're not just cert going to a search engine anymore. Right? They're they're going into, like, ChatGPT or something and asking And so you've you've talked about how do you optimize to be picked up by these LLMs so that people can get directed to you. And it sounds like is this like the new SEO? Like is even search engine optimization as much of a thing? Is it really now how do you optimize to be picked up by LLMs?

Because it's something that we heard from other companies as well more recently. And then connected to that really is how do you then connect from maybe that kind of initial outreach by a patient who's potential patient who's going through a chap like a like a CHAP GPT or something. And get them to your AI bot, right, which would be more a protected environment for patients. How do we bridge those two, or how do we get them to search you first?

Ian Harris: Right. Let me just start there.

Jon R. Cohen: Right. So, you know, great question. So actually, just I don't know if you've seen it. There's a article in New York Times this morning all about search engine optimization through LLMs. And I have talked about this. We have put in place our, you know, our marketing folks have been aware of this for quite some time. So we actually have people who just they're working through LLM search strategies so that we do appear on whether it's Gemini or Claude or ChatGPT So we have been optimizing there's another term for it. It's called generic I think it's called generative optimization as opposed to SEO.

But however, saying that, saying that, we are not only aware of it, that what we put in place mechanisms to make sure that people do find us And we track it also, by the way. So we have seen this go up month to month to month. People who are finding us on the on the other LLMs the number of people it continues to increase month to month. So one, what we're doing on the SEO economy. You know, very comfortable about where we are relative to that strategy. In terms of people finding us, is a is an interesting question because we have not gone to market yet.

We do have a fairly fully baked initial marketing plan so that people will find us depending on what they're looking for. Now, there's a lot of nuances to that. We don't have time here to probably talk about all that. But meaning are they really looking for therapists? Are they looking to have a serious conversation? There's a lot of different things that people look for. We so as I mentioned a couple minutes ago, you know, our view on this is that if you want to have a serious conversation that's confidential, particularly around relationships or other issues that may be bothering you, and your information is protected HIPAA protected, and we have significant clinical background,

Ian Harris: that

Jon R. Cohen: people will then make a decision about where they will go depending on what they want. We don't the answer, of course, is we don't have the answer yet. But it's we are being positioned. We are we'll start off being positioned in a little bit different mode than the others. But the jury you know, can't even say the jury's out because we haven't gone yet. We will know more, as I said, once we finish

Ian Harris: the beta.

Jon R. Cohen: In terms of why people are coming to it, how people are using it. Which will be a significant bunch of data points about how we go to market after that.

Ian Harris: We'll we'll do we'll have a separate marketing initiative and budget just for the LM product. Right? So

Ian Harris: in the guide, there's little to no revenue

Ian Harris: associated with TalkAI revenue, which as John alluded to, will launch this summer. Publicly. But there'll also be a separate marketing effort there. While we historically disclose, you know, traffic or conversion numbers on our core platform. Suffice it to say, if you just look at, you know, even the best in breedecom brands you can imagine there's a ton of traffic coming to our site who never check out. Right? So we actually view based on the research we've done, the TalkAI product's gonna be absolutely TAM expansionary for us. There's a lot of people who are curious about therapy. They come. They search.

But as you know, you know, it's not sort of a fleeting decision somebody makes just to buy something, right, to enter therapy. So a lot of people actually come to our site and never check out actually think this is gonna capture

Ian Harris: don't wanna call it a lower intent, but maybe a group of people who are not quite ready to see a human to human

Ian Harris: therapy session but are willing to take on, sort of this

Ian Harris: more of a GPT type interface. So

Ian Harris: have a separate marketing effort around that from a paid standpoint, but I also wanna flag from organic, we think there's a lot of folks coming to our site today are not monetizing at all.

Ian Harris: We will retain

Ian Harris: once we have, a TalkAI product. And that and this is completely separate from the GEO, the generative engine optimization work, which I would agree with your succinct take. It's it is sort of like the new frontier

Ian Harris: for SEO, which honestly, we're benefiting a lot from our

Ian Harris: historical strength in SEO.

