Talkspace, Inc. (TALK) on Q3 2021 Results - Earnings Call Transcript
Operator: Good evening and welcome to the Talkspace’s Earnings Conference Call for the Third Quarter of 2021. Leading today’s call are Doug Braunstein, Chairman of the Board and Interim Chief Executive Officer; and Jennifer Fulk, Chief Financial Officer. 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 the documents that we file with the SEC including the form 8-K filed with today’s press release and the disclaimer posted on Talkspace’s website. I’ll now turn it over to Doug Braunstein.
Doug Braunstein: Thank you, operator and welcome and thank you all for joining us today. I’m pleased to have the opportunity to speak with you both as Chairman of the Board of Talkspace, and now as Interim Chief Executive Officer. For those of you who are not familiar with my background, I spent nearly 35 years in the financial services industry, predominantly in management positions. I spent almost 20 years at JPMorgan Chase, where I helped to build and lead several large businesses and ultimately served as the bank’s Chief Financial Officer and Vice Chairman. As you know, Talkspace went public earlier this year through a merger with Hudson Executive Investment Corp., and raised $250 million in that transaction to fund the company’s operations and investments. Well Talkspace is a relatively young company, it remains committed to its nearly 10-year mission of democratizing high quality behavioral healthcare. I was excited to help bring Talkspace to market in the summer. And I’m stepping into this Interim CEO role today, because I continue to believe that Talkspace is a company with a bright and an exciting future. Working together with our board and the management team, I believe we can leverage a company’s differentiated offerings and the sizable market opportunity with a goal of delivering long-term value to our shareholders, to our members, to our clients, clinicians and employees. I’m pleased to be joined on the call today by Jennifer Fulk, our new Chief Financial Officer. She’s already do made a meaningful impact on the company establishing operational and financial discipline, and implementing processes to optimize the deployment of shareholder capital. I’m excited to work with her and the rest of the management team in my new interim role. Before Jennifer discusses our third quarter operational results in more detail, I wanted to highlight what I believe are some of the important changes, as well as some of the key strategic priorities for the company going forward. First, as you know, we announced changes to our management team today. I’d like to take the opportunity to thank Oren and Roni Frank for their vision is Talkspace’s Co-Founders. Oren and Roni created an innovative digital behavioral healthcare platform, combining access to mental healthcare resources with a data-driven approach to clinical outcomes. This approach to behavioral health care, which encompassed asynchronous therapy and digital delivery has touched numerous lives it is positively change the mental health landscape and the perceptions associated with it. We’re actually very grateful for the wonderful legacy they leave behind, and we look forward to building on their vision as we take the company to its next stage of growth. As the company continues to grow increases in complexity, the Board believes the best way to optimize value going forward is to focus on execution, product innovation, network optimization, and to promote operational and financial discipline throughout the organization. We believe this focus will best position the company to take advantage of this large and growing need for behavioral healthcare and ultimately reaccelerate growth and enhance future profitability. We believe, we can attract a strong leader for the company and we’ve retained Korn Ferry to conduct a comprehensive search for a successor. We will, of course, look for someone who can build on the founder’s vision, but also take the company from its startup roots to a new level of execution and success. Well, Jennifer will cover our financial performance in detail. I wanted to briefly comment on the quarter from a financial perspective. While our revenue grew year-over-year, and we continue to experience positive momentum across portions of our business, particularly in the B2B space. The overall financial results for the third quarter came in below expectations management shared with investors on our last earnings call. We’re obviously disappointed by this performance, and we have to do better. Fortunately, the Board and I believe several of the operational challenges that negatively impacted the business during the quarter are addressable and should positively influence performance as they’re remedied over time. I do expect our management team to work with me with an increased emphasis on execution, prioritization and a more disciplined approach to capital allocation going forward. I’d like to spend a few moments highlighting several areas that I believe will be a focus for us over the near-term that can ultimately maximize value over the long-term. First, our biggest opportunities to take advantage