Online therapy provider Talkspace continues to make big investments in artificial intelligence, seeing opportunities to improve the experience for patients and cut down on paperwork for providers.
Talkspace connects people via an app with therapists who provide counseling remotely, either over the phone, by video chat or by text.
The company is building out foundational large language models specifically for behavioral health using its internal, de-identified clinical data sets, as it claims to have the "largest behavioral health datasets in the industry," consisting of millions of therapeutic interactions on the Talkspace platform over the past 12 years.
"Unlike existing, horizontal, general-purpose LLMs, we are working closely with mental health clinicians experienced with evidence-based therapeutic frameworks," CEO Jon Cohen, M.D., told investors during the company's second-quarter earnings call Tuesday. "Talkspace behavioral health LLMs are being developed specifically to understand the language complexity and workflows of mental health delivery. Once up and running, these behavioral health LLMs will be an integral part of how we provide higher-quality care to our Talkspace members."
Talkspace plans to have an initial version of this AI platform available later this year. "We are very bullish on the prospects of this initiative, and are deploying CapEx investments to accelerate our progress," Cohen said.
The company will use the AI platform to enhance existing services but also to serve as a launchpad for future AI applications and behavioral health services, Cohen said. These may include risk assessment tools, integrated tools that embed behavioral health intelligence into primary care workflows, structured intake systems, personalized routing to appropriate care levels and enhanced client engagement tools, he said.
"Our foundational models won't just power the next generation of features on our platform, but will unlock an entirely new ecosystem of applications for mental health," Cohen told investors.
In March, the company launched Talkcast, a personalized podcast feature to keep patients more engaged in between therapy sessions. Patients who listen to a Talkcast podcast after their first session are 14% more likely to complete a second session and 29% more likely to complete a third session, Cohen said.
The company also rolled out an AI-powered smart evaluation tool for providers that automatically produces high-quality intake documentation for first sessions, saving providers time on paperwork.
"This saves providers 10 to 15 minutes of manual documentation and allows them to focus on what is most important, building a relationship with the patient in front of them," Cohen noted.
In partnership with Amazon Web Services' Generative AI Innovation Center, Talkspace is developing a foundational safety and quality AI model to analyze therapy sessions for both clinical quality and clinical risk.
"We've long maintained high clinical quality standards, and by integrating this AI with our proprietary risk algorithms, we can now scale those standards even further, adding new capabilities and efficiencies that were previously out of reach," he said.
He added, "This new safety and quality model creates a durable competitive advantage by combining two of our unique and valuable assets, our extensive database and our deep clinical expertise. The combination of expert clinical judgment and powered by vertical, specific AI applied to vast amounts of real-world data will further delineate our behavioral health platform and our network, strengthening our position and establishing a responsible framework for future innovation in behavioral health."
Talkspace also continues to improve its AI-powered suicide detection technology, further refining the risk algorithm and expanding it to other areas of concern, such as substance misuse and abuse and neglect, according to executives. "We retrained it on newer data, which is important so it can stay up-to-date on how people actually talk. As a result, the new algorithm is measured to be 92% accurate, up from 83%," Cohen noted.
Q2 revenue growth driven by payer segment
Talkspace brought in total revenue of $54.3 million for the second quarter of 2025, up nearly 18% from $46.1 million in the same period last year. This growth was primarily driven by its payer business, or insurance-covered sessions.
The company's second-quarter revenue surpassed Wall Street analysts' expectations of $53.8 million, but the company fell short on earnings per share, reporting zero against a forecast of 1 cent per share. Shares of Talkspace fell 3.6% during regular trading hours on Tuesday. The company also reported adjusted EBITDA of $2.3 million, versus the $3.2 million analyst consensus estimate.
Payer revenue grew 35% year over year to reach $40.5 million compared to $30 million a year ago. The company expects continued annual growth in the 30%-plus range for its payer business, executives said.
The company continues to focus on its payer strategy, which now makes up nearly 75% of total revenue, up from 65% in the second quarter of 2024.
Talkspace conducted more than 385,000 therapy sessions with its payer members in the second quarter, representing a 29% increase year on year, and had over 111,000 unique payer members active in the quarter, up 25% compared to a year ago, said Ian Harris, Talkspace's chief financial officer, during the earnings call.
"Nearly two-thirds of the American population now have access to Talkspace through their healthcare insurance at no or minimal cost," Cohen said.
The company has recently expanded its payer partnerships to include several additional large Blues plans such as Blue Cross of Idaho, Blue Cross Blue Shield of Texas and Blue Cross Blue Shield of Illinois, adding another 16 million covered lives, according to Cohen.
Talkspace's roster of health plans and benefits clients include Aetna, Carelon, Cigna, Optum and select Blue Cross Blue Shield plans.
The company continues to expand its business with payers and employers and now covers nearly 200 million people in-network and through Medicare and Medicare Advantage (MA) plans as well as TRICARE, which serves U.S. military members and their families.
The company is live in all 50 states for traditional Medicare continues to be added in-network across more MA plans, Cohen said.
In January, the company rolled out additional military coverage and now covers all of TRICARE's 10.5 million members, including families and dependents.
Ryan Daniels, analyst at William Blair, sees positive signs in the company's growth strategy.
"We believe management is effectively executing various strategic and operational initiatives aimed at driving sustainable organic growth, enhancing margins, and increasing cash flow. Most notably, the recent expansions into FFS Medicare, Medicare Advantage, and TRICARE (East & West) present material long-term growth opportunities for the organization, in our view," Daniels wrote in the analyst note.
Daniels said he anticipates "significant expansion in the virtual behavioral health market in the coming years as demand remains strong and patients of all ages, and payer types, continue to seek out care."
Teladoc Health also is shifting its virtual mental health business from direct-to-consumer to the employer and payer markets. It will take time for direct-to-consumer operators to convert to more commercial sales, Daniels noted.
Talkspace also works with municipalities, school districts and state governments to provide its mental health services.
The company's direct-to-enterprise (DTE) segment declined slightly to $9.4 million, compared to $9.6 million during the same period a year ago.
"While we experienced better-than-expected renewal rates in the quarter, the timing of new wins took longer to close than expected. Several large deals we had expected to sign earlier in the year, we did close on in the quarter. However, they closed towards the end of June and into July, and will launch in Q3, helping to provide visibility in DTE growth for the second half overall," Harris said.
Consumer revenue, which represents patients paying out of pocket for therapy sessions, decreased sharply, down 32% from $6.5 million a year ago to $4.4 million in the second quarter of 2025.
The company reported a net loss of $541,000 during the second quarter compared to a net loss of $474,000 during the second quarter of 2024.
Talkspace's adjusted EBITDA nearly doubled to $2.3 million, compared to $1.2 million in the second quarter of 2024, representing a 92% year-over-year increase.
It ended the quarter with $103 million in cash and cash equivalents.
In May, the virtual mental health therapy provider inked a partnership with Amazon Pharmacy to streamline psychiatric medication fulfillment and home delivery for its members. It marked the first time a virtual behavioral health solution has integrated with Amazon Pharmacy, the companies said.
Last month, it announced a partnership with women's health company Tia to enhance its mental health offerings integrated with its primary care services. Through the partnership, Talkspace will provide therapy and psychiatric services to help ensure continuity of care, the companies said.
Talkspace maintained its full-year 2025 revenue guidance between $220 million and $235 million, with an adjusted EBITDA target of $14 million to $20 million.