Ian Harris: So it's as Jan said, it's a small but

Ian Harris: growing very fast, sort of channel for us on the on the core side.

Charles Rhyee: Okay. That's really helpful. And that kinda clarifies some of my thoughts because I was just curious how do you how do you transition people if they're searching through a chat GPT, but it's what you're saying is that the low hanging fruit is all the people that come to the that come to your website already. That you are monetizing. So at least you have this initial base, and it seems like people are getting to you in some fashion. My second question, though, is maybe have you had any discussions with like, Humana?

When we think about the MA opportunity, we've obviously seen now the advanced rate notice for 2027 is actually quite poor, and we're looking at potentially another round of benefit cuts from plans going into you know, not this year, but going into next year. Where does behavioral health do you think in your partner's mind sit in terms of benefits? Is that something that you think they might look to cut back on, or is this something that you think is pretty safe? Thanks.

Ian Harris: Yeah. I mean, if you're alluding to

Jon R. Cohen: alluding to employers,

Charles Rhyee: I can't answer you. We have a

Jon R. Cohen: most of that is

Charles Rhyee: I was thinking about Medicare Advantage for 27. Just because of the

Ian Harris: Yeah.

Jon R. Cohen: Yeah. I our view right now is the payor continue to be very interested in what we're offering and MA continues to grow. But we'll continue to talk to whoever's out there. I think that Humana is a another whole question about how they're going to approach the market now. But I can't tell you anymore except that we still continue to have interest on the MI side. Okay. Yes, just curious. Okay. That was really helpful. I appreciate the comments. Thanks, guys. Thanks. Thanks, Charles.

Operator: We'll take our next question from Bobby Brooks with Northland Capital Markets. Your line is open.

Charles Rhyee: As we think about how you guys are

Jon R. Cohen: mapping out driving higher utilization into 2026? What are the three or so most important levers do you feel you have at your disposal to help drive that Well, no particular order. We've talked the length already about the directory integration. I think you've heard me talk about that the change that we made in the patient journey this year. Have had very, very significant impact. On the number of people that are booking checkouts, booking for a session second and third. That's been a really big idea. And so I think as I talked about before, that's a never ending journey.

They're literally you can't believe how many more things you could do to test and to change to make sure that you actually get more people through to the funnel and through the funnel. So that's the second. I would say again, no particular. The third is partnerships. You've heard us talk about the growth in both Amazon, ZockBack, and the 20 plus other partners that we've announced We will continue to lean in on the partnership expansion because a lot of it's beneficial for both the partners and for us to get the referrals. So I would say the those three levers, you know, journey partnership, and certainly directories.

And probably in a general sense, number four is just our ongoing relationship with the payers.

Charles Rhyee: Got it.

Ian Harris: And then just curious to hear more

Jon R. Cohen: on the beta testing of TalkAI. And obviously, still early, but wanted to know wanted to hear more what's the plan like, what

Ian Harris: how are you thinking of early plans of commercializing it? Are you in maybe are you in any active conversations with kind of the larger LLMs of potentially licensing it?

Jon R. Cohen: Just trying to get a sense of on that

Ian Harris: Yes. Our

Jon R. Cohen: go to market is to be direct to consumer first. Which is what we've talked about is to launch and then and test all the different models about who's coming, why they're coming, what sort of price point makes sense. So that whole direct to consumer is number one focus We are in discussions with multiple, to be honest, with several other entities about their interest in our LLM. And I would just say just TBD But there are other discussions going on with other people who are interested in what we're doing.

Ian Harris: Got it. And I would say last one for Bobby on the on the on the early learnings of the beta, which call it know, a little bit shy of a thousand users at the moment.

Ian Harris: We've been I wanna say,

Ian Harris: pleasantly surprised, but it's been really interesting to see just how engaged folks are with the product and you know, this has been well covered in sort of general reporting on elements, but

Ian Harris: the willingness of people to share

Ian Harris: with

Ian Harris: the AIs they're therapy product, therapist therapeutic product as opposed to a human has been quite astonishing. So very, very I'd say promising, sort of engagement and retention thus far. And then as John said, the intention would be, like, any sort of product led growth strategy, start with B2C, Right? It's sort an out of pocket

Ian Harris: revenue model. Take the learnings from that,

Ian Harris: and that initial data from those initial cohorts, which will then inform how we would approach it more in the enterprise side, talking to whether that's employers, Large group. Other large groups. Yeah.

