Earnings Call Transcript
Talkspace, Inc. (TALK)
Earnings Call Transcript - TALK Q3 2025
Operator, Operator
At this time, I'd like to welcome everyone to the Talkspace Third Quarter 2025 Earnings Call. The press release and presentation of earnings results can be accessed on Talkspace's IR website. The presentation will be used to walk you through today's remarks. Leading today's call are CEO, Dr. Jon Cohen; and CFO, Ian Harris. Management will offer their prepared remarks and then take your questions. Chief Technology Officer, Gil Margolin, will join for the question-and-answer section of the call. Certain measures that will be discussed today are expressed on a non-GAAP financial basis and have been adjusted to exclude the impact of one-off items. Reconciliations of these non-GAAP measures are included in the earnings release and on the website, talkspace.com. As a reminder, the company will be discussing forward-looking information today, which may include forecasts, targets and other statements regarding plans, goals, strategic priorities and anticipated financial results. While these statements represent the company's best current judgment about future results and performance as of today, actual results are subject to many risks and uncertainties that could cause actual results to differ materially from expectations. Important factors that may affect future results are described on Talkspace's most recent SEC reports and today's earnings press release. For more information, please review the safe harbor disclaimer on Slide 2. Now I will turn the call over to Dr. Jon Cohen.
Jon Cohen, CEO
Good morning, and thank you for joining the call today to review our third quarter results. We delivered record revenue of $59.4 million and adjusted EBITDA of $5 million. I am pleased to report that active payer members grew 8% sequentially and 29% year-over-year and payer sessions increased 12% sequentially and 37% year-over-year. This acceleration in the quarter is a reflection of the focused approach we initiated this year on all aspects of the patient journey. As I look back at the quarter, I'll call out a few specific areas where we've seen this strategy have a significant impact. The number of clients activating and attending their third session in the first 30 days on the platform is up over 50%, driven mostly by improvements to our matching algorithm, ease of scheduling and improved provider capacity. In addition, we continue to see strong results and improve the efficiency on our marketing spend by targeting specific new audiences such as military and their dependents. We are also utilizing AI-driven tactics to further optimize media and test new marketing investments. In the third quarter, we became in-network with several new Blues plans, including Illinois and Massachusetts, and we won a competitive takeaway of one of the largest national EAPs, which we launched earlier this month. We have also made meaningful progress embedding Talkspace into our payer partner ecosystems by focusing on the areas that matter most to them. We continuously manage and curate our network of around 6,000 clinicians to make sure that top quality providers are available to our members and to ensure that each clinician is highly engaged and motivated. This is a key differentiator for Talkspace and has helped drive deeper integration with our payer partners, including directory integrations to facilitate patient sign-on as a seamless experience. Our brand awareness has also improved as we are now the most recognized insurance coverage focused brand for mental health with over 35% of people recognizing the Talkspace name according to third-party surveys. This makes our integration into payer directories even more effective as people are more likely to recognize Talkspace and seek care from us. Payer revenue in this quarter also benefited from strength in our psychiatry business, which we relaunched earlier this year to address the needs of our high-acuity users and those that need medication. As a result of these initiatives, psychiatry initial session volume increased 46% in the quarter. Further, we grew our psychiatry network of providers by nearly 50% from Q2, and we'll continue growing that part of the network due to the demand trends we are seeing. We continue to focus on optimizing the internal referral funnel between therapy and psychiatry services, and we expect continued growth in the coming quarters. To round out our comprehensive mental health services, earlier this month, we announced our acquisition of Wisdo Health, a clinically proven AI-powered social health platform specializing in peer-to-peer community and coaching support. Wisdo has supported over 500,000 adults to date on their platform and utilizes AI to match this population with appropriately trained peers and group coaching for emotional support, companionship and shared experiences that improve health outcomes, increase adherence and engagement rates and reduce total cost of care for its health plan clients. Wisdo is particularly applicable to many Medicare patients who have recorded a 21% decrease in loneliness and exhibited reductions of up to 10% in emergency room, urgent care and inpatient visits after joining Wisdo. We anticipate that many of the Wisdo users may also benefit from referrals to therapy, just one of the many avenues where we see the synergies of being able to provide patients with a more complete set of behavioral health solutions. I am also excited to announce that next month, Wisdo will begin supporting Novo Nordisk's new WeGo Together app for patients on Wegovy for obesity or overweight. Within the app, Wisdo powers the group coaching experience that helps participants build sustainable habits, share encouragement and stay emotionally supported as they work toward their health goals. Our direct-to-enterprise or DTE business remains solid, particularly with organizations