Talkspace CEO on B2B growth plans, "significantly reduce cash burn"

Talkspace CEO on B2B growth plans, “significantly reduce cash burn”

After facing headwinds in the public market, Dr. Jon Cohen inherits a number of challenges as the new CEO of Talkspace Inc. (Nasdaq: TALK).

But coming in, his plan to navigate the choppy waters is to stay the course set by Chairman Doug Braunstein when he was interim CEO — drive revenue growth by growing the B2B division and stem the tide of business expenses.

Talkspace searched for a new CEO for a week before a year. The board terminated co-founder and CEO Oren Frank and Roni Frank, co-founder and chief clinical officer, without cause, effective Nov. 15, 2021, according to an annual shareholder disclosure.

The company announced Franks’ exit just ahead of third quarter 2021 results. A year later, Talkspace announced Cohen’s appointment just ahead of third quarter 2022 results.

Cohen was already associated with Talkspace before his appointment as CEO on November 8. He was elected to the board of directors in September.

Prior to joining the board, he stepped down as CEO and executive chairman of BioReference in August. BioReference is one of the nation’s largest full-service laboratories and is a division of international biopharmaceutical and diagnostics company OPKO Health Inc. (Nasdaq: OPK).

Just 10 days after his appointment as CEO, the Nasdaq Stock Market notified Talkspace that he faced delisting for failing to maintain the minimum market share price of $1.

Talkspace said in a public filing that these are entertaining available options. He specifically highlighted a stock split. He added that this would require shareholder approval at a special meeting. It held its annual meeting on September 15.

This problem could be solved by being acquired by Amwell, officially known as American Well Corp. (NYSE: AMWL) for $239 million, according to market chatter.

Behavioral Health Business interviewed Cohen before the Nasdaq sent Talkspace a notice and news of a potential deal with Amwell broke. The following questions and answers will not include these topics. It has also been edited for length, clarity and style:

BHB: How did you become a board member?

Cohen: I knew the president [Doug Braunstein]. And in my experience at BioReference, I had built a very large digital health solution called Scarlet Health, which is a digital home [blood] draw a solution with 80 million lives covered. So we knew each other and after multiple discussions he asked me if I was interested in joining the Talkspace board.

Why did you become a board member?

I got very interested in, first, mHealth and then digital health over the past 10+ years.

I thought the mental health space, which obviously has a huge need, is growing rapidly. If you put that on top of the acceleration of telehealth post-COVID, I just thought this was – given the 10-year history of Talkspace and its brand – a really exciting opportunity to get involved in something thing that was the future.

Have you sought the role of CEO or have you been invited to participate in the search process?

It was just really a discussion they had. Doug had been interim CEO for almost a year. He and the team have done an enormous amount of work over the past 12 months to get him to where he is now, today. At that time, the board was just beginning to make a decision on what to do about the CEO. They had, quite honestly, delayed making a decision. I would call it fortuitous. I had left BioReference in August. I was pretty unsure of what I was going to do next. I had a really great run there through COVID. And I really wasn’t sure. He just came up with a chat about whether or not I would be interested. And that’s how it started.

When did the selection process start?

It was early October.

Where do you see Talkspace, as a whole, in terms of development?

It’s been around for a while. It has a very strong brand in the market. It was originally born from a B2C platform. It started as asynchronous, that is, SMS, then voice which then went, in addition, to video. All of this has evolved because technology has evolved. Remember, 10 years ago video wasn’t as popular as it is today.

If you layer that on strategic changes [to more B2B]this is an important strategic change for the company.

[Talkspace] has undergone many changes over the past year. It’s in a place right now where there are two big, important initiatives.

One is to drive the business to profitability. This is a very, very important question for me and for the company, to enable us to break even and be profitable.

At the same time, you need to continue to cut costs where you can and, on top of that, significantly increase revenue by adding lives covered – we now have 86 million lives covered for payers – and then add more and more employers.

What are your immediate tasks?

There are a lot of things you always do when you take on a leadership role.

First, do you have the right people? Do you have the right team? Is this team lined up? Are the goals the same?

The second part is to set goals for the next year and the next two years. Then it requires developing a business marketing plan that, and adding a financial plan, achieves those goals.

The company relies heavily on contract therapists. Will this change in the near future?

I think the answer is probably no. I would say that we are going to rely both on the people we have who are full-time employees and certainly on the people who are part of the network that we have built for part-time employees. I would say it’s a combination.

From a capitalistic point of view, what are the company’s needs? And do you think anything will change in this area?

We are well capitalized. The biggest move is going to be to drastically reduce cash consumption to break even and break even so that we can conserve the capital we have or other investments in the future. But I don’t know what they will be right now.

Will you continue to position Talkspace to serve members of the public health plan, i.e. those on Medicare, Medicaid, and receiving VA care?

We are evaluating this now.

One of the many reasons other behavioral health providers want to work with people from these populations is the need in terms of population and severity of conditions. Another is that Medicare, Medicaid, and the VA are primary payers. Do these two factors apply to Talkspace?

I think it’s true. It must be ensured that the reimbursement is sufficient to meet the needs of the network. That’s part of it.

Medicare, for example, as far as I know, doesn’t pay for asynchronous mental health services, which means they don’t pay for talk texting. The usual Medicare population is only reimbursed for video consultations. This is another thing that needs to be factored into this decision from the business side.

What other technology changes at Talkspace have you excited about?

We’ve made a lot of improvements in matching therapists to members. We continue to make real progress in improving the matching process.

Now that you’re CEO, how do you see Talkspace evolving or growing?

Added a significant number of paying lives and a significant number of employers in addition to people using the services. You can have an EAP program. But I hope that employers will promote the program so that employees benefit from it.

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