Welcome to the Talkspace Second Quarter Earnings Conference Call. My name is Richard and I'll be your operator for today's call. I'll now turn the call over to Mr. Mark Hirschhorn, President and Chief Operating Officer. You may begin.

Good afternoon, everyone. This is Mark Hirschhorn, Talkspace's President, Chief Operating Officer. I'd like to welcome you to our earnings conference call for the second quarter of 2021. Leading today's call is Oren Frank, Talkspace's Co-Founder and Chief Executive Officer, who will be joined by Jennifer Fulk, the company's Chief Financial Officer, and myself. Management will offer their prepared remarks and we'll then take your questions. Talkspace's press release and webcast link are available on the Investor Relations section of Talkspace's website. On this call, we will be making forward-looking statements. These statements reflect our best judgment based on factors currently known to us, and actual events or results may differ materially. Please refer to the documents that we file at the SEC including the form 8-K filed in today's press release and the disclaimer posted on Talkspace's website. I'll now turn it over to Oren Frank.

Thank you, Mark. Welcome and thank you all for joining us on our first earnings call as a public company. We founded Talkspace with a mission of making high-quality behavioral healthcare accessible to everyone. And we are proud of the impact that we have had on millions of clients. Our purpose-built technology platform is designed to personalize treatment to lower costs and, most importantly, improve clinical outcomes at a very large scale. We continue to invest in product and service innovation with the aim of providing individuals greater choice and addressing an even broader array of conditions that will make our portfolio extremely attractive for individuals, health plans, and enterprise clients. We continue to develop our distribution channels to further expand our market reach. We believe that our clinical and technology capabilities allow us to offer unparalleled products and services. We're excited to address the unmatched and growing demand for mental health services in innovative ways. I'm delighted to start today's call by introducing Jennifer Fulk, who joined us as the Chief Financial Officer. Jennifer joined us from Eli Lilly and brings with her an accomplished track record of success across a diverse set of leadership roles in finance, strategy, and investor relations at a world-class healthcare organization. Jennifer, over to you.

Thank you, Oren, and good afternoon everyone. I'm thrilled to have joined Talkspace and have been very impressed by the passion and commitment of our talented leadership team. It is clear that we have differentiated medical-grade clinical capabilities, a unique technology stack, and a highly recognized brand. This gives us an incredible foundation to capitalize on strong demand tailwinds as we revolutionize virtual behavioral healthcare. And I'm looking forward to speaking with our investors in the coming weeks.

