Q4 2023 Talkspace Inc Earnings Call

Participants

Jeannine Feyen; Director of Communications; Talkspace Inc.

Jon Cohen; CEO; Talkspace Inc.

Jennifer Fulk; CFO; Talkspace Inc.

Charles Rhyee; Analyst; TD Cowen

Ryan Daniels; Analyst; William Blair

Stephanie Davis; Analyst; Barclays.

Presentation

Operator

My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the tax space Fourth Quarter and Full Year 2023 earnings conference call. (Operator Instructions) At this time, I'd like to turn the conference over to Janine van Director of Communications.
Please go ahead.

Jeannine Feyen

Good morning and welcome to tax bases Fourth Quarter and Full Year 2023 earnings conference call. I am Janine fine, Director of Communications. I hope you've had the opportunity to access the press release we posted on talks bases, IR website and the presentation of our earnings results will use this presentation to walk you through today's remarks.
Leading today's call are our CEO, Dr. Jon Cohen, and our CFO, Jennifer Fox management will offer their prepared remarks and we'll then take your questions.
Certain measures we'll discuss on this call are expressed on a non-GAAP basis and have been adjusted to exclude the impact of one-off items. Reconciliations of these non-GAAP measures are included in our earnings release and on our website, investors dot stock-based.com.
I also want to remind you that we will be discussing forward-looking information today, which may include forecasts, targets and other statements regarding our plans, goals, strategic priorities and anticipated financial results. While these statements represent our best current judgment about future results and performance.
As of today, our actual results are subject to many risks and uncertainties that could cause actual results to differ materially from what we expect important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release. For more information, please review our Safe Harbor disclaimer on Slide 2. Now I will turn it over to Dr. Jon Cohen.