of the synergies between B2C and B2B unifying customer acquisition funnels, leveraging the company’s robust website traffic brand awareness, and ultimately simplifying the process to submit claims for all of our members. Actual believe much can be done to boost the monetization of our existing offerings with modest, additional investments. Second, improving how we operate our therapist’s network is critical to member engagement, satisfaction, and retention as well as actually being critical to all of our growth initiatives. For example, more effectively utilizing our W2 network across both the B2B and B2C platforms can improve matching rates, can improve conversion, reduce churn, and increase utilization and margins for the company all without additional expense. Third, we need to better rationalize our new product roadmap, prioritizing projects that have the highest probability of driving accretive growth, and delivering value by expanding both our B2B and our B2C offerings. For example, our technology team is working to simplify the session submission process and automate billing for our insurance clients. These changes can minimize the administrative burden for our clinicians while simultaneously improving the collection rates of our receivables. Finally, we need to continue to invest in our market leading brand, prioritizing and adding marketing channels and optimizing search engines that allow us to capture demand at a lower cost while originating a larger portion of our traffic organically. We must also improve conversion rates and increase retention through improved customer experiences, efforts in the planning process of the company must be prioritized and executed on these issues going forward. Fortunately, I believe we have a strong group of talented employees, dedicated to our mission to provide affordable access to behavioral health care. And they are assisted today by an extraordinary Board of Directors. Each of those members with deep operational, technology and healthcare experience, all of whom are committed to working more actively with the current management team. We have the resources, talent, and the capital necessary to invest in our existing business and new initiatives going forward. And I’m optimistic about the company’s competitive advantage and our ability to create value for our investors overtime. With that, I’ll turn the call over to Jennifer to provide you details on the third quarter. And I look forward to taking your questions at the end. Jennifer, over to you.
Jennifer Fulk: Thank you, Doug, and good evening everyone. My remarks today will cover three areas. First, I will review the financial results, which we highlighted in our earnings release. Second, I will update you on our key operating metrics and some enhanced disclosure. And finally, I will provide an update on our 2021 financial outlook. Unless I say all numbers presented are rounded for ease of reference and the comparisons I’ll be referring to are on a year-over-year basis, unless specifically noted. Our net revenue for the third quarter was $26.4 million a 23% year-over-year increase. This came in below our expectations as a result of a lower number of acquired customers during the quarter and our direct-to-consumer business and an adjustment to our reserves for credit losses related to receivables from health plan clients, which was only partially offset by growth in B2B gross revenue. Our direct-to-consumer revenue, which is generated from the sale of subscriptions to our therapy users was $18.6 million a 10% year-over-year increase in the third quarter. We believe the slowdown in our B2C business resulted from delays in launching new products, features and markets as well as a decline in our conversion rates. We intend going forward to prioritize products and services that we expect will lead to higher customer engagement, better retention, and increase lifetime value and focus on efforts to increase conversion rates. Our B2B revenue was $7.7 million in the quarter, a 69% increase year-over-year. It is worthwhile to highlight the continued strong performance of our recurring revenue coming from PEPM fees, which tripled year-over-year. Our DTE business represents a meaningful portion of our B2B franchise. And we expect it to continue to be a strong driver of recurring revenue growth. In the third quarter, we increase the allowance for credit losses on receivables by $3.4 million of which $2.8 million related to prior quarters. Claims processing has so far been a highly manual and complex process, improvements in this operational capability are a high priority and critical as we scale the business for B2B revenue. If we normalize for the one-time non-cash adjustment related to prior periods, B2B revenue would have been $10.5 million up 144% year-over-year and quarterly consolidated revenue would have been $29.2 million up 37%. Turning to membership and access. We ended the third quarter with 60,300 active members, a 21% increase over the prior year’s quarter. During the third quarter, our clinicians completed 71,300 B2B sessions and 96% increase versus the prior year’s quarter. You will notice that we have slightly