Thanks, Jennifer. I also want to mention our two incredibly important recent hires, Dr. Varun Choudhary, who joined us as Chief Medical Officer. Varun was previously at Magellan, where he managed the national behavioral health program, and Erin Boyd, who joined us as Chief Growth Officer for our enterprise business and previously served as Director of the Behavioral Network Strategy for Cigna. Erin's hire further strengthens our commitment to taking advantage of what we view as a massive B2B opportunity. Recognizing that many of you are new to the Talkspace story, I would like to spend some time talking about our company more generally. After this, we will review some of the highlights of Talkspace's second quarter results and then touch on the exciting growth opportunities ahead of us. Talkspace is the only public pure-play virtual behavioral health provider delivering same-day access to high-quality mental health resources by text, video, and audio messaging, and also via live video/audio sessions. Our platform treats a wide range of mental health conditions and operates across over 20 clinical specializations and addresses the needs of individuals, couples, adolescents, and psychiatric patients. Clinicians can also write prescriptions and have them sent directly to the patient's local or virtual pharmacy in all 50 states. Since the founding of Talkspace, we've been a technology-first company because of our belief that virtual therapy can dramatically improve engagement and treatment outcomes through the application of data science. Our proprietary machine learning and natural language technologies leverage a vast and anonymized dataset to identify patterns in personalized treatment. This allows us to improve the speed and accuracy of matching and diagnosis, empower clinicians to deliver personalized care, and optimize and enhance clinical outcomes. Of course, we have designed our ecosystem and information practices to achieve and maintain full compliance with HIPAA and other legal requirements regarding the confidentiality of patient information. We believe that our technological capabilities and data-driven approach are robust and a sustainable competitive advantage. We believe our health market is right for innovation and we have several opportunities to further satisfy demand with new products that we imagine deliver quality-centric behavioral healthcare, making it more convenient and affordable. In the second half of the year, our service portfolio will expand again, with an enhanced suite of functionalities that will further drive broad market adoption. Expanding our products to cover a full behavioral stack will enable us to adopt a land and expand approach for cross-selling and upselling our services across the entire spectrum of clinical use cases, needs, and modalities. These calming medical-grade capabilities are unique in the marketplace and represent a compelling value proposition for our B2C and B2B clients. We serve our members through two different channels: direct-to-consumer, comprised of individual consumers who subscribe directly to our platform; and our business-to-business channel comprised of enterprise clients who pay us a per member per month fee, as well as large health plans who offer their insured members access to our platform at in-network reimbursement rates. We’re currently making moves into new distribution channels such as healthcare platforms and navigators, e-commerce platforms, partnerships, and additional nontraditional carriers that will give us access to an even broader and more diversified audience. Our B2C product is offered via several subscription tiers, some allow for asynchronous treatment via unlimited text, video, and audio messaging and offer a range of scheduled, live or audio sessions. We continue to see a shift toward higher tiers which will continue to drive ARPU. We currently offer psychotherapy, psychiatry, and prescription services targeted at individuals, couples, and teenagers, and in the second half of the year we're planning to further expand our offering to encompass group therapy and situation-specific treatments focused on the workplace. Our B2B business is built to service large clients and employers and provide a recurring and visible stream of revenue with low customer acquisition costs, which will ultimately lead to higher operating margins over time. We're extremely excited about these offerings accelerating traction and cost-saving opportunities as they continue to outperform our expectations and over time we expect them to contribute an increasing portion of both our revenue and margin. Our B2B initiatives provide all employees access to our services as a benefit paid for by their employer either directly which we call DTE or Direct-To-Employer or through an insurance plan. For our health clinic clients, we contract with major insurance clients to deliver care through other EAP, Employee Assistance Program and MBH, Managed Behavioral Health Programs. Examples of our health plans and EAP clients include Aetna, Cigna, Humana, Optum, Premera, and Wellspring. We have built a living network of approximately 3,000 licensed therapists, psychiatrists, and nurse practitioners to serve our large and growing member base. The proceeds from our capital raise enabled us to accelerate our strategic decision to hire full-time W-2 clinicians, which we believe enhances our members' retention, engagement, and satisfaction. The increasing availability of full-time employed providers will lead to higher matching