Jon Cohen

Thank you, Dave, and thank you all for joining us today. I am excited to discuss our strong Q4 results and the successes we had in 2023. We will then provide financial guidance for 2024 and for the first time, discuss a longer-term outlook as to how we believe the business will perform over the next three years.
Overall, 2023 was a year of important achievements for us, and I'm proud of the way we executed against our strategic goals outlined early last year. Financially, it was a year of solid growth and operational refinements, which positions us well entering 2024.
We increased revenue in 2023 by 25% year over year, while significantly reducing operating expenses resulting in an adjusted EBITDA loss of $13.5 million, an improvement from a $59 million loss in 2022. The improvement in our financial performance developed sequentially throughout the year, and our adjusted EBITDA loss in Q4 narrowed to just $300,000 with our top line momentum and rationalized cost structure, we are poised to grow profitably in 2024 and beyond. Jennifer will elaborate on this later.
Let me review in more detail. Each of our strategic initiatives that we outlined at the beginning of 2023. Our first initiative was to grow payer revenue. We delivered on this objective more than doubling our payer revenue compared to the prior year as we laid out in our objectives.
This strong growth was driven by both an increase in covered lives from $92 million to $131 million, as well as through expanding our same basis capture rate, which grew by almost 50%. As a result, we nearly doubled our session by.
We also established a business development process to engage new partners and increase referrals to talk space by leveraging our in-network status. We are pleased with the early traction we are seeing these efforts.
Our first relationships include ever now a partnership to provide mental health support with menopausal care for agreeing to provide sleep data to therapists to help support therapy and bicycle health to expand access to mental health care for patients with opioid use disorder.
Our second strategic priority was to grow our direct to enterprise business. A significant part of our DTE. strategy was based around providing services to help combat the youth mental health crisis. Surgeon General has said that among 10s, mental health is the defining public health crisis of our time and that social media addiction is the greatest threat for the lives of children and 10s more so than cigarette smoking in the past. Since joining talks base a little over a year ago, we have rebuilt our DTE.
Sales team, which has already begun to demonstrate success. On November 15th, we announced our partnership with the City of New York to provide every single teenager between the age of 13 and 17, approximately 465,000 teenagers access to therapy.
In December, we announced a similar partnership with the Baltimore County school system where we are now providing access to talk space to all high school students in Baltimore County.
In addition to the students, we are also actively supporting teachers. We recently entered a partnership with the State of Vermont to provide tox based services to all educators throughout the state. In addition, we recently announced our partnership with the American Federation of Teachers to enhance mental health support to AFT.s more than $1.7 million members.
As a reminder, approximates deliver therapy by live video voice and a synchronous messaging and texting asynchronous therapy continues to be a significant differentiator in the market as many of our competitive providers of telehealth, mental services utilize video only and do not have the platform to provide messaging at a synchronous care.
As part of our improvement in the DTE. offering, we invested in and improved our self-guided products call talk space go, which can be integrated into our therapy platform depending on the client's needs. It includes daily collections, information, learning modules and live classes.
Content is curated by the clients' needs. For instance, for 10s, there was a two week course covering mental health foundations, billings relationships and identity and live classes with a therapist about forgiving, healthy relationships, client communication, and many of these members can easily move from self-guided to therapies as needed.
Our revenue performance in 2023 would not have been possible without our world-class network of therapies. And in 2023, we aggressively pursued our third strategic initiative, which is to be the platform of choice for providers by improving the therapist experience and focusing on the quality of clinical care.
We grew our network during the year by 75% at a 2300 therapist to now over 5300 therapists across all 50 states, while at the same time improving our provider satisfaction rates in our pursuit of our fourth initiative, operational excellence, we reduced our total operating expenses 32% from $143 million to $98 million.
We also improved our revenue cycle management to above industry standards and made important investments in our compliance and control processes. The resulting rationalized and refined expense base positions us to realize continuing operating leverage going forward.
In addition to these four strategic initiatives, we made a number of key investments in our leadership team during the year. This includes hiring a new Chief Medical Officer rebuilding our direct enterprise business through new senior hires at strengthening our corporate governance by adding two new independent directors to our Board, Swati, Abbott and Lee at Zoro, what he was previously.
The CEO of Blue health intelligence, healthcare data and analytics company spun out of the Blue Cross Blue Shield Association. Leanne has over 27 years of digital product experience in health care software and consumer businesses. She most recently served as the Corporate Vice President of Consumer Services at Microsoft, where she led efforts to reshape the company's consumer service businesses.
