Online therapy company Talkspace will provide free virtual mental health services to more than 400,000 adolescents and teens in New York City.
The NYC-based digital mental health company inked a partnership with the NYC Department of Health and Mental Hygiene (DOHMH) to operate a new program, called TeenSpace, to offer tele-mental health services to teenagers between the ages of 13 and 17 years old at no cost.
Launching this month, the service enables NYC teenagers to connect with a licensed therapist through phone, video and text.
Talkspace and NYC inked a $26 million three-year contract for the program, according to the company.
The new free program comes as alarming rates of anxiety and depression (PDF) are affecting children and teens across the U.S. According to 2021 data from the Centers for Disease Control and Prevention, 42% of U.S. teens have reported persistent feelings of sadness and hopelessness, and 22% have seriously considered attempting suicide.
Talkspace CEO Jon Cohen, M.D., believes the company has a "moral imperative" to help address teen mental health.
"We believe it's the largest teen mental health initiative, certainly city-based, in the country," Cohen said. "It includes all schools, public, private and charter schools." Talkspace estimates the service will give approximately 400,000 to 500,000 teens immediate access to evidenced-based mental health services.
The service builds on NYC Mayor Eric Adams' mental health agenda for NYC released in March.
"Our young people shouldn't ever feel alone. We're here for them, and together I know we'll build a healthier, stronger city together," Adams said during a press event on Nov. 15.
NYC DOHMH data revealed that, between 2011 and 2021, there was an increase in the percentage of city students who reported feeling sad and hopeless (PDF), non-suicidal self-injury and suicidal ideation.
"Across New York City in recent years, approximately 40% of Latino and Black young people and 30% of white young people reported experiencing anxiety, depression, or an associated condition. Nationally, we have witnessed these numbers climb even higher," said Deputy Mayor for Health and Human Services Anne Williams-Isom.
The new program "puts access to mental health support right in the hands" of young people, Williams-Isom said. "They can use their smartphone or other devices to connect with a practitioner in a time and space that works for them," she said.
Talkspace connects people via an app with therapists who provide counseling remotely, either over the phone, by video chat or by text. The company covers approximately 113 million lives as of Sept. 30 through its partnerships with employers, health plans and paid benefits programs.
Through NYC Teenspace, eligible teens will be self-guided through an introduction to therapy and given mental health assessment tools and, when they are ready, encouraged to match with a dedicated, licensed therapist through Talkspace’s secure, private platform where they can send their therapists an unlimited number of private messages and have access to live, real-time virtual sessions—all from their smartphones, tablets or computers at no cost.
There's also a compelling business case for building out its virtual mental health offerings for adolescents and teens. It's part of Talkspace's strategy to grow its payer and enterprise businesses.
The company is keenly focused on building its direct-to-enterprise business, which was up 10% year over year to $8 million in revenue in the third quarter of 2023, according to Talkspace's third-quarter financial results announced earlier this month.
"The team continues its work to build out a strong pipeline of new clients in existing and new verticals," Cohen told investors during Talkspace's third-quarter earnings call. "We believe that a vitally important segment of society suffering from mental health issues are adolescents."
"Our investment in this area is now bearing fruit, and although I cannot yet provide specifics, we plan to make several announcements in the next few weeks around delivering the Talkspace solution to adolescents for more than one large jurisdiction," Cohen told investors Nov. 2 before the NYC partnership was announced.
"This places us in a unique position to capture more of the total addressable market, which we estimate to be over $500 million," he said.
In an interview, Cohen added that the demand for mental health services represents a "massive market."
"We're not here to steal market share. We're actually here to grow the market that's out there. So given the size and scope of the market, given the huge appetite right now for additional mental health services, given the focus of the country—almost every day you hear about the need for more mental health services—given the funding that actually is available through a bunch of different areas, the stars are certainly aligned that we would be in an excellent position to be able to provide services to as many of those patients and entities that need the service. I think that we continue to be very bullish on the market because of what the need is," he said.
The Talkspace platform is amenable to students because of the texting and messaging platform that the company developed, Cohen told investors during the Q&A portion of the earnings call.
"That's a great way to actually be in contact with students. It is available essentially 24/7. The ability to text and message pretty much anytime makes it a really, really viable solution for students. Given what’s going on in the schools and/or that population, we know that it is a very, very large opportunity. There’s roughly 25 million high school students in the country, so you could do the math about what that represents on a per student per month fee," he said.
Talkspace also developed a unique AI algorithm over the last three years that can identify individuals at risk of self-harm or suicide. Using machine learning capabilities, the Talkspace platform can detect language patterns consistent with high-risk behaviors that place individuals at risk for self-harm. An analysis found that the model is 83% accurate, according to the company.
Talkspace revenue increased 32% year over year to $38.6 million in the third quarter, driven by a 79% year-over-year increase in the B2B revenue categories. Third-quarter payer revenue was $22.1 million, up 132% year over year.
The company is now on track to achieve profitability by the end of the first quarter of 2024 and expects to have $120 million of cash on its balance sheet, executives said during the third-quarter earnings call.
The online mental health provider's revenue growth and narrowing losses in 2023 mark a significant turnaround for the company. Talkspace went public in 2021 via a special purpose acquisition company deal but has struggled with losses.
The company had a rocky 2021 after losing its two founders and pushing out its chief operating officer. The online therapy app also was hit with a securities fraud lawsuit alleging that it misled investors before it went public by misrepresenting its financials and growth.
There were media reports in November 2022 that telehealth company Amwell was exploring a buyout.
Talkspace tapped Cohen as CEO back in November 2022, capping off a year’s worth of leadership shake-ups. He is a surgeon and a veteran healthcare executive who had served on the company’s board. The company started with a consumer focus but signaled last year that it was shifting to a B2B model as part of a larger turnaround effort.
That strategy shift appears to be paying off as the virtual mental health company says it is accelerating its path toward profitability.
"We remain the largest in-network provider of telehealth mental health services in the country, and we continue to strengthen our position as we anticipate the launch of more than 15 million additional behavioral health, commercial covered lives in the next few weeks," Cohen told investors during the third-quarter earnings call. "We expect the activation to gradually ramp over the next few months and to contribute meaningfully to our 2024 results."
He added, "We anticipate a significant increase in covered lives in 2024, providing even greater access to a significant portion of the entire U.S. population. Our meaningful growth prospects in our DTE (direct-to-enterprise) business, most notably in adolescents, are adding exciting opportunities that will drive revenue growth momentum and profitability in 2024."