rates, increased network capacity utilization, and grant us more flexibility to experiment with new products. We expect to add additional full-time therapists throughout the remainder of the calendar year, and this strategy requires a greater upfront investment that we are confident we can scale rapidly as we continue to grow and can meaningfully improve both our quality and unit economics over time. We are all leading to a major industry; mental health is finally recognized as an essential need, and thanks to its greater convenience, lower cost, and demonstrable clinical efficacy, the adoption of behavioral telehealth has continued to increase post-pandemic. While most medical specialties have seen a gradual decline in telehealth utilization in the aftermath of COVID, the percentage of claims for virtual behavioral health services has remained consistent since the onset of the pandemic, both in aggregate and as a percentage of total behavioral visit claims. The most meaningful driver of consumer behavior in mental telehealth is no longer just the trait of convenience but also reduced stigma and lower costs, which ultimately validate the durability of virtual healthcare demand. We believe this change is structural; recent surveys suggest telehealth consumers are at an all-time high. Utilization continues to increase as clinicians become more familiar with the platform, and patient demand attracts new investments in infrastructure and innovation. As it relates to Talkspace's go-to-market strategy, our audience has been and continues to be digitally native, mobile-first, and young. 60% of our members are first-time therapy users who select Talkspace for its privacy, convenience, and affordability. As such, we expect demand to remain especially robust as consumers and providers continue to appreciate the benefits of virtual modes for mental health care. Before turning the conversation over to Mark, I would like to highlight some key items from our quarterly financial performance and also share a number of KPIs we use to track our business internally and expect to share regularly with our investors to help you monitor our performance. This quarter, we have more patients across more conditions than ever before with approximately 61,500 active members at the end of the second quarter, which is up over 40% from just one year ago. Our $31 million in net revenue for the second quarter was a quarterly record for the company and represents 73% year-over-year growth. B2C net revenue for the second quarter was $21 million, up 36% year-over-year and up 14% sequentially. Of particular note, our B2B revenue grew 320% year-over-year to $10 million, and we have a robust pipeline of B2B clients and revenue opportunities. As a result, we are on track to meet our revenue guidance of $125 million, growing our revenue by 64% for the fiscal year of 2021. While our B2C revenue grew substantially, we and many of our peers are experiencing elevated customer acquisition costs due mainly to a material increase in the cost of digital advertising. As a result of this environment, we're taking a number of steps which we believe further strengthens our business. First, we increased our advertising budget, which we believe further enhances our market-leading brand and differentiates us from competition, serving as an important driver for our B2B pipeline. Second, we focused on further enhancing our medical-grade clinical capabilities imposed by building our network of W-2 clinicians, a unique asset that we believe will ultimately increase members' retention, engagement, and satisfaction. Third, we expect to launch a number of new products, features, and distribution channels over the coming quarters that we believe will drive organic growth. And finally, we're undertaking a number of operational improvements which we believe could mitigate the impact of customer acquisition cost inflation. While we do not know how long this pricing environment will persist, we believe we are both well-positioned and well-capitalized to defend our brand's market-leading position. Moving back to our B2B business, we continue to execute on our B2B growth strategy, which provides a recurring and visible stream of high-margin revenue. As our differentiated and comprehensive product portfolio continues to resonate in the B2B marketplace, we're seeing traction in expanding our offerings both within existing clients as well as adding new clients. In the second quarter, we added a combined 14 million eligible lives, representing a 34% sequential quarterly increase and a 67% year-over-year increase. The number of enterprise customers was also up strongly, ending the quarter up 18% from the prior quarter; our direct-to-employer offering continues to grow rapidly, and we just experienced our largest Direct-To-Employer win in the company's history. The B2B business is thriving and continues to outperform our expectations. We foresee significant opportunities for cross-sell and upsell of our medical-grade innovative products, and overtime, we expect it to contribute an increasing portion of our revenue and margin. As a result of our merger, we ended the quarter with approximately $250 million of cash, which will be used to further increase our already high brand awareness, drive adoption across all channels, add new products and partnerships, leverage the massive B2B opportunity we have ahead of us, and expand internationally. At this point, I will turn the call over to Mark for a review of our financial results. Thanks very much, everyone.