serving youth and young adults. Specifically, our 2-year deal with the North Carolina Department of Health and Human Services to provide Talkspace to 20,000 teenagers impacted by the justice system first launched in July and corespaces, which provides student housing options on college campuses to 36,000 students at 32 different universities launched in late August. While both of these launched a bit later in the quarter than anticipated, they are now up and running and progressing nicely. Additionally, this was a strong quarter for contract renewals, including Baltimore County Public Schools and Colby College, which has renewed its contract three times now for its eight years with Talkspace. We also celebrated two years of our New York City Teen Space program. Looking at the results over that time period, we have over 40,000 youth enrolled in the program. Notably, 93% of the participants use messaging, highlighting that our approach to accessibility allows us to meet teens where they are. Our suicide risk algorithm identified over 500 potential elevated risk incidents, which is incredibly important in a population experiencing anxiety and depression as their most prominent mental health challenges. Switching to AI, we continue to make significant progress integrating our work on AI into all aspects of our business with multiple initiatives to improve the customer member journey. This includes LLM search engine optimization, AI assistance in improving eligibility determination for insurance, smart insights for providers in preparation for their sessions, comprehensive smart evaluation that provides the providers with a HIPAA-compliant AI draft of a biopsychosocial evaluation after intake sessions, Smart notes providing post-session summaries for the clinicians, our talkcast individualized podcast that I've talked about in the past and now our AI that helps review the medical records, which has been extraordinarily helpful to the compliance and clinical quality teams. We have data demonstrating the value of our AI innovations. When providers use smart insights ahead of their second session with a member, those members are more than 30% more likely to book a third session within 30 days and 31% more likely to complete their third session within 30 days of registration. Recent results from our data on talkcast indicate that 21% of people are more likely to book and complete a third session after listening to their podcast. We've also launched three additional proprietary risk algorithms to add to our suicide risk algorithm. These include risk for violence or homicidal ideation, homicidal intent or homicidal plan, risk for substance use disorder and mouth treatment risk determination, which identifies behavior or circumstances that may lead to harm, neglect or ongoing abuse. Finally, I'm very excited to announce that the Talkspace developed behavioral health-specific large language model I alluded to on our Q2 earnings call has proven to outperform current AI chatbot agents in our alpha testing. Our proprietary LLM has been trained on hundreds of millions of anonymized therapy transcripts and rigorously tested for safety and therapeutic quality, and we envision it will serve as a therapy companion and clinical support tool. With that in mind, I want to address the issue of AI and mental health and the crisis that has emerged generating the recent headlines of high-profile cases in the press of significant injury and fatalities as a result of people interacting with general purpose LLMs to address mental health issues. Many have noted that the chatbot can be dangerous as they provide instant unrestricted validation and reassurance to users, are too empathetic or sycophantic, are constantly affirming bad behavior, and are always cheerfully adaptive during conversation that flatters rather than challenges ongoing issues. This has resulted in social deskilling and an erosion of real-world interactive skills. They fail to challenge delusions or reinforce reality, lack real-time risk identification, lack clinical oversight, and there is no HIPAA protection. We would note that even as companies work to address some of these issues, they do not have all of the necessary capabilities or experience to more fully protect users. We recognize that these inadequacies of others is a unique opportunity for us. Our significant investment in an AI model, combined with our other capabilities, will offer individuals a significantly better and safer experience. This new model that we have developed sets a new standard for both therapeutic efficacy and user safety unlike general purpose LLMs available today. Utilizing our database, the model was trained on hundreds of millions of tokens from anonymized and graded text-based therapy transcripts. In testing, the model consistently outperforms both open source baselines and state-of-the-art models in responding to high-risk mental health situations, including self-harm, hallucinations, OCD, mania, and delusion. In fact, in a recent test, our model, when compared to general purpose models without this specialized fine-tuning, delivered a 50% improvement in identifying and responding to high-risk behaviors, a 47% higher therapeutic quality score on the cognitive therapy rating scale, and a three times higher user satisfaction than the base model. We expect that these early results will get even better over time as we refine the model and further testing cycles. More importantly, our product is being built with significant clinical oversight, real-time risk determination, immediate referral to a live therapist, human in the loop, and with HIPAA protection to protect patients' personal information. These are unique and core skills that are already available to our Talkspace members through their personal interactions with their therapists. Additionally, our model can be used as an engagement tool for intake screening for multiple