Investing.com -- Shares of Talkspace (NASDAQ: TALK) fell sharply by 16% after the company provided revenue guidance for fiscal year 2025 that fell short of analysts' expectations. The online therapy provider forecasted revenue between $220 million and $235 million, whereas the market consensus was set at $232.8 million.

The company's fourth quarter earnings per share (EPS) matched consensus, but revenue for the quarter was slightly below expectations, coming in at $48.7 million compared to the estimated $49.8 million. Despite this, Talkspace reported a year-over-year revenue increase of 25% to $187.6 million for the full year 2024.

On February 20, 2025, Talkspace announced its financial results for the fourth quarter and full year of 2024. The company highlighted a 15% growth in fourth-quarter revenue to $48.7 million, driven by a significant increase in Payor revenue and a modest rise in Direct to Enterprise revenue, although Consumer revenue saw a notable decline. Gross profit for the quarter grew by 3% year-over-year, but gross margin decreased due to a shift towards Payor revenue.

Operating expenses decreased by 11% compared to the previous year, contributing to a net income of $1.2 million, a turnaround from a net loss in the same quarter of the previous year. For the full year, Talkspace reported a net income of $1.1 million, a substantial improvement from a net loss in 2023.

The company's CEO, Dr. Jon Cohen, expressed pride in the growth achieved in 2024, emphasizing the strategic shift towards the payor market and the expansion of covered lives to nearly 200 million. Cohen also mentioned the company's efforts to cater to a diverse demographic, including teens, seniors, and military members.

Needham analyst Ryan MacDonald maintained a Hold rating on Talkspace, citing a mixed finish to fiscal year 2024 with fourth-quarter revenue and adjusted EBITDA falling below consensus. MacDonald pointed out the importance of utilization rates in driving revenue growth and expressed the need for a faster expansion in these rates as the company's relationships mature and marketing strategies evolve. He stated, "While commercial utilization continues to grow nicely, we would like to see a faster rate of expansion in capture and utilization rates as relationships mature and newer channel-oriented marketing strategies take hold before getting comfortable with TALK's ability to deliver topline performance near or above the high-end of the guided range."

Investors appear to be reacting to the cautious outlook and the challenges ahead as Talkspace navigates its expansion efforts, particularly in the Medicare segment. As the company continues to adapt its strategies, market participants will be closely monitoring its progress towards achieving the guided revenue and utilization targets.

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