Thank you, Oren. As Oren noted, we had a very solid second quarter. During the second quarter, revenues increased 73% year-over-year to $31 million. Direct-to-Consumer revenue in the second quarter increased 36% year-over-year to $21 million, driven by a significant increase in our active membership, as well as consumer preferences shifting towards higher subscription tiers. B2B revenue from the second quarter increased 321% year-over-year to $10 million, growing to represent 32% of total revenue compared to 13% of total revenue in last year's quarter. This is exactly where we want it to be at this point in the year and underscores our success in moving aggressively into the enterprise arena. We are reaffirming our 2021 revenue guidance at $125 million, which reflects 64% year-over-year growth. Turning to membership and access, we ended the second quarter with 61,500 active members, an increase of 41% over the prior year's quarter. At the end of Q2, our B2B business reached over 56 million eligible lives. Between July 1, 2020, and June 30, 2021, Talkspace was added as an inter-work benefit for over 22 million eligible lives. Direct-to-Employer clients increased to 107 as of June 30, 2021, up from 41 clients as of the end of the second quarter 2020. As Oren mentioned, our Direct-To-Employer offering continues to gain traction in the marketplace, as we just experienced our largest Direct-To-Employer weekly wins in the company's history. In fact, our sales pipeline today stands at a greater than 10x increase in opportunities compared to what it was at this time last year. Our enterprise clients, as well as those pending enterprise opportunities, including some of the nation's largest health plans, have been slowly transitioning to recognize virtual behavioral care as a necessity for permanent care. This nation’s shortage of qualified professionals, in addition to other inherent obstacles to access that are systemic in our healthcare system, make Talkspace a vital partner to every health plan and healthcare benefits provider. We are extremely excited for the fourth quarter, as timely product enhancements will enable us to capture an even greater percentage of the existing white space in the payer market. While we have been actively promoting our market-leading brand, we have also been busy creating options for our members. We will shortly have the ability to offer synchronous or live messaging to complement phone and video features, ensuring that members have opportunities to select exactly how and when they want to engage with their psychotherapist or psychiatrist. Talkspace has been an innovator in bringing therapy to millions of people through messaging; we have listened to our health plan clients, and we will be introducing these expanded features to ensure that a far broader audience can advance into therapy over the next several months. Our gross profit increased to $19 million for the quarter, an increase of 57% compared to the prior year's second quarter. Our gross margin was 62% compared to 69% in the second quarter of 2020. The decline in gross margin is primarily attributable to the increasing B2B line of business and its growing absolute dollars as a percentage of total revenues, in addition to upfront investments in W-2 clinicians and the time it takes to optimize their client capacity. These full-time clinicians have been transitioned either from part-time 1099 clinicians already on our platform or recruited from outside of Talkspace. We expect that margins will normalize as these clinicians reach full utilization and optimization on our platform over the next several quarters. Adjusted EBITDA loss was $12 million in the second quarter 2021, compared to a loss of $300,000 in the second quarter of 2020. As Oren mentioned, CAC has been meaningfully elevated since the beginning of the year relative to prior periods. The majority of the excess losses in the quarter relative to initial expectations can be attributed to this increase in customer acquisition cost. While advertising costs have dramatically increased during the first half of this year, the current environment makes it more difficult to predict when customer acquisition costs will ultimately normalize. As such, we will not be providing any update to guidance on EBITDA for the remainder of this year. Net loss for the quarter was $30.4 million compared to a net loss of $600,000 in the prior year period, and included transaction-related expenses of $4 million. On a per-share basis, the net loss was $1.15 per share for the second quarter compared to a loss of $0.05 in the comparable quarter last year. For Q2, we booked a $39 million liability on our balance sheet related to warrants that were acquired from Hudson Executive Investment Corp in connection with the closing of our merger. We ended the quarter with about $248 million in cash and short-term investments. We are very confident that these resources will enable us to continue investing in our expanding B2C franchise, while we also build out our emerging B2B franchise. Over time, our strategies to strengthen our B2B commercial offerings, and in turn, see this segment generate an increasing portion of our revenue and margin. We believe we have a significant opportunity to cross-sell and upsell our comprehensive service portfolio. And we will continue to invest in new products, channels, and geographies. With that, I will turn the call back to Oren for closing remarks.