revised how we report active users. And we have also added incremental disclosure for a number of sessions. We’re breaking out these two categories to add additional clarity for our investors and expect to continue this practice going forward. In addition, at the end of Q3, our B2B business covered over 75 million eligible lives and 92% increase over the prior year’s quarter. I would also note that because individuals can be covered by multiple programs, for example, health insurance and EAP this aggregate number may include a certain degree of overlap for individual members. Nonetheless, our definitions have remained consistent, and so it provides a helpful barometer of our growth in eligible members. Gross profit was $14.2 million in the third quarter, compared to $15.1 million in the prior year’s quarter. Gross margin was 54% compared to 70% a year ago. This decline was due to the reserve allowance, I referenced earlier, the revenue mix shift towards B2B and the continued investment in the W2 therapist network. Excluding the prior periods, reserve adjustment, gross profit and gross margin for the quarter would have been $17 million and 58% respectively. Well, an expansion of the W2 therapist network will put pressure on our gross margins in the near term. We believe building this national practice is strategically important and represents a unique long-term competitive advantage that will deliver over time, higher patient satisfaction, increased retention and faster close rates. Going forward, we will implement more robust processes and systems to better optimize the network utilization with the aim of leveraging therapist value more effectively. GAAP operating expenses in the third quarter were a $39.4 million versus $17.5 million in the prior year quarter. Our GAAP cost base grew by $22 million year-on-year, mainly due to higher marketing and administrative costs. Net income was $1.5 million compared to a net loss of $2.7 million in the prior year period. This reflects a non-cash reduction of the warrants liability amount driven by lower share price. Adjusted EBITDA loss was $20.8 million in the third quarter of 2021 compared to a loss of $2 million a year ago, EBITDA was lower than we anticipated as revenue came in below expectations and cost remained elevated. Turning to the balance sheet. We ended the quarter with approximately $223 million of cash and equivalents and no debt outstanding. As we’ve discussed today in the third quarter, we underperformed our plan and we’re taking immediate actions to improve execution and reaccelerate growth and profitability. Well, we expect our fourth quarter to also be below our initial expectations many of the initiatives we are taking today will benefit future quarters. As a result of current performance and near term expectations, combined with the management changes announced today, we are withdrawing our year-end guidance. As well as the initial long-term guidance provided in January of 2021. We believe that withdrawing guidance at this time is the most prudent approach, given current business conditions and we will provide updated guidance as soon as we have greater visibility. I’d like to close by echoing Doug’s confidence about Talkspace’s future. We maintain a large cash balance with no debt on their balance sheet, which allows us to invest in important operational enhancements and new initiatives and continue to drive long-term growth. We have a highly differentiated value proposition, a well-known brand and a huge market opportunity. This gives us a solid foundation to invest in a accretive growth and capture a substantial part of the vast and unmet demand for high quality behavioral health services. With that, I will ask the operator to open it up for questions.
Operator: And our first question comes from Charles Rhyee from Cowen. Go ahead, Charles.
Charles Rhyee: Yes. Thanks for taking the questions. I guess maybe just want to unpack some of the things you guys talked about here, particularly about conversion rates. Maybe you can go into that a little bit more and try to understand because, the sense that I got, earlier in prior, discussions and quarters, was that you guys did have strong, a good member experience, good conversion, you’re talking about growth in B2B, maybe help understand, what you’re talking about specifically here? What were you seeing in terms of maybe explain a little bit more what you mean by conversion rates? And what are we seeing here and what trends do you feel that you need to reverse?
Jennifer Fulk: Yes. Thanks for the question. So yes, and we’ve talked in the past about CAC, which we saw modestly up this period and the largest factor for us in Q3 was the conversion factor. When I say conversion factor that’s specifically on the – for B2C customers where the customers that come to our site or come to our app whether they convert into paying members or not. And again, this was a – the largest factor, this conversion rate when it comes to kind of our performance in B2C in the third quarter. As Doug mentioned earlier, we’ve got a number of projects to not only improve conversion, but also improve lifetime value for those members.
