Talkspace’s Medicare, Tricare Deals Expand Free Access, Marketing Hurdles Remain

Thanks to Talkspace’s (NASDAQ: TALK) new partnerships with public payers, Tricare and Medicare, more individuals now have free access to the company’s assets. The tricky part is garnering awareness about the services.  

Talkspace is also set to cover 200 million lives and is working to improve awareness that its services may be free for many new patients. Increases in covered lives in the second half of 2024 were largely driven by military and Medicare demographics, according to company executives at the 2025 JP Morgan Healthcare Conference. These partnerships helped bolster the company’s EBITDA margin and improve topline growth.

“Military is a very isolated, interesting population,” Dr. John Cohen, Talkspace CEO, said. “It’s easy to target the population because it’s so fixed. We have people just devoted now to delivering on Medicare. There are multiple other populations that we can address … it’s just a matter of what our bandwidth is and how many of those we want to additionally go after.”

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Talkspace expects that treating military and Medicare groups will contribute meaningfully to revenue in 2025, according to chief financial officer Ian Harris.

In addition to Medicare and military demographics, Talkspace is continuing to focus on teens.

Talkspace already dedicates a significant portion of its resources to the teen demographic, with 40% of its clinicians specializing in treating teens. The company maintains several partnerships with public organizations, including school districts and cities, giving over 500,000 teens free access to Talkspace services. Teens primarily take advantage of Talkspace’s asynchronous texting and messaging services, Cohen said.

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Last month, the company partnered with the City of Seattle, giving an additional 55,000 teens and young adults access to certain Talkspace services.

The provider is launching a new artificial intelligence tool to improve member engagement and care quality. Using AI, Talkspace can generate AI-generated personalized podcasts that incorporate care information from the patient’s therapy sessions and Talkspace’s data bank. For example, a teen experiencing cyberbullying could listen to an AI-generated audio podcast that reviews practices and tools introduced by the patient’s therapist.

In addition to improving care quality, Talkspace continues to execute its financial goals. In 2024, Talkspace reached $190 million in revenue and has maintained a positive cash flow for multiple quarters. To aid in reaching its goals, the company launched a $40 million share repurchase program. Company executives are also reviewing M&A opportunities, small tuck-ins and technology improvements, according to Cohen.

The company has associated more covered lives with advantages in capital allocation, according to Harris. Talkspace currently covers under 175 million lives but will soon cover 200 million, representing two-thirds of the American insured population.

Having reached such a large portion of insured Americans, the company now must improve awareness of the affordability of its services.

“The biggest issue we have is that we need to get the word out,” Harris said. “It’s incumbent on us to drive awareness of the fact that people likely have access to Talkspace for free. It’s not a brand awareness problem. … We deployed so much capital to build that brand, we’re now leveraging that with the different message of, ‘Hey, you know Talkspace, you already know Michael Phelps, but what you likely don’t know is you have access for free.”

In addition to improving awareness, the company will seek to improve retention rates through product changes.

Talkspace will continue to add lives, but improving other metrics could allow for meaningful financial benefits, according to Cohen.

“Our opportunity, if we stop right now on adding lives, is to get more people onto the platform and stay on the platform,” Cohen said. “Small changes in our capture and utilization across the platform [have a] huge impact on the top line of the business. So, although we’ll continue to add lives, we’re going to be at roughly two-thirds of the American public, which is a pretty good number.

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