different types of patients and as an engagement tool in between sessions. We see the development of our Safe Talkspace AI agent proprietary LLM as a large new opportunity with significant potential upside for our existing business and significant opportunity for new products. We expect to launch a full product offering in the first half of 2026, but believe there are a number of unique and significant commercial opportunities in the near term. We expect to focus initially on several of these near-term opportunities that take advantage of our existing commercial infrastructure and brand presence, including as an affordable alternative for consumers and an attractive alternative for employers to provide a low-cost alternative to their employees. Over time, we anticipate being able to work with our existing payer partners to offer to their network members a reimbursable alternative. Importantly, all of these early products will remain HIPAA compliant and provide real-time clinical oversight with the availability for immediate referral to a live therapist in our existing network. We look forward to providing updates on this important initiative over the coming months. I'm proud of all our team has accomplished so far this year and know we are set up for even greater success ahead. Now I'll turn the call over to Ian to review the financials in more detail.
Ian Harris, CFO
Thanks, Jon, and good morning, everyone. In the third quarter, we continued to execute on our growth and profitability objectives while maintaining strong operational discipline. First, I'll review our quarterly financial performance and then provide an update on our outlook for the remainder of the year. Starting with the third quarter results. Total net revenue was $59.4 million, an increase of 25% year-over-year and 9% sequentially. The accelerating momentum in our payer business is a result of our strategic product investments over the last several quarters as well as our efficient marketing approach throughout the year. Payer revenue grew 42% year-on-year and 12% sequentially to $45.5 million. This performance reflects the continued adoption of our collaboration with payer partners, resulting in higher member engagement within our payer populations. During the quarter, we completed more than 432,000 payer sessions, up 12% sequentially and up 37% year-over-year. The strong session growth was driven by a 29% increase in unique active payer members to over 120,000, which represents our highest quarterly figure since the company's inception and reflects one of the benefits of the payer business line where past cohorts compound over time as members exhibit longer retention rates than out-of-pocket members. Direct-to-enterprise revenue was $9.3 million, down 1% year-on-year and 2% sequentially. Similar to last quarter, our renewal rates were strong, but as Jon mentioned, we experienced slight delays in a couple of material launches that were moved from Q3 to Q4. We have high visibility into sequential growth for Q4, thanks in part to the Q4 launches of those third-quarter new client wins. Consumer revenue from people paying out of pocket totaled $4.6 million in the quarter, up from $4.4 million last quarter, but a decline versus $6 million a year ago as we now cover more Americans via in-network benefits and we optimize our checkout funnel to direct members to use their covered benefits. Adjusted gross profit was $24.6 million, up 13% year-over-year and up 5% sequentially, representing a 41.5% gross margin compared to 43.1% in the prior quarter. The sequential decline in gross margin was driven in part by the continued overall mix shift towards payer revenue as well as the timing of selective network hiring in certain areas in anticipation of increased demand, which we expect to normalize in Q4. Total operating expenses were $22.4 million, down 11% sequentially and up 4% year-over-year. As a percentage of revenue, OpEx, excluding stock-based compensation and nonrecurring expenses, declined to 34% versus 40% in Q2 and 41% a year ago, driven by disciplined expense management and continued operating leverage as revenue growth outpaces a relatively fixed cost base. Adjusted EBITDA grew 111% year-over-year to $5.0 million compared to $2.3 million in Q2 and $2.4 million a year ago. Adjusted EBITDA margin expanded to 8.4% versus 5% a year ago, again, demonstrating the operating leverage inherent in the business. Turning to the balance sheet. We ended the quarter with $96 million in cash and equivalents, including available-for-sale securities and restricted cash. This was down $7 million sequentially, primarily due to our share repurchase activity. We bought back nearly $9 million of stock in the quarter, bringing our year-to-date share repurchases to $17.2 million. Finally, turning to our outlook. We are narrowing our full-year guidance ranges for 2025 as follows. We now expect revenue to be between $226 million and $230 million, which represents year-over-year growth of 20% to 23%. This compares to the prior range of $220 million to $235 million. We now expect adjusted EBITDA to be between $14 million and $16 million versus the prior range of $14 million to $20 million. As we've shared today and is evident in our improving KPIs and accelerating revenue growth, especially in our payer business, the strategic investments we've made in both marketing and to improve our technology and product platforms over the course of 2025 are paying off. While these investments impact our near-term profitability as reflected in the updated guidance, they also lay the groundwork for sustainable growth for both our top and bottom lines in the near term as well as into 2026. We've made meaningful progress across the company so far this year, both from a clinical and operational standpoint. I believe we're ending the year on a very solid foundation. With that, operator, we can open the call for questions.
