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City ends contract with Talkspace, company faces investigations for potential securities law violations

By Bob Conrad
Published: Last Updated on

The online therapy company Talkspace is no longer providing free services to Reno residents. Reno City Manager Doug Thornley said the city’s year-long contract is ending with the New York-based company. The Talkspace webpage for Reno is no longer accepting new users.

The City of Reno used $1.3 million in federal CARES Act money to pay for Reno residents to get free Talkspace access for a year.

A This Is Reno investigation found that, after much publicity a year ago, fewer than 1,400 people were using the service months after it was launched.

About 3,100 people ultimately took advantage of the city’s offer for free therapy, Thornley said last week.

Thornley added that the city is focusing on providing local mental health options for a more sustained period of time. Washoe County’s rollout next year of the 988 mental health help line will be a part of that effort.

The city’s agreement with Talkspace drew both praise and criticism. Many said they benefited from the service while local therapists criticized Mayor Hillary Schieve for not including local options as part of the massive contract. They were told by city officials they could instead sign up to be Talkspace therapists.

Company facing investigations

Law firms are lining up to represent the company’s shareholders after the company recently went public, its CEO and COO resigned and the company’s stock value plummeted.

Both company founders, Oren and Roni Frank, each received $750,000 upon leaving the company.

“Oren Frank said Talkspace would benefit from new leadership ‘suited for the different set of needs and skills required for a publicly-traded company,’” according to a report on Fierce Healthcare. “The leadership exodus, along with the company’s disappointing quarterly results announced Nov. 15, caused the company’s stock to plummet. Its value has dropped more than 36% in a week.”

Law firms are seeking to represent the company’s shareholders for potential litigation.

“We’re focused on investors’ losses and whether Talkspace may have intentionally inflated its receivables and revenue growth and understated its credit loss allowance,” said Reed Kathrein, a Hagens Berman partner leading the investigation.

Talkspace and senior management have touted the company’s “broad-based momentum” and its high year-over-year revenue growth, Kathrein noted in a press release. Their statements came under question on Nov. 15 when Talkspace announced disappointing third-quarter financial results.

CORRECTION: The original number of people who took advantage of TalkSpace provided by the city was incorrect and has been corrected.

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