Talkspace investors may receive additional information about the case by clicking the link "Submit Your Information" above. If you are a member of the class described below, you may no later than March 8, 2022 move the Court to serve as lead plaintiff of the class, if you so choose.
A class action lawsuit has been filed on behalf of those who purchased or acquired (1) Talkspace, Inc. (“Talkspace”) (NASDAQ: TALK; TALKW) f/k/a Hudson Executive Investment Corporation (“HEIC”) (NASDAQ: HEC; HECCW; HECCU) securities between June 11, 2020 and November 15, 2021, both dates inclusive (the “Class Period”); and/or (2) all holders of Talkspace common stock as of the record date for the special meeting of shareholders held on June 17, 2021 to consider approval of the merger between HEIC and Talkspace (the “Merger”).
Case Background:
Talkspace is a behavioral healthcare company that markets itself as being enabled by a “purpose-built technology platform.” Talkspace’s platform serves two different business channels: (1) business-to-consumer (“B2C”), comprised of individual consumers who subscribe directly on Talkspace’s platform; and (2) business-to-business (“B2B”), comprised of large enterprise clients who offer their employees and insured members access to Talkspace’s platform for free or at in-network reimbursement rates, respectively. On or about June 11, 2020, HEIC completed its initial public offering, selling 41.4 million ownership units to investors at $10 per unit for gross proceeds of $414 million. On June 17, 2021, HEIC shareholders voted to approve the Merger at a special shareholder meeting. Following the consummation of the Merger on June 22, 2021, HEIC changed its name to “Talkspace, Inc.”
The truth regarding HEIC and Talkspace began to emerge on August 9, 2021. After the market closed, Talkspace issued a press release announcing its financial results for the second quarter of 2021. That same day, Talkspace held a conference call to discuss its second quarter 2021 results. On the call, the defendants revealed some issues relating to increased customer acquisition costs due to rising digital advertising costs while downplaying their impact, and confirmed a material increase in customer acquisition costs since the beginning of the year. Following this news, Talkspace’s stock price fell $1.11 per share, or 18.72%, to close at $4.82 per share on August 10, 2021.
Then, on November 15, 2021, after the market closed, Talkspace issued a press release announcing its financial results for the third quarter of 2021. The press release disclosed, inter alia, that “[i]n the third quarter we increased the allowance for credit losses on receivables by $3.4 million, of which $2.8 million related to prior quarters”; that a “slowdown in the B2C business resulted in part from delays in launching new products and features, as well as a decline in conversion rates”; that “[g]ross profit was $14.2 million in the third quarter, compared to $15.1 million in the prior-year quarter”; that “[g]ross margin was 54% compared to 70% a year ago”; and that “[t]his decline was due to the increase in the reserve for credit losses on receivables, revenue mix shift towards B2B, and continued investment in W2 therapist network.” In a separate press release issued the same day, Talkspace announced that, effective immediately, Oren Frank was stepping down from his position as Chief Executive Officer and as a member of Talkspace’s Board of Directors. Likewise, his wife, Roni Frank, was stepping down from her position as Head of Clinical Services and a Board member, effective that day. Following this news, Talkspace’s stock price fell $1.23 per share, or 36.28%, to close at $2.16 per share on December 16, 2021.
The complaint alleges that the defendants made false and/or misleading statements and/or failed to disclose that: (1) HEIC had overstated its competitive advantage and due diligence capabilities with respect to identifying and effectuating a merger with target companies; (2) HEIC had conducted inadequate due diligence into then-private, pre-Merger Talkspace, or else ignored and/or failed to disclose multiple red flags concerning then-private, pre-Merger Talkspace’s business and operations; (3) Talkspace was experiencing significantly increased online advertising costs in its B2C business since the beginning of 2021; (4) Talkspace was experiencing lower conversion rates in its online advertising in its B2C business; (5) as a result of the above, Talkspace was experiencing increased customer acquisition costs and more tepid B2C demand than represented to investors; (6) as a result of the above, Talkspace was suffering from ballooning customer acquisition costs and worsening growth and gross margin trends; (7) Talkspace had overvalued its accounts receivables from certain of its health plan clients in its B2B business, which amounts required adjustment downward; and (8) as a result of the above, Talkspace’s 2021 financial guidance was not achievable and lacked any reasonable basis in fact.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453 or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.