Thanks, Mark and Jennifer. Before I turn over the call to Q&A, I would like to take this time to thank our investors for your trust in us and in our mission. I would also like to use this opportunity to acknowledge the hard work of the Talkspace team members around the world. We are grateful for your passion, talent, and incredible execution, all while managing the exciting and demanding transition into a public company. I'm proud to share these results on your behalf and tell the world that TALK is good. And with that, we'll open the call for questions. Back to you, operator.

Thank you. We will now begin the question-and-answer session. Our first question on the line comes from Mr. Charles Rhyee from Cowen. Please go ahead.

Yes. Thanks and congratulations on the merger and congratulations on the quarter. Just had a quick question here. really about sort of, I think Mark you noted that a lot of the gross margin erosion was from actually the mix shift and in B2B, can you give us a breakdown of the active members between the B2C and the B2B business and just looking at how that mix, how we're thinking about that as we go forward into the third quarter guidance here in particular, obviously a nice step up from first to second quarter a little bit less so in the third. Can you kind of give us a sense on what might be driving that?

Yes, Charles, thank you. This quarter, we saw a significant increase in B2B active membership to the extent that B2B members are now essentially representing slightly more than half of the active members on the platform. As those B2B members come to us at a far reduced acquisition cost. They generate, however, a slightly lower gross margin, but a far improved bottom line net margin. We would continue to look towards the B2B contribution of membership as well as revenue to continue to represent a growing portion of consolidated revenue both in the third and fourth quarters of this year as we continue to see tremendous traction from both our health plan clients and our Direct-To-Employer clients. We have now exceeded our expectations for annualized revenue as our quarter came in at $10 million and clearly we'll be looking to exceed our original guidance on the enterprise contribution to total revenue.

The active members in the B2C side were down sequentially. Anything to comment on that, and what do you expect for the rest of the year? Thanks.

Sure. We were very deliberate this quarter, and we continue to focus on the fact that there's a tremendous disparity in customer acquisition costs this year as compared to where we were in the second quarter of 2020. The frequency of price increases is somewhat dramatic from Facebook and Google and the other digital properties. And we are spending what we believe is appropriate to maintain our competitive advantage in our leading brand. But, we're going to continue to look to diversify our acquisition channels through investments in non-traditional channels as well as looking to partner with some of the nation's leading companies. I think it's unlikely that we are going to see a dramatic shift downward in the next quarter or two but we do believe that CAC will stabilize because these elevated levels are not sustainable, nor have we ever seen increases like this in the past two to three years. We’ve been tracking this clearly over the last five years.

Charles, this is Oren, with a couple of additional comments. First of all, to your question about Q3. We've been doing this for 10 years now; this is purely seasonal. Historically, the demand for psychotherapy is likely lower during the summer. So we've been a little conservative on Q3, although when you look at what's going on with the Delta variant it's very unclear how the markets will behave. We feel very strong tailwinds as Mark mentioned. Regarding the customer acquisition cost question, we are optimizing this very carefully and thoughtfully to achieve two things. First of all, we have a unique advantage of differentiation that we are active in both B2C and B2B, and therefore the power for brands to actually help both penetration and utilization on B2B is part of our consideration of how much we invest in customer acquisition cost and in B2C. It will take cross-feeding and helping each other in a very unique manner. So we are investing the money there to keep our brand the number one brand in this market, but as Mark said, there are certain levels of rises in prices. If you guys saw the Q2 Facebook release, you would have seen that they raised their prices close to 50% year-over-year, which we just don't think are justified. So it's a curve for optimizing the game.

Great, appreciate it. Thank you.

Thank you. Our next question on the line comes from Stephanie Davis from SVB Leerink.

Hi, guys, congrats on the first quarter, and Mark, welcome back to the public earnings call arena. You have been missed.

Thank you, Stephanie.

I was hoping to hear a little bit about how things are going in your key selling season just because the employers are beginning to look at different benefits for the following year, and maybe how that could tie into any forward growth we're going to see in the B2B eligible lives metric and any lumpiness or seasonality to consider there?

We are extremely excited about where the B2B business sits today. We've obviously exceeded our internal projections. We're going to exceed our objectives, both from individual sales performance as well as for the entire group of our colleagues that work on the enterprise side; they've seen upticks coming from both the payer and direct employer sides. What we're seeing today is an accelerated interest in trying to align with the benefit structures as traditional benefits commence on January 1, moving towards Q3 and Q4 adoption and implementation of Talkspace services ahead of the introduction of additional revised benefits. We're seeing a tremendous amount of interest from traditional companies, and now we're beginning to really get traction with some of the nation's largest consultants and brokers. We've added, and we continue to add, some extremely experienced individuals from the market, and we're going to announce a number of additional hires on the enterprise side. Quite frankly, we are in a somewhat enviable position as we have, I believe, a solution for both enterprise clients and health plan clients through modalities of live video, messaging, and voice that can help to address the most critical issues in the marketplace today, mainly access and cost.