Jon R. Cohen: That's super helpful. And then just the last one for me. John, when we were on the road in December, I thought you made a really interesting remark, I think would be good to hear on the call about, obviously, you've had a long career in medical field and have seen have been in kind of a couple of different spaces of it. You mentioned how

Charles Rhyee: in other in your past life, you've never see like, people insurance companies are always coming to ask for lower prices, but that's not what you've seen. Could you maybe reiterate that comment?

Ian Harris: Sure. So

Jon R. Cohen: yes, we talked about we expect single digit increases in our payer reimbursement pay reimbursements on our fee for service. So we are negotiating we are going back with them. There are several coming up where we'll look for small increase rates. What you're alluding to is, yes, I the prior industries where I've been, whether it's physician networks, hospital, PRGs, laboratories. It's usually the reverse. They're usually looking for how much less they're going to they'll pay you. It just turns out that you know, this mental health space is something that the payers really, really continue to be interested in promoting. And supporting relative to their relationship with the employers and their employees.

So because we are, as I said, not just available, accessible, but an affordable option for them and significantly scalable. We remain very attractive to the payers. So which as Ian alluded to, which is why the partnerships and everything else are really, really important to us. So the long winded answer to yes, I'm very happy that we get increased rates It's a bit of a surprise to me. Awesome. Congrats on the great quarter. And I'll return in the queue. Thanks.

Operator: We'll move next to Steven James Valiquette with Mizuho Securities. Your line is open.

Jon R. Cohen: Yes, thanks. Yes, good morning, guys. A couple of questions here. First on the '26 revenue guidance, obviously coming in pretty strong. Versus the high end of the range that you targeted three years ago. And I guess are you able to find any color or just remind us roughly how much revenue you're expecting from Wizzo in 2026? Trying to get a sense for just rough approximation for like the organic versus the year on organic growth this year. I'll let you answer that one first and I'll have to after that. Yes.

Ian Harris: Hey, Steve.

Ian Harris: Yeah. We're we haven't broken out

Ian Harris: with those separately. It'll show up depending on the type of contract

Ian Harris: most likely in DDE or the payer lines of business?

Ian Harris: And to a lesser extent, little bit of consumer there. So it's it's embedded in the three business lines we report out. Would think of it if you're understand the question from inorganic benefit from them. It's it's fairly modest, so single digit millions contribution for twenty six.

Jon R. Cohen: Okay, got it. Okay. And then, yeah, the next question here. I guess with the industry environment rapidly moving right now, as you kind of alluded to, not just in relation to AI, but other factors as well?

Ian Harris: Does this increase your appetite and or need to look at additional external assets or possibly do additional tuck in acquisitions this year? I know it's always hard to answer those questions, but I guess the question would be, are you well positioned the way you think you are right now, your own enhancements on the internally developed TalkAI agent and recent Wisdom addition. But just wanna get your sense for that. Thanks. Yep.

Ian Harris: No. We appreciate the question. I mean, certainly, we have the wherewithal to do more tuck ins. Right? We know the year with almost 93,000,000 of cash and equivalents on the balance sheet.

Ian Harris: I would say

Ian Harris: given we just did the Wizzo acquisition, we wanna make sure that's a successful outcome. It's the first tuck in we've done. In a number of years and for this management team, our first. So our main priority is to make sure that one's successful. I would say,

Ian Harris: the excitement

Ian Harris: and resources and attention that we're dedicating to the TalkAI project is, very substantive. And

Ian Harris: so the

Ian Harris: sort of de novo organic internal developed growth opportunities is probably where I would I had to