Thanks to the hard work in 2023, executing against the strategic priorities I walked through. We entered 2024 with a very robust foundation of operational excellence. We will maintain that focus, but enhance our fourth strategic pillar to include investments in innovation and technology.
At the heart of this initiative is our commitment to leveraging artificial intelligence across various applications, aiming to enhance our clinical efficiency and operational excellence. Innovation is deeply ingrained in our DNA at Fox-Pitt. We're proud of our legacy as innovators having led the way in messaging therapy.
This year. We're excited to push the boundaries further integrating AI to not only continue our tradition of innovation, but also to redefine the standards of mental health care delivery. Our AI tools will be utilized to assist our therapists, helping them to deliver better care and be more efficient but not replacing them. We will continue to explore the power of AI and how to use it to improve quality of our services.
As an example, our proprietary machine learning model alerts at therapist when a patient may be at risk for cellphones, it detects language patterns consistent with high-risk behaviors that place individuals at risk for self harm for suicide and is 83% accurate.
We published the results of this algorithm in 2019 and since then we have flagged 32,000 patients since the launch who are at risk for suicide. The model has been very validated recently for team to give you an idea of a structured and unstructured data set. Our data contains approximately 4 billion words for over 75 million messages.
De-identified data is also augmented by other data types that provide a holistic view of our users and their behavior health. It is an incredible dataset at Hach space. We believe that digital therapy provides an unprecedented opportunity for us to improve mental health data science and machine learning all securely tip of compliance.
We intend to make investments today in pursuit of our goal to leverage our unique data to identify patterns and improve the way behavioral health is delivered.
In summary, I am very pleased with our execution against our strategic initiatives. Based on our progress in 2023 and where we stand today. We are incredibly excited about the year ahead and talk Seas is poised to grow profitably in 2024 and to demonstrate continuing operating leverage while maintaining a robust have a liquid balance sheet to responsibly invest in our technology, people and growth to serve our customers even better.
2024 will be another year of continued payer revenue growth as we are uniquely positioned to capture the opportunity in this growing market, which is estimated to grow at a 5% category through 2032, $137 billion affordability and access to insurance remain challenges for behavioral health patients as 42% of the population with a diagnosed condition cannot access their treatments.
And of those who actually have access to insurance, 34% of those people have difficulty finding a therapist to accept their insurance. Two months ago, the Attorney General of New York issued a report on the ghost behavioral health networks that are occurring all around the country where investigators found that 86% of providers were goes, meaning that they were unreachable not actually in network or in network but not accepting new patients.
It is our vision to continue to be the solution to this problem by maintaining our leading position as the largest in-network telehealth mental health provider in the country. To achieve this, we expect to substantially add to the number of covered lives with additional Blues plans, other regional plans and Medicare.
In 2023, we paved the groundwork to be a Medicare provider for both standard Medicare and Medicare Advantage. We will roll that out in all 50 states throughout 2024. Medicare has $65 million lives, $33 million standard Medicare and $32 million in Medicare Advantage.
The importance of mental health support for the elderly, particularly loneliness and depression, has surfaced as a critical issue in their overall health. The number of people over 65 years old that have said they have mental health challenges has increased 2.5 times since 2020.
In addition, we will continue to pursue and launch needle-moving strategic partnerships to increase referrals such as the partnership we announced yesterday with will the foremost virtual care platform delivering consumer-centric primary care giving patients access to both primary care and behavioral health conveniently and virtually
We are also excited about our momentum to DTE. in 2024. We will continue to pursue multiple opportunities in the DTE. space with employers, governments, universities and teams. We are in conversations with multiple other school districts, and we'll continue to aggressively pursue this market.
Our goal is to be the national leader in addressing the teen mental health crisis, and we look forward to updating you on our progress throughout the year. Financially, we will achieve a significant milestone in 2024 by reaching breakeven and transitioning into profitability for the first time in the 12-year history of the Company. And we entered the year with a robust cash reserve of $124 million.
Importantly, cost base will grow profitably this year, which provides the Board and management with the flexibility to determine the best use of that capital, given the size of the yet substantially untapped and growing mental health care markets and our solutions to address those needs with our existing product offerings, we do not require M&A to grow, and we will continue to deploy capital internally to grow the business organically.
However, we will take a disciplined approach to considering inorganic opportunities if they make sense to enhance our existing product set. This quarter, the Board approved a share repurchase plan of $15 million. This additional authorization will be used to mitigate the impact of stock-based employee compensation over time.
The Board will continue to evaluate optimizing the return on excess capital for our shareholders, but this initial authorization reflects the confidence we all share in the future profitability of the Company. With that, I'll turn the call over to Jennifer.