Charles Rhyee: And can I ask you what has changed that you feel like the conversion rates that you might’ve seen in the past or not are starting to fall off? Is that a function of direct investment to market on these online platforms where we’re seeing very high customer acquisition costs?
Jennifer Fulk: So, yes, what we’re doing today is providing you more clarity and what we see – in the results in Q3 and the metrics we provided. I think that there are a number of factors for us to address there. And Doug mentioned the operational improvements that we can address. And I’ll leave it at that.
Charles Rhyee: Okay. Thank you. Maybe one last question for me then, you have $223 million on the balance sheet. It seems like to a certain thing, when you look at the growth in the behavioral business of some of your peers here, there’s it seems to be a fairly linear correlation between spending the customer acquisition costs and gaining members. And you talk about lifetime value of members, I’m sure – you’ve given that you’ve been around for awhile, do you have data in terms of how often people come back? So, obviously you spend money to acquire a customer, they subscribed for a certain period of time. They might not renew, but may come back, what does that kind of a repeat user data look like for you? And the point I’m getting to add is, is it worth investing in yourself, in terms of spending this even if you’re in the short-term spending or high customer acquisition cost, because to me, it seems like this behavioral health market is still very fragmented. It’s still emerging. And a lot of it is trying to gain share at the moment that does it, is there a case to be made here to be spending that to acquire customers for the now, actually, and also for the future? Thank you.
Doug Braunstein: Sure. Charles, thanks for that question. It’s Doug. Good to speak. So, you make a number of points, the first is, we think we have ample resources on the balance sheet today to invest both in our market leading brand in new products and to continue to grow the business. So, we’re very fortunate to be in that position. The second is that we think there’s great short-term, and more importantly, long-term value in that market leading brand. And you heard me speak about the ways that we can more efficiently and more effectively invest both in adding marketing channels and optimizing our spend and really capturing demand over the short run at lower costs. So a lot of that is to build out our organic search opportunities. The other piece that Jennifer talked about is, if we improve conversion, that spend leads to lower CAC, and ultimately over time retention leads to higher LTV. Now, we think there’s great value in a number of actions. We can take over the short run to improve execution around all of those fronts. And we’re absolutely of the belief that over the long run our brand and our capabilities are going to allow us to take share in this market.
Charles Rhyee: Great. Thanks. I’ll jump back in the queue.
Operator: And our next question comes from Ryan Daniels from William Blair. Go ahead, Ryan.
Ryan Daniels: Yes. Thanks for taking the questions this evening. I want to continue with the customer retention and conversion rates. You talked a little bit about operational changes, meaning better matching and easier onboarding, and then also kind of new product solutions that can innovate and differentiate you from the market. So, I know the answer is probably both, but do you view one of those two is more critical to your success and in getting those metrics where you want them to be?
Doug Braunstein: Yes. It’s also a great question. Thanks for it. What I would actually step back and say is that the most critical part for us is better execution, right? So, whether it’s investing in new products, whether it’s in improving our conversion rate, whether it’s improving our retention, it’s really all about execution. And the good news is that those factors, those execution factors are completely within the management’s control. And it is my intention in the interim CEO role and the management’s attention as a group going forward to really focus in on all of those aspects of ways we can build out both our B2C business and our B2B business.
Ryan Daniels: Okay, thank you for that. And then the transition to the W2 workforce, which had an impact on gross margins, should we think about that as being largely complete at this point, or will that continue to occur in pressure margins a bit on a go-forward basis, all else equal?