Ian Harris: bet

Ian Harris: we'll spend most of the time. So nothing immediate in terms of our portfolio that feels like a gaping hole that we need to address inorganically. Would say we feel very good about the hand we have today sort of already under our roof. And then as you know, just on that cash point, we bought back $17,000,000 of stock in 2025, still have very good amount of capacity under our existing buyback program. So in terms of uses of cash, that's another one. We obviously have that sort of arrow in our quiver for '26. Yeah. I Okay. I would add that on the on the

Jon R. Cohen: it's an interesting question you have. You know, the TalkAI and even all of our other AI initiatives to improve the business implementation journey. Just as a reminder that has been around fourteen years,

Ian Harris: and

Jon R. Cohen: it's always been an innovative company, quite honestly. Mean, it was did most of the original work for texting and messaging. And then got approval for that. So when we made the decision to further invest in AI initiatives, Again, just to remind you, the company reported out AI risk algorithms back in 2018 and 2019. So this the reason I bring that up is that we have a fair degree of significant expertise on the inside relative to our ability to do this kind of work. Obviously, don't have everything and you go outside and you get other people to help on a consulting basis, whatever you need. But the core Talkspace technology capability is very, very high. Okay.

That's all very helpful. Thanks. We'll take our

Operator: next question from Peter Warrandorf with Barclays. Your line is open.

Ian Harris: Just curious, given the anticipated growth this year, if you guys are comfortable with the size

Jon R. Cohen: of provider network as it is

Ian Harris: right now, and if there are any specific pockets that you feel like you might need to address. Yeah. Hey, Peter.

Ian Harris: The short answer is yes. We feel very good about it. We actually know, John had some notes in there in his prepared remarks about

Ian Harris: what we call the curated network. So we're actively

Ian Harris: pruning, engaging, trying to activate. And I think it was maybe it was Bobby's question, sort of the rank ordering, of how we're activating folks. You know, one of the indirect components of that, which I think is not as obvious because it's really on the supply side, making sure we're engaging the network to have adequate availability such that when someone comes in, they want a certain day, a certain time, a certain type of therapist, we have that. Right? And there's a lot of creative ways we're working on the product to make sure we're capturing that sort of consumer intent

Ian Harris: in real time.

Ian Harris: So short answer is we feel very good about where it is. It will grow here and there. You know, it's it's very specific state by

Ian Harris: state. If we add a big

Ian Harris: a big partner with a certain type of population, do we need to ramp up hiring there? We've we've had numerous examples where our recruiting team has proven again and again they're very effective and very nimble in ramping up supply

Ian Harris: when and if needed.

Ian Harris: But as sort of a run rate basis, we feel very good about where we are. The one area I would flag, which we grew quite a bit in 2025, was on the psych side. So John talked about it as one of the more exciting sort of newer service offerings for us.

Ian Harris: 10 ks, we ramped up

Ian Harris: provider network on the Sykes side quite a bit in twenty five.

Peter Warrandorf: Got it.

Ian Harris: Okay. Thank you. And then one quick one on the consumer side. The DTC revenue obviously becoming a smaller headwind every year. But just curious how much of that you guys

Jon R. Cohen: think you're capturing elsewhere on the like payer side of the business?

Jeannine Feyen: As that revenue kind of continues to fade away?

Ian Harris: Oh, yeah. I would say most of it, we capture. I mean I mean,

Ian Harris: as you go through the registration flow,

Ian Harris: make it pretty unavoidable for

Ian Harris: prospective consumer prospective member, I should say, to not share with us your insurance info. We very much lead with that intent to capture you on the payer side. And I said there's always, for whatever reason, you know, the long small tail folks we don't cover or they just rather pay out of pocket for whatever reason, there is always that option. But we surmise we're capturing most of that consumer attrition. And then, yes, to your point, it'll be less of a headwind on a dollar basis 2016 just given the smaller starting point. In the year. So you know, quickly becoming sort of more and more immaterial.

Peter Warrandorf: Great.

Ian Harris: More

Operator: And that does conclude the Q and A portion of today's call. And this also brings us to the end of today's meeting. Appreciate your time and participation. You may now disconnect.

Peter Warrandorf: Goodbye.