Jennifer Fulk

Thank you, John, and good morning, everyone. We are pleased with our fourth quarter and 2023 results, which reflect our continued execution across our company priorities, translating into strengthening financial performance today, I'll primarily focus on the fourth quarter results on a sequential quarter over quarter basis and 2023 on a year-over-year basis, unless otherwise stated.
Let's begin with our top line performance. Fourth quarter revenue was $42.4 million, a 10% increase from the previous quarter and a 40% increase year over year. For 2023, our total revenue amounted to $150 million or 25% growth over 2022.
Gaap net loss was $1.3 million in Q4 and $19.2 million in 2023. Adjusted EBITDA loss was approximately $300,000 in the fourth quarter and $13.5 million in 2023. And as of December 31, 2023, our cash and cash equivalents totaled $123.9 million.
Moving to revenue results by category Care's fourth quarter revenue maintained strong growth with an increase of 15% sequentially to $25.4 million pairs sessions completed by behavioral health and a team members grew 9% sequentially to almost $250,000 unique payer members. Completing sessions grew sequentially by 5% and year over year by 67% to $79,200.
We will provide both sessions completed and active payer members within each quarter going forward, as these metrics are key indicators to progress against both capture rate and utilization in the payer category.
Also of note, in Q4, there was a onetime net revenue and gross profit benefit of $1.5 million and year end reconciliations and further progress on collections from prior periods. For the full year 2023, payer revenue more than doubled from the prior year to $80.8 million. Covered lives grew 42% year over year and sessions in 2023 nearly doubled to $850,000, driven by additional covered lives as well as an increase of almost 50% in the same basis.
Capture rate net price grew 12% in 2023, partly reflecting our investments in Revenue Cycle Management, which drove improvement of our collections rate to 94% in the fourth quarter. In the direct to enterprise category, fourth quarter revenue was $8.9 million, up 11% sequentially, primarily due to the new launches in the quarter for 2023 DTE. revenue was up 19% year over year to $33.6 million.
Turning to the consumer category, where members are paying out of pocket revenue was $8.2 million in the fourth quarter, a 4% sequential decline and $35.6 million in 2023, a 35% year over year decline stage results aligned with our expectations.
As we've previously discussed, our approach has increasingly centered on attracting payer members with more attractive conversion rates through our marketing initiatives. While we do not have dedicated resources for the consumer category, it continues to have a positive contribution to our financial results.
Moving to gross profit, our fourth quarter gross profit grew 11% sequentially to $21 million. Gross margin for the fourth quarter was 49.4%, slightly higher than the third quarter. Gross margins, primarily due to the nonrecurring payer revenue benefit that I mentioned earlier, partially offset by net revenue mix shift towards the payer category. For the full year 2023, gross profit grew approximately 23%, $74.4 million.
Moving to OpEx in the fourth quarter, our GAAP operating expenses were lower by almost $500,000 sequentially to $23.6 million for 2023. Gaap operating expenses decreased by 32% year over year $97.6 million. Excluding stock-based compensation and nonrecurring benefits, operating expenses were $21.6 million in Q4 and $89.2 million in 2023.
Which was a 27% year over year decrease cost savings achieved in 2023 were driven by notable progress across several areas. First, in marketing efficiency, we have streamlined and optimized our marketing expenditure, enhancing the efficiency of our advertising spend to lower the cost of acquiring members while simultaneously increasing the lifetime value of these members through product improvements.
We our marketing investments in channels that drive brand strength and awareness by leaning into storytelling through social media, partner, marketing and integrated campaigns with influencers, ensuring that touch base is top of mind as the highest quality affordable therapy solution available.
Second, we've built scalable capabilities and processes across the Company. So that purpose revenue cycle management and efficiencies and operational processes have enabled us to streamline our cost base.
Lastly, we have developed a culture of discipline and prioritization We are fortunate to have a considerable amount of organic growth opportunities and our teams excel at identifying and executing the most promising and profitable projects.
These optimization measures have resulted in not only improved financial performance, but also positioned us to drive greater operating leverage over time.
Turning to our 2024 financial guidance. First, as we've previously guided, we continue to expect to exit Q1 with breakeven adjusted EBITDA. For the full year, we expect revenue to be in the range of $185 million to $195 million, an increase of 23% to 30% year over year, and we expect adjusted EBITDA to be in the range of positive $4 million to $8 million, an improvement in profitability of approximately $18 million to $22 million compared to 2023.
Let me expand on these first on revenue. Based on Q4 performance, we are exiting 2023 at an annualized run rate of $165 million. We expect we can continue to grow payer session volume, including the benefit of the covered lives that were added in December also, as John highlighted.
We expect to add more covered lives throughout the year, including Medicare. We also expect meaningful revenue growth in DTE., driven by our recent launches in New York City and Baltimore, as well as converting additional wins from our growing pipeline and further monetizing our broadening product offerings.
We continue to believe that we have a significant and profitable opportunity in payer over the long term of note, these large-scale payer contracts represent significant volume opportunities. Sales typically come at lower gross margin rates as compared to our consumer offering for that reason.
We anticipate overall gross margin to be lower and gross profit to grow at 18% to 23%, moderately slower than revenue in 2024. We also expect that we can continue to manage our operating expenses at current levels on an absolute basis this year by continuing to be diligent about optimizing resourcing across the business.
Regarding capital expenditures. And as John noted, we see a number of organic opportunities to invest in technology and AI and have an initial estimate for CapEx in 2024 of three to $4 million.
These investments will be focused on our priority technological areas, including AI features that support our therapist, operational efficiencies and further development of the product ecosystem for DTE. members.
Moving to our early view, on a three year financial outlook, we believe we should be able to sustain compounded revenue growth in a range of 20% to 25% and deliver adjusted EBITDA margin in a range of 12% to 15% by 2026.
This outlook is based on continued expansion of our payer segments, achieving higher capture rate by fine-tuning our marketing strategies and broadening our referral networks, reaching more people more effectively. Second, by elevating the DTE. experience, investing in our digital capabilities within our product suite to provide not only therapy but a holistic mental health care journey.
We expect that these enhanced digital offerings support meaningful gross margin opportunities and will contribute to both revenue and profitability over this timeframe, and we continue to believe we can deliver on both of these go-to-market opportunities with only moderate growth in our operating expense base. Again, this is a preliminary view based on our current assessment of the business, and we will update this over time.
In conclusion, we are excited about the growth prospects in payer revenue and our position as a leader in covered mental health care. We are equally excited about the significant opportunities in DTE., and we believe our highly scalable infrastructure creates a foundation for profitable growth in 2024 and years to follow. With that, we will open the call for questions.

