Talkspace Inc. (Nasdaq: TALK) continues to push into new payer partnerships and new patient populations by announcing that it will serve traditional Medicare and Medicare Advantage members.

The move marks yet another level of progression in the New York City-based tele-mental health company’s evolution into a company that generates business by working with enterprises that act as intermediaries in people’s health. The company was founded and went public under a model that was heavily focused on working directly with consumers.

At the 2024 J.P. Morgan Healthcare Conference, Jon Cohen, Talkspace’s CEO, said that its services will be available nationwide to American seniors on these health plans by the end of the year. Cumulatively, about 66 million Americans are on Medicare — 34 million on original Medicare and 32 million on Medicare Advantage, according to the latest figures from the federal government. 

Cohen pointed to federal regulatory changes that enabled the Medicare expansion.

“The importance of the Medicare mental health changes for [seniors] is, hopefully, obvious,” Cohen said, citing significant increases in reported mental health issues among seniors.

Cohen didn’t name any specific Medicare health plans Talkspace wants to partner with.

Behavioral Health Business reported in June 2022 that Medicare would be a part of Talkspace’s future business. At the time, when and how weren’t clear, as the company was undergoing several transformative changes in its leadership and operations. At that time, the company was planning to make forays into Medicaid and work with the U.S. Department of Veterans Affairs.

Medicare has a reputation for providing limited mental health benefits for seniors. Historically, LMFTs and licensed professional counselors were not covered by Medicare’s outpatient mental health benefits. However, several legislative and executive moves in the federal government eventually led to the inclusion of these mental health providers in Medicare and other bureaucratic changes to make participation in Medicare easier.

Cohen said telehealth solutions are as feasible for seniors as for other age groups, stating that 60% of people ages 60 to 70 have a cell phone.

“For anyone who thinks that seniors don’t use their cell phones, you have not been a grandparent,” Cohen said.

Other telehealth organizations have announced that they are expanding into Medicare networks. San Francisco-based Brightside Health made such an announcement in October.

The Medicare announcement is in line with other Talkspace initiatives that deepen its presence in the B2B segment, or in Talkspace’s jargon, direct-to-enterprise (D2E) business, as well as engaging with different patient populations.

In November, Talkspace announced a partnership with New York City that would allow teens 13 to 17 to use Talkspace at no or low cost to them. Cohen teased that other deals would follow. About a month later, Talkspace announced a deal with Baltimore County Public Schools that gave all students ages 13 and older access to free therapy.

Talkspace said the teen market is a $500 million opportunity, Cohen said.

These deals and an ever-expanding slate of in-network or deeper partnerships with payers increase the population of those who have access to Talkspace through a payer or employer to about 130 million.

“The major emphasis in 2024 is not just adding lives but actually increasing the capture rate and utilization,” Cohen said.

This momentum from these and other strategic efforts — such as the long-term cost reduction and clinician retention and growth efforts — puts Talkspace on track to profitability. Larger-than-expected losses led to the ouster of the company’s founding executives and its pivot away from its legacy direct-to-consumer business model. The company didn’t even include its D2C business in its slide deck.

Cohen reiterated that the company is on track to hit breakeven in the first quarter of 2024 and then be on track toward profitability.

Talkspace grew in other ways in 2023. It expanded its hybrid clinician workforce — a combo of contractors and staff clinicians — by about 60% in the previous year.

The company is also apparently the “largest in network telehealth mental health provider in the country,” according to Cohen. Talkspace’s most significant competitor would be BetterHelp, the mental health division of the virtual health care company Teladoc Health (NYSE: TDOC). Teladoc CEO Jason Gorevic said at the same conference that BetterHelp was “by far the largest virtual care provider in the mental health space” and that it produces $1 billion in revenue and has 30,000 clinicians on its platform.

A key difference between the two is that BetterHelp generates most of its revenue from membership fees from patients and engages with clinicians as contractors or users of its telehealth platform. The company’s latest annual financial filing identifies Cerebral and Talkspace as key competitors in the D2C market.

Talkspace’s focus for the last few years has been on optimizing and growing its own business on its own, staving off suppositions that it would be an acquisition target. Now, the company is leaving the door open for being an acquirer in a telehealth market that is likely going to require consolidation after a dramatic expansion in nearly all care specialties since the onset of the pandemic.

“There are hundreds of [telehealth companies] that are looking for therapy — weight loss, diabetes management, cancer diagnosis, cardiovascular,” Cohen said. “If there’s somebody out there that’s looking to be part of Talkspace, then we would certainly talk about it and ask if it makes sense for us to get together in that kind of relationship.”