Operator, Operator
Your first question comes from the line of Steven Dechert with KeyBanc.
Steven Dechert, Analyst
Just want to ask around the large language models. How will those be integrated into the Talkspace app? And how do you plan to monetize that? Will that be like a subscription? Or is this something that will be included if you're an existing patient for free?
Jon Cohen, CEO
Thank you for the question. It will be integrated into our network. We are also developing a clinical oversight component, allowing us to monitor individuals who may need off-ramping. This will be part of the new patient journey, which will vary based on the specific population using it. We have several potential areas for monetization, including large populations, consumers, and employers. Each model and patient journey will differ accordingly. In response to your question, I suggest staying tuned until we are ready to launch it, which will be in early 2026. Each approach will have a distinct impact on how we commercialize that particular offering.
Steven Dechert, Analyst
Okay. And then maybe as a follow-up, could you talk about some of the changes you've made to the matching algorithms driving the strong retention that you're seeing?
Jon Cohen, CEO
I think the most important part there is that we get people in and we actually tell them that we're going to make an appointment for them. Subsequently, we then, in some circumstances, find an appropriate match for them as opposed to matching them right off the bat. So that's one initiative. The second is our ability to schedule people for multiple sessions or into time slots of what they're looking for has significantly improved to help drive that part of the registration process.
Ian Harris, CFO
Yes, Steve, it's Ian. I wouldn't say there's really one or even a handful of things we can point to directly that impact it. It's really a multitude of small tweaks that all have a really positive compounding effect when stacked together. So it's dramatically simplifying our registration flow. It's network management, where we're dynamically looking at supply/demand and sort of having that supply management outlook, where we're looking both in the near term, 1, 2 weeks ahead, but also from a broader network planning quarters ahead. Even we're getting at specifics like days of the week, times of the day, which states and making sure that we're engaging our network to open up schedules and availability such that when people come in, we know in addition to costs, which we've talked about in the past, we know that scheduling is a huge criterion in terms of that consumer choice to go through with their decision to proceed or not.
Operator, Operator
Your next question comes from the line of Charles Rhyee with TD Cowen.
Charles Rhyee, Analyst
This is Ethan on for Charles. So it looks like payer KPIs are doing pretty well. And are you guys comfortable, do you think, with the number of credential therapists you have right now in your network? Or do you think you might have to potentially grow that number in the near or medium term?
Ian Harris, CFO
Yes, we are quite satisfied with our current position. We are meeting weekly at the executive level to focus on capacity planning, which is fundamental to our operations. Overall, we feel positive about our situation. We are continuously fine-tuning and expanding, making it challenging to discuss in broad terms since we are delving into specific details related to qualifications, pay structures, ultimate capacity, and geographic distribution—just to highlight a few of the factors we must consider. I mentioned this in my prepared remarks regarding our gross margin and the sequential change from Q2 to Q3. Part of that involved hiring within our network to prepare for the expected demand we observed in Q3. As we look ahead to Q4, we expect to see continued strong demand from payers. This bit of hiring prior to the anticipated demand did put some pressure on our gross margins in Q3. However, we are optimistic about the overall health of our network at this point.