Doug Braunstein: Yes. I would say, think about our network as a combination, obviously of optimizing both our 1099s, as well as building out our W2 network. And there are certain benefits to both our – at least the early data suggests that our W2 network improves retention and customer satisfaction. And so we’re going to continue to invest in that for a variety of reasons, but again, I will and I apologize for this being a repeating theme. We need to do a better job as we build out that network in optimizing that W2 workforce. The good news is, we have lots of things that attract us as a platform for clinicians. We provide a lot of value to clinicians. And over time we expect, we will be to the extent we grow that network will be a very attractive partner for clinicians who really want to have an impact on their patients and the wellbeing of their healthcare.
Ryan Daniels: Okay. I appreciate that. And then maybe this is unfair at this point in the process, but I’m curious if you can put a little bit of a timeline or maybe key milestones that we should be watching to gauge the execution improvements here. So, how long do you think it will take to kind of stabilize with the W2 base to improve the claims processing to address the operational changes and kind of the product portfolio, kind of everything you’ve laid out? How long do you envision that transition process taking as a management team? Thank you.
Doug Braunstein: Yes, I guess the way I would answer that, and obviously I’m new into this role, but have been around the company now as Chair of the Board. The board and the management team, I think collectively have an extraordinarily strong sense of urgency, that we need to address these issues both as quickly as we can, but ultimately as efficiently as we can and make sure that we’re implementing systems that do the job that we hope that they will do. So, I would say as Chairman of the board now as interim CEO and as a very large shareholder, I have an enormous sense of urgency in delivering on a number of these execution challenges, but I can’t give you any more specific other than we’re going to wake up every morning and do the very best job we can to get the job done.
Ryan Daniels: Okay. Fair enough. Thank you for that and good luck with your efforts. Thanks.
Doug Braunstein: Thanks. Thank you
Operator: And our next question comes from Vikram from Baird. Go ahead, Vikram.
Vikram Kesavabhotla: Yes, thanks for taking the question. I wanted to follow up on the direct-to-consumer side on some of your comments around lower conversion rates. I guess, I’m curious that the users that didn’t convert onto the platform, do you have a sense for if they sought mental health services at one of your competitors or perhaps went to in-person care or maybe they didn’t do anything at all? And really what I’m trying to unpack is if you think this was a case of lower demand in the industry, or if it was a case of people may be seeking alternative options, as you kind of worked with some of your operations here it would be great to get some color there. Thanks.
Doug Braunstein: Yes. We don’t have any specific data on that, but if you do step back, we feel quite strongly that the tailwinds in terms of the importance of behavioral health, and by the way, the tailwinds around the delivery of behavioral healthcare in a digital format remain quite strong for us. Another way of saying that as we think there continues to be a very significant unmet medical need as relates to behavioral healthcare. And so we’re optimistic that again, if we can deal with some of these execution challenges, the demand side of the equation for us is quite robust.
Vikram Kesavabhotla: Okay, great. Thanks. And then maybe a follow-up on the B2B side, if I go back to the second quarter, I think you reported B2B eligible lives at the time, closer to $56 million. If I look at the press release today, I think it was restated up to 72. I’m curious if you can just help us understand what changed there. And then if you kind of look at the pipeline today, I’m curious to, if you can give some color on, what the sales pipeline looks like and the demand environment on the B2B side now. That’d be great. Thank you.
Jennifer Fulk: Yes. On your first question there, Vikram on the eligible lives. So the update that we made today was updates that we received from payers. So, as we signed a new payer they continue to expand the eligible lives within their programs. So, the refresh that we did in the numbers that we’ve reported today was a reflection of that.
Doug Braunstein: I would say just generally, if you step back on B2B, the third quarter continued to be a positive momentum behind much of our B2B business. Not only do we grow eligible lives, but DTE customers also experienced significant growth. Having said that, we are mindful that there are execution opportunities in the B2B space that we can and should address that is going to lead quite frankly, to greater utilization and improve performance in the B2B space, as well as the B2C space. But in the short run we were – we can – we were pleased to see the road in our B2B business in the third quarter.
Vikram Kesavabhotla: Okay. Thank you.