Then, looking at the early days of Teladoc, I remember improving user penetration into the health plan base. You guys are spending a lot of your marketing budgets on this as well. So how should we think about improving the penetration of active users in that health plan revenue base and maybe some strategy and cost metrics around that?

Well, I think the analogy is spot on. We're still at a point where we are evangelizing the access point and the expansion of networks to all of our health plan clients and those health plan prospects that we're speaking to find us extremely appealing because we add thousands of available therapists to their platform almost overnight. I believe we are likely going to see additional traction as some of our product innovations are rolled out in the fourth quarter, and those innovations really align us with the consumer's desire to receive care. So the consumerization, and the fact that we believe that we're striving towards some degree of commercial ubiquity, as tens of millions of individuals have access to our psychotherapists and psychiatrists, the term Talkspace could very quickly become a verb. I think this is very similar to those breakthrough years when people were being introduced to Teladoc and other virtual care solutions. Our depth of relationship with our subscribers is notable, as our subscribers are normally with us for many months through their treatments and recovery.

Stephanie, I want to add one thing, which is that Teladoc at that time, 9 or 10 years ago, had to really evangelize the notion of telemedicine and remote care. We don't have to do any of that. That is a done deal; we've crossed that particular threshold. We have, I would say, an easier job in educating. Secondly, and unfortunately, the pandemic has generated a second pandemic of mental health issues, and we don't have to look at the Olympics or read the newspaper; I think we all know somebody and understand the levels of stress, anxiety, and depression that are around us. So the tailwinds of demand are very, very strong. And that helps us reach the levels of both penetration and equilibrium that should be easier than what Teladoc experienced back in those days. To give you one example, in Q2, we launched coverage for one of the largest employers in the United States. In the first couple of weeks, we had quite a few thousand of their employees seeking help. Our platform allowed us to match about 95% of their employees to a licensed therapist in all 50 states in under three hours, with a 100% match rate in under 24 hours. That capability of our platform, our technology, and our network does not exist elsewhere. I think this is what really large employers and plans are looking for: immediate access, accompanied by proven quality when we actually report on clinical outcomes, engagement levels, and the data that can be used for those employers to assess whether the launch was successful.

I hear that. There is definitely a different list usually as opposed to a few years ago.

Exactly.

Thank you, guys.

Thank you.

And thank you. Our next question on the line comes from Ryan Daniels from William Blair. Please go ahead.

Yes, guys, thank you for taking the questions. I want to go back to some of the new product offerings that are coming out over the next two quarters, or I think you referenced the fourth quarter in particular. Can you talk a little bit about which of those are going to be targeted more towards the B2C market and which would be more for B2B?

Thanks for the question. I have to tell you that we look at the member or the patient as one individual person that will need our services, and I think the issues of their needs are crossing our go-to markets. You will be surprised at how many of those requests for additional services are actually from people that access us privately or through employers and health plans. With that in mind, I'll give you just a taste of what we are looking at and planning with the kind of a better fit for B2C or B2B or both. As we deliver psychotherapy and psychiatry in all 50 states, including prescription management for various audiences across over 20 clinical specialties, all the major conditions and acuities are already covered. In terms of modalities, we are planning to add, as Mark mentioned, live messaging, which is something that's been requested by both markets, along with developing a better suite of live sessions. More people that have used traditional face-to-face therapy in the past are also moving to Talkspace as it offers them the closest proxy for their treatment. We are seeing growth in that and more demand. We plan to add forms of group therapy, which is mainly on the B2B side but applicable on both ends. Additionally, we're interested in helping patients with substance use disorders, as this has become a major issue. We already treat many of these conditions through our network, but we want to build dedicated products and services for them. This can also include other forms of chronic ailments associated with behavioral health. Our strategy is to provide a full-stack solution with strong clinical backing which we think is in high demand from both plans and our large partners, as they want comprehensive solutions for the majority of their cases. Moreover, we find that as virtual care for behavioral health becomes the first choice of treatment in the consumer world, more conditions and acuities are seeking solutions online rather than face to face. In short, our offerings will cater to both markets.