Charles Rhyee, Analyst
Okay. That's super helpful. If you don't mind me taking a quick follow-up. So it looks like S&M ramped down in the quarter, and this is pretty consistent with what you guys have been messaging. But just how should we think about the run rate of marketing spend going forward?
Ian Harris, CFO
Yes, it was slightly down sequentially but up about $1 million year-on-year. I want to emphasize that we approach marketing spend with care; we don't allocate it lightly. We're comfortable increasing spend compared to last year due to the efficiency and strong return on investment we are experiencing. This was evident in last quarter's KPIs for payer and again this quarter, particularly in new user growth, which is a solid indicator of future sessions and, in a fee-for-service model, the payer revenue to come. Looking ahead, I believe our Q3 position is a reasonable indicator for Q4. We will update you on our 2026 guidance next quarter. For our narrow guidance for 2025, I expect another 20% plus top-line growth, which will require some marketing support, but it shouldn't differ significantly from this year.
Operator, Operator
Your next question comes from the line of Ryan MacDonald with Needham.
Ryan MacDonald, Analyst
On the continued success in the payer channel. If we kind of break down sort of the growth in active members utilization, can you just talk about sort of how much you attribute to sort of the core commercial population versus obviously, the continued growth in lives in the Medicare population thus far?
Jon Cohen, CEO
Yes. I think as you can imagine, the significant growth continues to be on the commercial side of the business. We are seeing continued growth in Medicare. We are seeing, I would say, significant uptake on the military initiatives that we're doing right now. So all of it is moving at the same almost the same pace. But there's no question that the commercial payer orbit is significantly contributing to the increase in both registration and sessions.
Ryan MacDonald, Analyst
That's helpful. As you consider the Wisdo Health acquisition and the integration process, how will this help you tap into more Medicare opportunities or increase active engagement? Additionally, what marketing efforts are you implementing during open enrollment to enhance those initiatives this year?
Jon Cohen, CEO
It's a great question. The integration of Wisdo into our Medicare strategy is expected to provide a significant boost due to their group coaching offerings. We've observed that many seniors resonate with the concept of group coaching and peer support, especially regarding the issue of loneliness. We believe this will lead to noteworthy engagement within the Medicare population. Regarding open enrollment, I'm unsure how it will impact the Medicare Advantage demographics; it's uncertain at this point. Our primary focus remains on connecting directly with patients post-enrollment. Additionally, I want to emphasize that our collaboration with Novo Nordisk is a significant positive for Wisdo's market strategy. Those using GLPs for weight management are actively seeking group coaching solutions that allow them to connect with others on the same journey.
Ian Harris, CFO
Ryan, a quick modeling on that point. So the Wisdo revenue will show up for something like the GLP-1 program with Novo and their WeGo app; that will show up in DTE revenue. And then to your earlier question, signing up our existing payers, which I would say to date, the receptivity and interest from Talkspace's existing payer partners has really pleasantly surprised us. Their interest in potentially adding on Wisdo as another benefit. That will obviously show up in payer revenue. So it won't be broken out separately per se.
Operator, Operator
The next question comes from the line of Richard Close with Canaccord Genuity.
Richard Close, Analyst
Congratulations on the results and all the updates here. Just maybe to pull a thread on Wisdo and the pharma opportunity. Can you just talk a little bit about how you see that playing out? Is this just a one-off with Novo? Or how are you thinking about really penetrating that market?
Jon Cohen, CEO
Yes. I won't discuss the specifics of the relationship with Novo. I would tell you that, as you can imagine, the number of people that are getting Wegovy and what percentage of them are really looking for this kind of application to help them get through their journey. What it does is it really helps people develop the habits to continue to stay on the drug. We will look at other similar opportunities in the pharma space in a general sense, but we need to get this one, honestly, right the first time around. So I would say more to come on that.
Richard Close, Analyst
Okay. And then on the AI front, I appreciate the comments about the challenges faced by other LLM models in relation to mental health. Do you see opportunities for Talkspace to partner with some of those companies to provide the clinical oversight associated with your offering? I would welcome any thoughts on partnership opportunities.