Question and Answer Session

Operator

Thank you. At this time, I would like to remind everyone in order to ask a question,(Operator Instructions)
Charles Rhyee, TD Cowen.

Charles Rhyee

Yeah, thanks for taking the questions and congrats on the quarter and really want to talk a little bit more about the outlook here. You know, Jennifer, you talked about sort of these digital channels that you're looking to use to leverage to really fuel growth. No.
One of your peers kind of talked about on customer acquisition costs, particularly in terms of the social media channels, being a gating factor for growth maybe can you talk about the difference of how you look to deploy different types of marketing channels on your end.
Particularly through in conjunction with your payer clients as well as TT. clients? And maybe what the differences are there when you deploy these kind of solutions into your customer base versus it may be a pure direct-to-consumer model?

Jennifer Fulk

Yes, I think Charles. So first on the unit member acquisition costs that we've talked about for a few quarters now where our marketing efforts are really channel that driving kind of overall member acquisition and driving the lifetime value of those members that we acquire.
As I was down there on the payer category and specifically related to the outlook, we'll continue to focus those dollars on acquiring those members. I think we've made a lot of really good progress in driving down that cost of acquisition over the last several quarters, and we continue to expect that I would say I would come back to the references we made earlier in the call on our opportunity with referral partnerships and that being what we see as a big catalyst for us.
Particularly in the three year timeframe to be able to drive that member acquisition at a really effective cost on the digital capabilities that I mentioned related to the direct to enterprise category that's more related to our product offering and how we're enhancing the suite of offerings for that category. So we see those to go to market as and of course, highly related, but really incremental opportunities for us over the long term.

Charles Rhyee

Great. And then, John, you spent a lot of time talking about 10s and children and obviously that's a big challenge in the country as well as an opportunity for talk space. You've talked about school systems as a big opportunity as well.
Can you give us an update there more I mean, is this how much in sort of in this year or in the pipeline? Are these opportunities sitting there right now? And maybe kind of give us a sense on the average size of one of those kind of fields, is it is it on par with IPTE. or is it even larger? Maybe you give a sense of scope and scale.

Jon Cohen

Great, sure. So we've we have had a very significant interest since we made those two announcements and it's a variable between school systems. What I'll say is school districts and then there's the cities and then actually the state and or the counties.
So all there are much different entities that are looking to improve the mental health of 10s so really is quite honestly, is quite variable entity to entity. The Baltimore, for instance, the we are in contract with them with the with the Baltimore County school system, whereas in New York City.
We're in contract with the Department of Health in New York City. Just to give you an idea of the different solar, which we are seeing significant interest in terms of the teams and what our pipeline looks like. So the the answer is to stay tuned in terms of the size and scope.
It always comes down to how many how many kids there are that we need to cover and it could be it is really quite variable. I mean, you've seen the size of the extended contract with 40,000 to 65,000 kids. It's it's obviously less for Baltimore for the government, and we're doing that at 20,000-30,000. So it's it goes anywhere between that and can scale either way. So it's they are quite variable as what I'm telling you.

Charles Rhyee

Great. And then maybe one last on the guidance, Jennifer, if we look at the big, get a sense of how we should think about the adjusted EBITDA that obviously were close to breakeven in the fourth quarter. Should we think of it as fairly linear in terms of profitability improvement as revenues kind of sequentially increased through the year? Or is there any seasonality that we should be aware of?

Jennifer Fulk

Yes, Charles, I would say for now and without giving a specific quarterly number, I would we expect that we'll be able to deliver quarterly sequential improvement in adjusted EBITDA through the year. So a fairly smooth estimate as contemplated in our guidance.