That's helpful color and it actually leads into my next question. As you try to reduce customer acquisition costs, it would seem like one potential way to do that would be strengthening partnerships with primary care groups across the country. Obviously, with the mental health crisis, there's a significant need to better integrate behavioral and physical healthcare. Those doctors probably see a lot of patients and want them to get care, but realize that even if there is access to care in local markets, there might be long matching periods, not the greatest matches and a lot of private pay only so you may have to go out of network and spend more money. So is there an interest in working as a referral channel to try to drive preferred referral relationships with larger PCP groups across the country as you have such a broad platform and service offering relative to some of your peers?

Mark?

Ryan, let me take that. I think there is naturally going to be aggressive M&A over the next several quarters as people move towards designing platforms that can give consumers options and provide these physical practices the opportunity to leverage their resources. This, in turn, will enable them to have a variety of services wherein the consumer can select to meet in person once a month while also engaging with messaging or video sessions for co-morbid conditions they're being treated for. The comprehensive care type of service is not available today from any scaled provider across the nation, and we believe that we can facilitate this regionally as well as nationally over the next several years. I think this will arise through small acquisitions in certain geographies and will be a very active part of our inorganic growth.

That's very helpful. Then final one, I'll hop off just, again, on the customer acquisition cost. I think you mentioned Facebook raising their prices. I'm curious if you've seen that across all mediums. So, paid search, if that is having similar year-over-year price increases? And then also, is this just generally across the marketplace or specific to the behavioral market, given the big uptick we've seen in utilization and the funding that a lot of competitors received inflows of hundreds of millions of dollars earlier this year? Are they spending that money really actively to drive up their membership base? So is this specific to the tele-behavioral industry, or just very broad? Thanks.

So, Ryan, the price increase is very broad. If you look at the big platforms, namely Facebook and Google, which account for the majority of online advertising in the United States, you will see that the growth is across all categories. I would say that is the majority driver. There is certainly a competitive element, but it’s less pronounced than people tend to see because of all the noise. A lot of money is being invested, and as I have spoken with some of you before, we strongly believe this is the decade of behavioral health, so there's a lot of attention going on, which creates increased competition. When we look at customer acquisition costs, the growth in costs is evident on most of the large platforms. Therefore, we will definitely channel much of our efforts into alternative channels, alternative solutions, in order to generate what I would call more direct and organic growth. We will keep investing in our brand. As I mentioned before, we’re not going to pay the growth needs of Facebook, since they have raised their prices so aggressively. We believe we can optimize our acquisition costs; it will just take a little time. The only variable I can't tell you is how long this environment is going to last.

Thank you. Our next question on the line comes from Vikram Kesavabhotla from Baird. Please go ahead.

Yes. Thanks for taking the question. I'm curious if you can talk about what you're seeing with respect to member duration on the platform across both the B2C and B2B channels relative to what you've seen historically, and any expectations for how that will trend going forward based on the behavior of some of the newer members on the platform?

So let me take the consumer side of it, Vikram, for your question, and then I'll hand it over to Mark for enterprise. In essence, lifetime on the platform has been relatively stable throughout many of the years we've been doing this and has actually improved recently, as you will see in our ARPU number, which we believe is mainly related to the conditions and acuity of the people that come to seek help from our members. It's very difficult to forecast what it will be in the future. We always work to provide a better service, which translates into longer lifetimes and better clinical outcomes; these are highly correlated. I mentioned earlier our very large investment in the quality of our network by hiring fully employed W-2 clinicians. This results in a higher quality of care which in turn translates into longer lifetimes and better clinical outcomes. We did see an improvement in the last quarter, and we hope for it to continue. We definitely didn't see a decline. It’s essential to understand who is seeking care: if I come in suffering from depression for many years, I’m likely going to remain a member of Talkspace for years to come, while if I came here because I had an argument with my girlfriend, I might only stay for a few weeks to resolve that particular issue. Over time this normalizes because we want to help both personas. I hope that answers your question.

Thanks. And then maybe just as a follow-up on the provider network, can you talk about the mix of fully employed versus independent providers in the network today and any expectation on where that can go through the remainder of the future and longer term as well? Thanks.