Operator: And our next question comes from Stephanie Davis from SVB Leerink. Go ahead, Stephanie.
Stephanie Davis: Thank you. And thank you for taking my questions. I’ve got a few questions and I’ll go kind of from the broader stroke into more detail. So, first off, a CEO transition is a pretty big move at the stage in a company’s lifetime. So, I was wondering, Doug, if you could tell us more about what you would be looking for in a new CEO, just kind of on a list of goals or priorities, or maybe what they’re focused could be?
Doug Braunstein: Okay. So thanks for that question, Stephanie. I’m going to actually just step back for a second, because I think it’s important for you to put that question in context, which is, we did not get started as a public company in the manner that we had hoped for. And obviously we’re disappointed by that. And our Board has been working together with the management really over the past five months. And we’ve had actually numerous conversations regarding management and management succession. And collectively with Oren, we decided to make a change here. And obviously, as you can see from the press releases that came out, Oren agreed that this was the right decision at the right time. So having said that, I stepped into the inner role, because I still believe fundamentally in the strong tailwinds that I’ve talked about, this large growing unmet medical need. We’ve got a market leading brand. We’ve got a differentiated offering. And we believe that there are many execution issues that we face that are within our control to address. We are looking for a Chief Executive Officer who can step in believes in our fundamental mission, believes in the vision that the Founder said, but has those execution capabilities to really take what’s a wonderful company to today and build it and grow it for the next stage in its evolution. And I will say, we’re quite confident with Korn Ferry’s help that we’ll be able to deliver on that objective.
Stephanie Davis: Given the turnaround and the need for a new CEO. What does this mean for your prior M&A strategy? Does that fall by the wayside at your relative priority shifts?
Doug Braunstein: Look, we’ve always said that the organic growth opportunities just doing what we do well today provide substantial growth for the business. We think that there are a number of new products, and new initiatives that can further grow the business. And ultimately we like every other public company has to think about, are there strategic opportunities that enhance the long-term value for the business? And we’re not – we’re going to be open to any and all of those, but our focus for the moment really is on organic opportunities.
Stephanie Davis: Understood, understood. Then last one out of me, I just have a little bit more color on the B2B selling season back up, and maybe any lessons learned from 2021 that you can take with you as we go to 2022 beyond just the need to update some of your capabilities.
Doug Braunstein: So Stephanie, I missed the beginning part. I couldn’t hear the first part of the question. I’m sorry.
Stephanie Davis: Lessons learned from the B2B selling season in 2021.
Doug Braunstein: Oh, the B2B selling season in 2021. I don’t think we’ll – we’re going to comment specifically on the selling season, but what we will say is that Talkspace as a brand, because we have invested so heavily in it, resonates particularly strongly on the B2B side. And that has generated a lot of opportunities for us. We think, we have a robust pipeline of opportunities, but again, it’s up to the management team to turn that pipeline into a business going forward. And that’s what we’re all going to be focused on.
Stephanie Davis: All right. So thank you for your candor. I appreciate it.
Operator: And our next question comes from Daniel Grosslight from Citi. Go ahead, Daniel.
Daniel Grosslight: Hi guys. Thanks for taking the question. I like to stick with the B2B channel and house plans in particular. Can you dig into the AR write down this quarter and the sequential decline in B2B revenue that seems to have caused, was the write down all due to a claims processing issue where you just couldn’t collect it from health plans? How quickly can you fix this issue? Should we expect the continued write downs in revenue degradation in the health plan channel in the near future? And how does this impact your growth expectations in the health plan channel for 2022? I think previously you had mentioned that you thought that health plans would grow quicker than the enterprise channel. Is that still the case? Thanks.
