SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in Talkspace, Inc. f/k/a Hudson Executive Investment Corporation of Class Action Lawsuit and Upcoming Deadline - TALK; TALKW; HEC; HECCW; HECCU

NEW YORK, Feb. 28, 2022 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Talkspace, Inc.  ("Talkspace" or the "Company") f/k/a Hudson Executive Investment Corporation ("HEIC") (NASDAQ: TALK; TALKW; HEC; HECCW; HECCU) and certain of its officers and directors.  The class action, filed in the United States District Court for the Southern District of New York, and docketed under 22-cv-00840, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Talkspace securities between June 11, 2020 and November 15, 2021, both dates inclusive (the "Class Period"), and/or (b) 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") and entitled to vote on the Merger (the "Class"); seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 10b-5 and 14a-9 promulgated thereunder, against Defendants, and arising from the materially false or misleading statements or omissions issued during the Class Period and in the proxy statement issued in connection with the Merger (the "Proxy").

If you are a shareholder who purchased Talkspace securities during the Class Period, and/or held 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 and were entitled to vote on the Merger, you have until March 8, 2022 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com.  To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.

[Click here for information about joining the class action]

Talkspace began as HEIC, a blank check company.  A blank check company is sometimes referred to as a special purpose acquisition company—or "SPAC"—and does not initially have any operations or business of its own.  Rather, it raises money from investors in an initial public offering and then uses the proceeds from the offering to acquire a business or operational assets, usually from a private company that does not publicly report financial or operating results.  As a result, investors in blank check companies rely on the skill, transparency, and honesty of the blank check company's sponsor to spend the offering proceeds to acquire a fundamentally sound target company that offers attractive risk-adjusted returns for investors.

Talkspace is a behavioral healthcare company that markets itself as being enabled by a "purpose-built technology platform."  Talkspace provides individuals and licensed therapists, psychologists, and psychiatrists with an online platform for one-on-one therapy delivered via messaging, audio, and video.  Talkspace's platform serves two different business channels: (i) business-to-consumer ("B2C"), comprised of individual consumers who subscribe directly on Talkspace's platform; and (ii) 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 January 13, 2021, HEIC issued a press release announcing that it had entered into a merger agreement with Talkspace.  As a result of the Merger, the owners of the pre-Merger Talkspace business were expected to own approximately 50.8% of the common stock of the combined Company, on a fully diluted net exercise basis.

Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operations, and prospects.  Additionally, the Proxy omitted and/or misrepresented material information.  Specifically, Defendants and the Proxy made false and/or misleading statements and/or failed to disclose that: (i) HEIC had overstated its competitive advantage and due diligence capabilities with respect to identifying and effectuating a merger with target companies; (ii) 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; (iii) Talkspace was experiencing significantly increased online advertising costs in its B2C business since the beginning of 2021; (iv) Talkspace was experiencing lower conversion rates in its online advertising in its B2C business; (v) as a result of (iii) and (iv) above, Talkspace was experiencing increased customer acquisition costs and more tepid B2C demand than represented to investors; (vi) as a result of (iii)-(v) above, Talkspace was suffering from ballooning customer acquisition costs and worsening growth and gross margin trends; (vii) Talkspace had overvalued its accounts receivables from certain of its health plan clients in its B2B business, which amounts required adjustment downward; and (viii) as a result of (iii)-(vii) above, Talkspace's 2021 financial guidance was not achievable and lacked any reasonable basis in fact.

On the basis of the defective Proxy, 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."

On August 9, 2021, after the market closed, HEIC, which had been renamed Talkspace following the June 22, 2021 Merger close, issued a press release announcing the Company's financial results for the second quarter of 2021 ("Q2 2021").  That same day, Talkspace held a conference call to discuss the Company's Q2 2021 results.  On the call, 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.

On 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.  Despite this decline in the Company's stock price, Talkspace securities continued to trade at artificially inflated prices throughout the remainder of the Class Period as a result of Defendants' continued misstatements or omissions regarding Talkspace's true financial condition and prospects.

Then, on November 15, 2021, after the market closed, Talkspace issued a press release announcing the Company's financial results for the third quarter of 2021 ("Q3 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, Defendant 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.

Talkspace also held a conference call after the market had closed to discuss the Company's disappointing Q3 2021 results.  In his prepared remarks, Defendant Douglas L. Braunstein acknowledged: "[T]he overall financial results for the third quarter came in below expectations management shared with investors on our last earnings call. We are obviously disappointed by this performance, and we have to do better."

Following these press releases and the Q3 2021 conference call, Talkspace's stock price fell $1.23 per share, or 36.28%, to close at $2.16 per share on December 16, 2021.

Subsequent to, and due to, the closing of the Merger, the price of Talkspace common stock declined precipitously as the truth about Talkspace and the Proxy's false and misleading nature were revealed over time.  By December 30, 2021, the price of Talkspace common stock was trading below $2 per share, 80% below the price shareholders would have received if they had redeemed their shares instead of approving the Merger less than one year earlier.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.

CONTACT:
Robert S. Willoughby
Pomerantz LLP
[email protected]
888-476-6529 ext. 7980

SOURCE Pomerantz LLP