Charles Rhyee

Okay, great. Congrats again. Thanks.

Jennifer Fulk

Thank you, Kim.

Operator

Ryan Daniels, William Blair.

Ryan Daniels

Yes, hey, guys, this is Jack sometime for I Daniel. Thanks for taking my question and congrats on the solid year. This is kind of a follow-up on the previous questions here. But for the three year guidance, you noted EBITDA margins are expected to improve significantly.
And if we take the 2024 midpoints, you are assuming you are expecting EBITDA margins of about 3%. So first, maybe can you touch on where you see the most leverage and OpEx you get through your margins, you know that, that confidence really good at and since you've already decreased the OpEx margin by a lot that you're trying to figure out how much more you can kind of go.
And then just as a quick follow-up there, too, how should we think about the progression of margins to get there maybe not on a quarterly basis, but on a yearly basis, would it be kind of fairly linear improvements each year kind of going out the next three years? It's just any additional color here would be appreciated. And to supplement. Yes.

Jennifer Fulk

So adding things, Jack. So so so first on 2024, and we I talked earlier about some specifics there. And in 2024. Our guidance assumes that the payer category continues to be the largest driver to our revenue growth. And I mentioned that comes at a lower gross margin relative to the other categories that we mentioned as moderately slower growth in the gross margin as a result in 2024.
As we look further, and again, this is a preliminary long-term outlook that we provided, and it was in response to several inquiries we got from investors on, you know what it what is our view of the longer-term profitability of the business, given that 2023 was such a year of important progress towards profitability 2024, it is still a transitional year as we grow into profitability.
We wanted to give this three year view. And I'll just come back to the couple of elements that weigh in there, which is continued progress in the payer category. And that's really in the long term against our capture rate opportunities that we mentioned, how big of a volume opportunity we see there and then indirect to enterprise that playing a bigger part to contributing to both the top line and the bottom line over the next three years. And that's the things we referenced earlier.
As far as the digital capabilities and very importantly of the opportunities that John has mentioned we have we see in the 10s market.

Jon Cohen

Yes, I would just just reiterate that the the they have the majority of operating costs are taken out were relatively stable. On the OpEx side, it's the top line growth, but we see a lot of opportunity now, which we think is going to have the biggest impact on the longer range plan because the opportunity is so big.
So it's not like you're going to see us, I think, take a lot more out of the operating costs. It's going to be much more the ability and the opportunity before us to grow the top line. Okay.

Ryan Daniels

Understand. I appreciate that color. And a quick follow-up here to I know you've grown the clinician network to about [5300] are up about 75%. Can you maybe just talk about therapist turnover, clinician turnover? Curious what you're seeing on that front?
And are you seeing good traction from clinicians with the on the artificial artificial intelligence front or kind of something else that you see provision citing that at the center that they really like?

Jon Cohen

Yes, so we know the turnover is low. We don't it's it's really not an issue. And the reason it's growing. It was because of all the the time and effort we put in to be the employer of choice and the interest we have from people coming onto the platform because of all the things that toxics actually actually does offer a chance to grow their practice in an environment where they like the people we're talking to.
They like the community that like the education, we're providing them so that the success there has been as you can see quite extraordinary in terms of growing the market?
I would say that the A., I think we know will be very positive for the therapy as we only have anecdotal information, quite honestly, but the the very early experiences, they're really, really excited about the idea to have the summary available to them, both on sessions that they've completed and as soon to have the summary of the intake information to be able to make it much easier for them.
So so so those two documentation issues we know are very popular the the third is going to be the ability to help them provide actually better care, which is what we're doing with the harm and suicide. And we're going to lean in on developing other algorithms, which will help them deliver better care. It doesn't substitute in any way for them, but it gives them a really makes it better for them as clinicians to provide better care. So we're seeing a lot of interest in that to say the least.

Ryan Daniels

Okay. Perfect. Thanks, guys, and congrats again.

Operator

Stephanie Davis, Barclays.

Stephanie Davis

Hey, guys, congrats on the quarter and thank you for taking my question. John, you have been very busy since my garden leave on. You have talked about going into the student populations and government populations and payer populations should I think about the majority of your expansion into new markets as done and now it's you major proof point you're going to go on a kind of a hunting spree or are there further markets you're looking at and thinking? Well, why don't we do not grow first?