Jon Cohen, CEO
Yes, we definitely have a significant advantage compared to other LLMs due to our provider network and our expertise in managing mental health journeys. If someone is using another LLM and requires therapy, it's important to note that we're a network that can ensure patients needing therapy are likely covered, so they won’t incur additional costs. In contrast, those using other LLMs might face questions about payment if they need therapy outside their network. I believe there are potential licensing and partnership opportunities with other players in the market.
Operator, Operator
Your next question comes from the line of Bobby Brooks with Northland Capital Markets.
Robert Brooks, Analyst
It was great to see a second straight quarter where all the year-over-year growth KPIs on utilization for payer accelerated. And I was just curious if we could dive a little bit deeper into the factors that were driving that. I know over the last two quarters, you had mentioned new monthly record sign-ups for new users, and that was sort of the key. Is that still occurring? Just hoping to get a little more color on that.
Ian Harris, CFO
Thank you for the question, Bobby. The short answer is yes. In the last quarter, we experienced about a 10,000 increase in quarterly unique active payer members from Q1 to Q2, and we saw a similar increase from Q2 to Q3. This is a strong leading indicator for payer revenue. We have excellent visibility into the retention of new users joining the platform each month and how those cohort curves are performing. This information is very useful for our supply capacity planning. Again, we saw this trend this quarter, which positively impacts our visibility into payer revenue for Q4. This quarter, we achieved a 29% growth in users compared to a year ago, with sessions also increasing by 37%. We observed a slight year-on-year improvement in sessions per member due to product changes aimed at enhancing user engagement. Jon mentioned a relaunch of psychiatry, which has improved our coordination between therapy and psychiatry. Last year, we were not focused on this aspect as much. The growth we see in sessions per member, the increase in prices, and the rise in users all contribute to the 42% growth in payer revenue. To highlight the new user aspect, our marketing efforts are performing well, as evidenced by our efficient metrics and strong ROI, leading to a $1 million increase in sales and marketing expenses from a year ago. We've previously discussed, though less this quarter, the collaboration and resources our payer partners are investing to create a seamless integration with Talkspace. The progress we've made on directory integrations and embedding within their payer portals has taken years and represents a significant milestone. All the clinical quality, safety, and outcomes data we've shared with them, which they have appreciated over several years, adds to this effort. It’s a considerable challenge for these managed care organizations to prioritize dedicating resources for such technological integrations, and I believe it demonstrates the positive impact we're making for them. This ultimately leads to significant user growth as well.
Robert Brooks, Analyst
Got it. That's super helpful. And then just maybe double responding to the directory integration. I know in the past, you had talked—I think it was like you were integrated with one payer system. It seems like maybe that's now expanded to some others. Just any thoughts on that?
Jon Cohen, CEO
Yes. So the answer is yes. We will be in several other national players, most likely probably in Q4 and rolling into 2026. But those are really close, I'll tell you to the finish line, which will, as I said, probably happen in Q4, which will continually have a significantly positive impact on the ability of people to book sessions without having to leave the payer platform.
Ian Harris, CFO
I think what you're asking is that those new additions are only coming. Those are not reflected in the Q3 results.
Robert Brooks, Analyst
Could you discuss the factors behind the tightening of the guidance range, specifically regarding EBITDA? Are you increasing spending in anticipation of higher demand, especially since your gross margins are lower due to selective hiring? Is that the main reason for the change in EBITDA?
Ian Harris, CFO
Yes, exactly. So on the revenue tightening, we just—as you can see, tighten that around the midpoint. I guess the new midpoint is a little bit higher than prior. And then a couple of million down on the EBITDA range, which is a couple of factors. One is actually a function of the sort of DTE commentary Jon laid out where some of our Q3 launches got delayed to October. So they're live now, and we'll see it in Q4, but you lose up to a quarter of revenue and EBITDA from that. And then it's also in assessing sort of our classic growth versus profitability, given the returns we're seeing and the acceleration in our KPIs, right, payer going from low 30s at the beginning of the year annualized growth to low 40s and wanting to continue that given the opportunity set is there, we decided a couple of million bucks on EBITDA to ensure that we're growing at least 20% in 2026 is a trade-off that makes a ton of sense.
