Talkspace (NASDAQ:TALK) executives highlighted accelerating growth in the company’s payer-focused model, expanding profitability, and increased investment in AI-driven product initiatives during the company’s fourth quarter and full-year 2025 earnings call.
Strategic shift toward payer model drives growth
CEO Dr. Jon Cohen said Talkspace’s strategic pivot away from the consumer business and toward a payer fee-for-service model—begun before he joined in late 2022—has continued to reshape the company’s results. He said that since 2022, Talkspace has grown revenue at a 24% compound annual growth rate, driven by payer session annualized growth of about 56%, while operating expenses as a percentage of revenue have declined, supporting operating leverage and improved EBITDA margins.
Cohen said growth in payer is supported by two main factors: initiatives to increase awareness and drive “high-intent” referrals, and an expanding set of offerings in the payer channel aimed at new populations and levels of acuity. He noted Talkspace now covers “well over 200 million lives” through insurance and employer benefits.
Operational initiatives: directories, partnerships, and expanded programs
Management described several initiatives designed to reduce friction for patients and increase utilization. Cohen pointed to efforts to improve the member journey and deepen payer partnerships, including directory integrations, single sign-on with payer partners, and embedding Talkspace scheduling into payer directories. He said Talkspace is also working with one partner to allow payer care coordinators to schedule Talkspace appointments for patients, with plans to expand the capability to other partners.
Executives also discussed referral channels and marketing efficiency. Cohen said brand recognition has increased over the past three years while marketing spending has “significantly decreased,” and cited growing referral volumes month-over-month from Amazon, Zocdoc, and other strategic partners. He also said general-purpose large language models are becoming a traffic source, with LLMs driving an increasing percentage of traffic and checkouts in the fourth quarter as the company expands this channel.
During Q&A, management offered additional detail on directory integrations. CFO Ian Harris said the company has “line of sight” to at least three directory integrations in the early part of 2026, describing them as an opportunity similar in size—or potentially bigger in aggregate—than the integration launched in 2025.
Cohen also reviewed program and product expansions during 2025, including investment in psychiatry, growth in military and Medicare enrollment, and the acquisition of Wisdo, an AI-powered social health platform focused on peer-to-peer community and coaching. He said Wisdo has increased interest from Medicare Advantage plans, citing Wisdo’s impact on loneliness and social isolation, and noted Wisdo’s partnership with Novo Nordisk to provide group coaching for patients on GLP-1s as an entry into pharma partnerships.
For youth programs, Cohen highlighted TeenSpace, which launched in late 2023 in major markets including New York, Baltimore, Seattle, and North Carolina. He said that in New York City more than 45,000 teens are enrolled, 66% of enrolled teens showed measurable clinical improvement, and the program is reaching underserved communities, with 82% identifying as BIPOC and nearly 45% living in areas with high health and income disparities. He added that engagement remains strong, with over 90% actively texting with their therapist and more than half using messaging exclusively.
AI initiatives and Talk AI agent
Cohen and Harris said the company is using AI both to improve internal operations and to enhance the patient and provider experience. Cohen said AI-related workflow changes reduced registration drop-offs, improved scheduling, increased checkouts, and contributed to a 49% increase in patients completing a third session in the first month of care.
He also highlighted “Talkcast,” an individualized AI-generated podcast, saying members who open a Talkcast episode between their first and second sessions are 20% more likely to complete a second and third session. Cohen said Talkspace has produced more than 76,000 episodes, with 95% positive provider reviews and 92% positive client reviews.
On the company’s newer “Talk AI agent,” Cohen positioned the product as a specialized mental health support AI with human oversight and HIPAA privacy protections, designed to address limitations and potential harm from general-purpose LLMs. He said the Talk AI agent is trained and fine-tuned on Talkspace’s dataset, identifies 10 areas of risk in real time, and includes escalation pathways to connect users at risk to licensed clinicians in real time. Cohen said the company is beta testing “this quarter” with expectations to be in market late in Q2.
In response to analyst questions, Cohen said it is too early to characterize adoption dynamics versus general-purpose LLMs and said the company would provide more information after beta testing. Harris added that there is “little to no revenue” from Talk AI included in 2026 guidance and said Talkspace expects a separate marketing initiative and budget for the product. He also suggested the product could be “TAM expansionary” by capturing users who visit Talkspace’s site but do not check out. Later in Q&A, Harris said early beta engagement has been promising and referenced a user base “a little bit shy of 1,000 users.” Cohen said the initial go-to-market will be direct-to-consumer, while also acknowledging ongoing discussions with other entities interested in the product.
Fourth quarter results and full-year 2026 outlook
Harris reported fourth quarter revenue of $63.0 million, up 29.3% year-over-year. Payer revenue was $47.7 million, up 41% year-over-year, driven by session volume and expansion across existing clients. Sessions totaled 450,000, up 36.3%, and unique active payer members were 124,000, up 29.7%.
Direct-to-enterprise revenue was $11.6 million, up 21.8%, which management attributed in part to launches that shifted into the fourth quarter, and the inclusion of the Wisdo acquisition, which closed Oct. 1 and contributed implementation revenue for certain accounts. Consumer revenue was $3.7 million, down 30.4%, which Harris said was consistent with Talkspace’s intentional prioritization of enterprise and payer channels.
Gross profit was $26.9 million, up 24.4%, with gross margin of 42.7%, down 169 basis points due primarily to revenue mix shifting toward payer. Operating expenses were $23.1 million, up 9.6%, reflecting the addition of Wisdo’s team, though operating expenses improved to 36.7% of revenue, down 660 basis points year-over-year. Adjusted EBITDA was $6.6 million, up 147.1%, with a 10.4% margin.
Talkspace ended the quarter with $92.6 million in cash, down $25.2 million year-over-year. Harris said the change was driven primarily by share repurchases and the Wisdo acquisition, noting the company repurchased $17.2 million of stock during 2025.
For 2026, management issued initial guidance calling for:
- Revenue of $275 million to $290 million (20% to 27% year-over-year growth)
- Adjusted EBITDA of $30 million to $35 million (90% to 122% growth)
Harris said the company expects revenue to build through the year, with the first half representing a little less than 50% of annual revenue as payer members and sessions grow. He said payer revenue growth is expected to be in line with the 2025 payer growth rate, and that a “material” portion of payer revenue comes from members already on the platform. He also said direct-to-enterprise revenue is expected to grow in the low single digits, with seasonal renewal attrition typically highest in the first quarter, and consumer revenue is expected to continue declining “by design.”
On profitability cadence, Harris said Talkspace expects adjusted EBITDA margins to start 2026 in the high single digits and exit the year in the mid-teens, consistent with the company’s previously communicated multi-year targets. Management also said it expects to deliver a three-year revenue CAGR of about 23% using the midpoint of 2026 guidance.
About Talkspace (NASDAQ:TALK)
Talkspace, Inc (NASDAQ:TALK) is a digital mental health company that provides online therapy and psychiatry services through a secure, cloud-based platform. Headquartered in New York City, Talkspace enables individuals and couples to connect with licensed therapists and psychiatrists via text messaging, live audio, and video sessions. The company’s platform is accessible through web and mobile applications, allowing clients to seek professional support anytime and from any location with an internet connection.
The company’s core offerings include therapy plans that range from unlimited text-based messaging with a dedicated therapist to scheduled live video sessions.