Jon Cohen

Stephanie, thanks for that. I would say that was his focus is a really big issue for us. It always is not getting diverted. I would say the other.
Yes, we've leaned in on teams, we've talked about the all the respect in terms of governments, cities, counties is all relative to 10s. So it's the it's the same market that we're after. It's just a matter of who the customer is going to be. I would say, though the other big one for us was our announcement for Medicare.
We are we will be we believe the primary, if not only large national telehealth medical provider that's going to be providing that service to Medicare but to the Medicare population.
As a result of that, we like to think now it's from 10s to seniors, right? So the senior it's not just a matter of getting into Medicare, which, as you heard me talk about is both the on regular Medicare or standard Medicare, but Medicare Advantage.
It's really a strategy to get Medicare patients people over the age of 65 usually to actually utilize the service. So given we know the methanol challenges in the seniors. The question is the challenge for us, which we are ready to address because we put enormous amount of effort and planning into this is to is to address the needs of the Medicare patients and get them to use the platform as we're doing with 10s, right?
So it's if you have the product and now we have to figure out how to make sure that they come onto the platform, which we actually proven we're able to do with 10s. And I'm very confident we'll be able to do in the Medicare population also amazing. Let's tease that out a little bit more.

Stephanie Davis

How is there any color you can share on the revenue model and what sort of offsetting costs are going to have attrited experiment around an engagement population.

Jon Cohen

So so I would say that the payers are very interested in us being in Medicare and Medicare Advantage. So for us, that's a really important advantage, quite honestly, because we're ready in network with all the majors. So in terms of that is that the investment for us on Medicare was to get us ready to get us ready to go into all 50 states to get that.
Make sure that this therapy has to sign up and then and then develop some marketing plan to go and tried different channels that we know the opportunity is pretty big data. The data [2025%] of senior say that there is no significant loneliness and slash depression. So we know that the market is there.
As I'll reiterate what I said earlier, the question is how do we get to them to get them to sign up week. We think it's going to be a big opportunity at 65 million people. But it's it's obviously not even early days. We just we haven't just barely gotten out of the gate.

Stephanie Davis

And instead I have another question then this is my last one on just broader sizing of your consumer opportunity. How are you looking at historical top of funnel investments and what the what steady state can look like given you do have an established brand?

Jon Cohen

So great question. You know, we've talked has been around for 12 years. It has a very strong brand and continues to have. So in the market, what we're seeing on the consumer side, as we've talked about before is, is there are there continues to be pressure on consumers, right? I mean, I think everybody would say no is going to predict where the market is going, where the economy is going. But you can see that consumer spending was very, very low.
I would say much up in the air relative to how much you're going to spend. And I was assume that, you know our our pivot two years ago to a payer strategy we know is working because when people come to find tox space and they have a choice between paying out of pocket or determining eligibility and then having the payers pay for it.
We know there's a very strong movement towards the payer side because they're going to pick their insurance given the choice. That's a big differentiator for us in the market. The other to consider on that as the consumer we know we'll spend less time on the platform than a person that has insurance.
That's a big deal because the long-term value of that individual patient relative to what it took for us to get that person onto the platform is much, much better than a consumer.
Essentially if this insurance is paying for your therapy pretty good chance you're going to stay on and continue to get therapy for as long as you need it without the overhang of.
Oh, am I going to continue to need to pay for it. So um, so we that's a big differentiator for us relative to being in the consumer market that it channel cannibalization, but welcome cannibalization.

Stephanie Davis

Thank you for taking my questions.
Yes.

Jon Cohen

Thank you, sir.

Operator

There are no further questions at this time. I'd like to turn the conference over to Jon Cohen for closing remarks.

Jon Cohen

Thank you for everybody. For being on in closing our achievements in 2023 and our outlook for 2020 for reflect our unwavering commitment to providing easily accessible, readily available and affordable, high-quality mental health care.
We are poised for continued success, and we look forward to sharing our progress with you. Thank you again for joining us today.

Operator

And this concludes today's conference call. Thank you for your participation. You may now disconnect from my mom. I mean.