Yes, thank you. First of all, I think something very good is happening to those set of professionals, both psychotherapists and psychiatrists. They are being recognized as a huge value and are receiving the right kind of respect. All of them, right now, are ritual providers. We have a huge opportunity to recruit the best therapists because of the way we manage our data platform. We have a better view of who the real therapists and psychiatrists are. Therefore, earlier this year, in January, we changed strategy and we started hiring them. We have now roughly 2,700 psychotherapists on the platform, and around 300 to 400 prescribers. Around 250 psychotherapists are fully employed since January this year, and we aim to continue this trend aggressively. We find that the providers are very happy to join us, as from the beginning of the year, our W-2 turnover has been minimal. Their alignment with us is very strong as well. I also think we have a significant advantage in hiring the best therapists because most of their alternatives are being hired by brick-and-mortar networks. The flexibility and lifestyle associated with the type of work we offer is very appealing compared to traditional settings. So, we're very bullish on this and consider it a great development for the industry and for us.

Thank you. Our next question on line comes from Richard Close from Canaccord Genuity. Please go ahead.

Yes. Thanks for the questions, and congratulations on the transaction. Just had a couple housekeeping here, maybe clarification on some of the answers to the previous questions, just on the B2B and direct-to-consumer, just the breakout in terms of the active users. Am I on target saying like B2B was like 31,400 around there, and B2C 30,100? Is that sort of like 51% - 49%?

Yes, you're on target there, Richard.

And then on retention, I appreciate it's stable. I was just going through my notes. I think I had five months as the average duration. Is that the right number we should be thinking about?

Well, Direct-To-Consumer. That's exactly right.

Mark, on your comments, I think this was for Stephanie's question. Just to be clear, I took from your answer in terms of the selling season that were you implying that new wins here in the selling season could actually start prior to January 1? So they'd be launching, call it late third quarter, fourth quarter timeframe?

That's exactly right. We're currently in finalist positions in a number of RFPs. One or two of them are among the largest employers in the nation. There are also a number of other initiatives that are launching with some of the brokerage houses. That will also enable us to accelerate the onboarding and go-live dates prior to the traditional January 1 start dates.

Thank you. And our last question on line comes from Mr. Charles Rhyee from Cowen. Please go ahead.

Yes. Thanks for taking the follow up. Mark, just wanted to ask a little bit about what you think about EBITDA for the rest of the year? I appreciate you saying that there are certainly uncertainties around customer acquisition costs and the like here. But at the same time, it sounds like you are optimizing for that environment, and if right now is sort of this kind of peak, kind of CAC pricing. I think the EBITDA loss in the quarter was about $11.8 million roughly; let's call it roughly in the ballpark from last quarter, $12.5 million, or sorry, $10.5 million on an adjusted EBITDA basis. Is that sort of the right run rate to think of for the rest of the year, anything else that we should think about that could pull it in one way or the other as we look at our model?

I think Charles, it's fair to assume that this third quarter is experiencing very similar metrics to what we've seen in the first reported six months of the year. So I would suggest that your approach is correct. We really don't have insight into where this CAC pricing will be. Clearly, additional lives coming onto the platform that we've already contracted, will begin contributing obviously additional revenues to offset some of that. But we'll continue to moderate our spend to ensure that we can optimize and develop those additional channels. But our run rate today is most likely going to remain consistent throughout the next several months. Can't really apply on Q4 as Q4 typically experiences the highest CAC inflation just as a result of all that retail demand. If we pull away from that, we'll see lower spend clearly but there's a degree to which we obviously are going to plan on investing in the brand.

Thank you. There are no further questions at this time. I'd like to turn the call over to Mark Hirschhorn for any closing comments.

Thanks very much, everyone. We're very excited for this quarter and for the rest of the year, and as I mentioned, perhaps the rest of this decade, Talkspace is uniquely positioned to help millions of people in need. With the tailwinds of this industry finally getting the right recognition and prioritization. So thanks again for your trust and for your support.

And thank you, ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.