Jennifer Fulk: Thanks, Daniel. So, healthcare claims processing is complex, and that’s not unique to Talkspace. We know as we grow this business, we clearly have a need to scale this capability appropriately. Regarding the reserve in Q3, we mentioned – I mentioned earlier that $2.8 million of a $3.4 million was related to prior periods and we feel that that is an appropriate amount to adjust those claims that we’re unlikely to collect from those prior periods. At this point we’ve implemented processes to make sure that the reserve that we have both for Q3 and for future periods is also appropriate. I wouldn’t say that any of this impacts the growth and the confidence we have in that business, that Doug was just describing earlier.
Daniel Grosslight: Okay. But do you still expect for 2022? Do you expect how plans to drive growth in that business? Are you kind of pivoting now to the enterprise channel, which you’ve called out as being particularly strong this quarter?
Jennifer Fulk: Yes. So, I think, we see the opportunity for growth across the B2B business. So, we’ve talked about the growth and eligible lives. We’ve got opportunity for further penetration and we just like we’ve seen further success in Q3 with DTE clients. We see that also continuing.
Daniel Grosslight: Got it. Okay. And then just a couple of housekeeping items. Can you disclose the number of B2B active members this quarter? And can you split out that B2B revenue between health plans and enterprise clients?
Jennifer Fulk: Yes, so our B2B active users so we said that we had 60,000 active users on the platform as we’ve previously disclosed and described. And we described it a bit further in the queue. And the B2B active users were 32,000 out of those 60,000 this quarter.
Daniel Grosslight: Okay. And can you break out into the plan revenue and enterprise revenue?
Jennifer Fulk: I can’t.
Doug Braunstein: We don’t – that’s not something that we typically provide. So, we’re happy to consider that in future quarters.
Daniel Grosslight: Okay. Thank you.
Operator: And we have a follow-up question from Charles Rhyee from Cowen. Go ahead Charles.
Charles Rhyee: Yes. Thanks for taking the question, follow-up here. Doug, you mentioned earlier that you and the Board have been working with management over the last five months of a range of things. Clearly that this quarter was below your expectations, and maybe I missed at the beginning, but can you talk about sort of what kind of – didn’t go right that kind of led to this. Clearly you had expectations on that the plan that you had in place would deliver on the third quarter, was there any kind of macro events as well, or is it really tied to some of the issues we talked about in terms of the claims processing with plans, but just curious what had you expected from an operational standpoint that didn’t quite come into place?
Doug Braunstein: Yes, so obviously we were disappointed to not meet what management had articulated is our expectations in the second quarter. But remember Charles, there were four items that I talked about at the very beginning that I think are really the focus for us and reflect the places where we believe we can do better. The first is really optimizing those synergies between B2B and B2C in the funnel. And we think that that will create value for us overtime. The second is really, how we operate and optimize our network. And that has implications both in terms of member engagement and satisfaction retention, as well as facilitating our growth. Third is, we need to do a better job in prioritizing and rolling out new products. And we have clearly not done as good a job as we can, and it’s going to be a real focus to prioritize that and execute along that for the new management team. And then the last is optimizing the investments we’re making in our market meeting brand that I believe you sort of talked about, making those investments today for the long-term, but we can do better at things like conversion. So, the good news for the company, and maybe I can conclude on this is that much, if not all of that is within our control. And if we do our jobs and executing, as I said, there is plenty of unmet need on the demand side for us to actually help our members and help people who are looking for behavioral healthcare, get the help they need. So that’s, what’s really exciting about the opportunity for us going forward.
Charles Rhyee: Great. Really appreciated. Thank you.
Operator: And we have no more questions at this time. I’d like to turn it back to the speakers for closing comments.
Doug Braunstein: So thank you operator. Thank you all for participating and for the questions. I want to close in some sense where I began, which is really to thank Oren and Roni for the job they did in innovating and creating Talkspace in the foundation that they have built and left to us. And to just remind everyone of my belief and our belief as a management team, that the most exciting opportunities for the company lie ahead, and we will be working every day to deliver on that promise for our investors. So thanks for being with us.
Operator: And thank you, ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect.