Operator, Operator
Your next question comes from the line of Stephen Valiquette with Mizuho.
Steven Valiquette, Analyst
Let me offer my congrats on the results as well. I guess my question is just kind of thinking ahead of next year, 2026 is the third year of your three-year guidance you gave at the beginning of 2024. Just wondering if there are any plans right now to provide any sort of new long-term guidance sometime next year or if that's still kind of TBD? Or are you going to just revert back to annual guidance? Just curious as you think about visibility on the business, how you're going to tackle the kind of the forward look. Just any preliminary thoughts around that might be helpful.
Ian Harris, CFO
Yes. Thanks, Steve. I think TBD for now. But yes, to your point, the three-year outlook we put out early '24 was for '24, '25, '26 we've largely delivered across that three-year plan, right? So just to remind folks, it was a 20% to 25% top line CAGR, which we grew 25% in '24 year one. The narrow guidance is for low 20s in this year '25. And so even to hit that outlook, we could have much lower growth in '26, but I want to make sure you hear, we think '26 will look a lot like '25 or potentially better, so at least 20% growth again in 2026 and then getting to that sort of low double-digit 12.5% to 15% EBITDA margin. So that's also very much the plan for '26. Obviously, we will give more detailed annual guidance next quarter or potentially at JPMorgan in January. But in terms of the longer-term outlook, I will not make any promises, but I know that's always helpful for you guys, so duly noted.
Operator, Operator
Your last question comes from the line of Ryan Daniels with William Blair.
Ryan Daniels, Analyst
This is Matthew Mardula on for Ryan Daniels. So regarding Medicare, there have been many different subsectors and just the overall larger market of Medicare. But since you've had a couple of quarters under your belt, when do you believe Medicare will start to meaningfully impact results? Do you think it could be 2026 or later on? I'm just trying to understand the ramp that could come from adding patients in Medicare.
Jon Cohen, CEO
Yes. So as I talked before, it continues to be a work in progress. We see increasing sessions, registrations each quarter. We are continuing to refine the strategy around reaching seniors. I think the unknown right now will be the impact of Wisdo, which we think will have an impact in addressing that population. So the short answer is it's still a work in progress as we work through state by state and subpopulation by subpopulation. I think you've heard me talk about before the over 75 engagement is very different than the 65- to 75-year-old, which is very different than the actual 55- to 65-year-old that may or may not be on, let's say, dialysis, et cetera. So we continue to work through it. So I would just say it's stay tuned for the Q4 and 2026 as we refine the strategy each quarter.
Ryan Daniels, Analyst
Got it. And I understand that over the past couple of quarters, you've been using AI applications on the administrative side. And in your prepared remarks, you mentioned some. Now regarding the benefits of AI, have you seen any financial impact on an administrative level? And if so, if you can kind of give us some color into that. And I'm just trying to understand if there will be a certain time where you believe you will see a meaningful lift financially in terms of either productivity or savings regarding the usage of AI applications on the administrative side.
Jon Cohen, CEO
So as we reported in the remarks, we've already seen a significant impact of AI. We've integrated it into almost every part of the patient journey from the top of the funnel through first session, second session, and third session. So the impact has actually been significant. We've talked about 30% more people looking now to book a third session within 30 days, 31% more likely to complete the third session. The talkcast has had a positive impact of 20%, 21% of people more likely to book a third session after listening to their podcast. All of those are just examples of how AI is actually integrated into the patient journey with whether it's the risk algorithms, smart notes, summary notes that I talked about in the comments, all of that already has had a very remarkable impact on the number of sessions that we're seeing and people rebooking.
Ian Harris, CFO
On the corporate side for general and administrative expenses, we are already leveraging AI significantly to enhance our operational efficiency. This quarter, we saw a 25% growth. When reviewing the adjusted EBITDA, the operating expenses that influence EBITDA, excluding stock-based compensation, remain largely unchanged compared to last year. The advantages from our corporate initiatives are clearly reflected in the reduction of operating expenses.