Law Firm Pomerantz Announces Class Action Filing

NEW YORK, Jan. 31, 2022 (GLOBE NEWSWIRE) — Pomerantz LLP announces that a class action lawsuit has been filed against Talkspace, Inc. f/k/a Hudson Executive Investment Corporation (“HEIC”) (“Talkspace” or the “ Company”) (NASDAQ: TALK; TALKW; TALKW; HEC; HECCW; HECCU) and certain of its officers. The class action, filed in the United States District Court for the Southern District of New York and registered as 22-cv-00840, is on behalf of a class consisting of all persons and entities other than defendants. who purchased or otherwise acquired securities of Talkspace between June 11, 2020 and November 15, 2021, both dates inclusive (the “Class Period”), and/or (b) all holders of Talkspace common stock at the record date of the special meeting of shareholders held on June 17, 2021 to consider the 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 federal securities laws and to pursue remedies under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 ( the “Stock Exchange Act”) and Rules 10b-5 and 14a-9 promulgated thereunder, against the Defendants, and arising from materially false or misleading statements or omissions made during the Class Period and in the proxy issued in connection with the Merger (the “Proxy”).

If you are a shareholder who purchased Talkspace securities during the class period, you have until March 8, 2022 to ask the court to name you as the lead plaintiff in the class. A copy of the complaint can be obtained at To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those making inquiries by email are encouraged to include their mailing address, phone number and number of shares purchased.

[Click here for information about joining the class action]

Talkspace started out as HEIC, a blank check company. A blank check company is sometimes called a special purpose acquisition company – or “SPAC” – and initially has no operations or businesses of its own. Rather, it raises funds from investors through an initial public offering and then uses the proceeds of the offering to acquire a business or operational assets, usually from a private company that does not publish financial or operating results. As a result, investors in blank check companies rely on the skill, transparency and honesty of the blank check company sponsor to spend the proceeds of the offering 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 individual therapy delivered via messaging, audio and video. The Talkspace platform serves two different business channels: (i) business-to-consumer (“B2C”), consisting of individual consumers who subscribe directly to the Talkspace platform; and (ii) business-to-business (“B2B”), comprised of large enterprise customers 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 reached a merger agreement with Talkspace. Following the merger, the owners of the pre-merger Talkspace business were expected to own approximately 50.8% of the combined company’s common stock, on a fully diluted net exercise basis.

Throughout the Class Period, the Defendants have made materially false and misleading statements regarding the company’s business, operations and prospects. In addition, the proxy omitted and/or misrepresented important information. Specifically, Defendants and Agent made false and/or misleading statements and/or failed to disclose that: (i) HEIC overstated its competitive advantage and due diligence capabilities with respect to identifying and completion of a merger with target companies; (ii) HEIC had conducted inadequate due diligence in the then-private Talkspace, prior to the merger, or had ignored and/or failed to disclose several red flags regarding the business and operations of the then-private Talkspace, prior to the merger; (iii) Talkspace was experiencing a significant increase in online advertising costs in its B2C business since the start 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 skyrocketing customer acquisition costs and deteriorating growth and gross margin trends; (vii) Talkspace had overstated its accounts receivable from some of its health plan customers in its B2B business, the amounts of which required downward adjustment; and (viii) due to (iii)-(vii) above, Talkspace’s financial forecast for 2021 was not achievable and lacked a reasonable basis in fact.

Based on the defective Proxy, on June 17, 2021, HEIC shareholders voted to approve the Merger at a special meeting of shareholders. Following the completion of the merger on June 22, 2021, HEIC changed its name to “Talkspace, Inc.”

On August 9, 2021, after market close, HEIC, which had been renamed Talkspace following the closing of the June 22, 2021 Merger, issued a press release announcing the Company’s financial results for the second quarter of 2021 (“ Q2 2021”). On the same day, Talkspace held a conference call to discuss the company’s second quarter 2021 results. During the appeal, the defendants revealed certain issues relating to increased customer acquisition costs due to rising digital advertising costs while minimizing their impact, and confirmed a significant increase in the costs of customer acquisition 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. of the company’s stock, Talkspace’s securities continued to trade at artificially inflated prices for the rest of the year. the Class Period due to Defendants’ continued inaccuracies or omissions regarding Talkspace’s true financial condition and prospects.

Then, on November 15, 2021, after market close, Talkspace issued a press release announcing the Company’s financial results for the third quarter of 2021 (“Q3 2021”). The press release revealed, among others, this “[i]n in the third quarter, we increased the provision for credit losses on accounts receivable by $3.4 million, including $2.8 million related to prior quarters”; that a “slowdown in B2C activity resulted in part from delays in launching new products and features, as well as lower conversion rates”; this “[g]net income was $14.2 million in the third quarter, compared to $15.1 million in the year-ago quarter”; this “[g]ross’ margin was 54% compared to 70% a year ago”; and that “[t]its decline is due to the increase in the reserve for credit losses on receivables, the shift in revenue mix towards B2B and continued investment in the W2 therapist network.

In a separate press release issued the same day, Talkspace announced that, effective immediately, Defendant Oren Frank (“Frank”) was stepping down as CEO and member of the board of directors of Talkspace. Likewise, his wife Roni Frank was stepping down as Chief Clinical Officer and member of the Board of Directors, effective immediately.

Talkspace also held a post-market conference call to discuss the company’s disappointing third-quarter 2021 results. In his prepared remarks, Defendant Douglas L. Braunstein acknowledged, “[T]he overall financial results for the third quarter fell short of expectations that management shared with investors during our last earnings call. We are obviously disappointed with this performance, and we must 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. action on December 16, 2021.

Following and due to the closing of the merger, Talkspace’s common stock price fell precipitously as the truth about Talkspace and the false and misleading nature of the power of attorney was revealed over time. As of December 30, 2021, the price of Talkspace common stock was trading below $2 per share, 80% below the price shareholders would have received had they 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 recognized as one of the leading law firms in the areas of corporate litigation, securities and antitrust. 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 the tradition he established, fighting for the rights of victims of securities fraud, breaches of fiduciary duty and corporate misconduct. The firm recovered numerous multimillion-dollar damages on behalf of class members. See

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