Digital behavioral health company Talkspace (Nasdaq: TALK) is on track to achieve profitability by the first quarter of 2024. Part of its strategy for achieving this goal is branching out to a new demographic: teens. 

Talkspace’s continued focus on its B2B segment resulted in net revenue of $38.6 million in Q3, a 32% year-over-year increase. It’s poised to expand to cover millions more lives and develop its services for adolescents.

“It’s quite honestly a moral imperative for us to be able to deliver a solution that’s accessible, scalable and affordable to teens,” Jon Cohen, CEO of Talkspace, told Behavioral Health Business.

Talkspace has multiple deals in the works to expand its adolescent programs and has tested its AI-driven algorithm that alerts clinicians to possible mental health crises to ensure it will also work for teens. 

Expanding into adolescents will position the company to capture more of the total addressable market (TAM), which Talkspace estimates to be over $500 million.

The new demographic would help counter attrition from accounts created during the COVID-19 pandemic.

Talkspace continued to grow its B2B segment in Q3. The company’s clinicians completed more than 228,000 B2B sessions in the quarter, a 105% increase year-over-year.

B2B revenue accounted for over $30 million of Q3’s total revenue, a 79.3% increase year-over-year.

The business’s Q3 adjusted EBITDA loss was $2.8 million, an 82% improvement from the previous year.

The company’s top priority for 2024 is expanding its number of covered lives.

Talkspace anticipates launching 15 million additional behavioral health commercial-covered lives in the next few weeks.

“It’s another very large national payer. I’m not allowed to disclose who yet,” Cohen said. “When we bring those 15 million on we’ll make it available pretty quickly. But then there’s a ramp-up period. So that’ll begin to kick in Q1 of next year.”

The company anticipates that these additional lives will contribute meaningfully to its 2024 results.

Talkspace’s plan for 2024

Talkspace’s strategy for a successful Q3 included four key initiatives.

Firstly, the company worked to drive broader awareness of payer member offerings through partnerships, namely, one with smart ring brand ŌURA. ŌURA users can share sleep data with their Talkspace therapist. Talkspace hinted at more partnership announcements in the coming months.

Its second initiative was to grow its direct-to-enterprise business, which grew 10% year-over-year to $8 million but remained flat from Q2.

Thirdly, the company seeks to become the platform of choice for providers. Talkspace acquired nearly 1,800 providers year-to-date, bringing its total number of providers to 4,800.

Talkspace’s fourth initiative was to maximize efficiency. The company’s cost base decreased sequentially only slightly but was down 30% year-over-year to $24 million.

The decrease in operational costs, combined with a 32% increase in overall revenue year-over-year, positions Talkspace to achieve its goal of achieving profitability by the end of Q1 2024, with a cash balance of around $120 million.

“The stars are aligned,” Cohen said.

Less than a year ago, the company was in danger of being delisted from the NASDAQ and was reportedly in talks to sell to Amwell for $200 million. Instead, the company set off on a mission to achieve profitability. Although Talkspace has no immediate plans to sell, Cohen is keeping his options open. 

“My view when I got here is: get this to be a high-performing, profitable business, and from there you just never know what’s gonna happen,” Cohen said. “We can ride the stock all the way up as we continue to perform. Or someone can come in and say, ‘I need a viable mental health solution and come to us.’”