Talkspace (Nasdaq: TALK) is reaping the benefits of going in-network with payers. The digital provider increased its payer business by 33% in the first quarter of 2025.

Talkspace is now boasting its fifth profitable quarter in a row, with revenue up by 15% to $52.2 million. Payer sessions were up 23% in the first quarter of the year to 350,000 sessions.

The company is also betting on its payer strategy, insulating it from an impending recession.

“I’d like to proactively address a common question we’ve received amid recent market volatility,” John Cohen, CEO of Talkspace, said this morning in the company’s Q1 earnings call. “Our business is not directly affected by tariffs. More importantly, our long-term strategy has shifted the core of our business to an insured patient base, reducing reliance on out-of-pocket spending. As an in-network provider for nearly 200,000,000 covered lives, we remain accessible and affordable. We are a national provider of Medicare, including Medicare Advantage, and continue to benefit from the federal investment in senior mental health.”

It is also now seeing some wins from its Medicare and TRICARE bets. Last year, the company announced it would partner with Medicare to make the service in-network for beneficiaries. Thus far, the company has witnessed strong patient outcomes, with 84% of Medicare members showing clinical improvement, bypassing the 70% expectation.

In January, the company announced it was in-network with TRICARE EAST and WEST region contractors.

“Our reach into various military communities through a series of specialized grassroots efforts has been very successful and very cost-effective,” Cohen said. “To date, with significant numbers of military personnel and their family members engaging in therapy. We are seeing that this audience relies extensively on word of mouth and loyalty from recommendations within their communities, and are very open to therapy. In January, we also began to deploy initiatives to address the Medicare population, and as a result, we are seeing growth in our Medicare registration.”

DTE, DTC woes

While the company’s payer strategy appears to be thriving, its direct-to-enterprise business is stagnant. The provider reported a 3% decrease in its DTE business year over year.

Once considered a bright spot in digital behavioral health services, DTE models now face uncertainty as companies increasingly scale back EAP services amid persistent economic headwinds, according to some industry experts.

“At the employer level, as they erode economically, will they have the dollars to put into a really nice EAP service versus the most very basic EAP service?” Carney said. “So we’ve already seen the effects of that. … Employers that gave the EAP 12 visits might go down to three, or do something to help them save money. The pressure on behavioral health will be high.”

Still, Talkspace has implemented a new program that could help address any changes to EAP sessions. The provider created an “easy button” system for its EAP members to convert to their employer’s behavioral health insurance coverage when they exhaust their EAP plan sessions.

“Users are now notified when EAP sessions are running low, thus reducing friction related to checking coverage benefits and making a switch while continuing with their existing provider,” Cohen said. “This is an incredibly important step to facilitate our members’ continuation on the platform, as well as to ensure the continuity and quality of care.”

Its direct-to-consumer business also saw a 32% decline as more members used their insurance benefits at checkout.

This news comes as some of its digital competitors struggle to maintain a direct-to-consumer model. For example, Teladoc’s direct-to-consumer behavioral health platform BetterHelp reported an 11% revenue decline in Q1 of 2025.

While BetterHelp was a holdout for D2C care, last week, it announced the acquisition of digital mental health startup UpLift to grow its in-network base.