Teladoc Health, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 ended solidly with progress on strategic priorities. Operated in a complex healthcare market impacted by macro factors. Took actions to streamline organization, deepen market focus and advance initiatives. Focused on four strategic priorities: net growth in customers and membership, deepening impact on patient care and outcomes, expanding international integrated care business, and increasing access to virtual mental health services.
• In Integrated Care, added over 4 million members in U.S. in 2024, grew underlying visit volumes by 6%, had strong bookings in employer channel and addition of TRICARE in government space, successful implementation season with over 800 new clients launched on January 1st, and plans to leverage Catapult's capabilities. In BetterHelp, served over a million unique paying users in 2024, saw sequential growth in average paying users in Q4 2024, launched weekly pricing model pilot with positive initial results, and continued international expansion.

Segment Performance

• Integrated Care: Fourth quarter revenue increased 2% year-over-year to $391 million, above the midpoint of the guidance range driven by virtual care visits, Chronic Care and International. Added $4.2 million U.S. Integrated Care members versus the prior year period and ended the fourth quarter with 93.8 million members, up 5% year-over-year. Chronic care program enrollment was just over 1.2 million at quarter end, growing by 4% versus the prior year period. Fourth quarter Integrated Care adjusted EBITDA was $53 million representing a 13.6% margin. Full year 2024 Integrated Care segment revenue increased 4% to $1.5 billion. Revenue benefited from double digit growth in U.S. virtual care visit revenue with volume up by 6% year-over-year, a mid-teens increase in international business and growth in Chronic Care. Integrated Care adjusted EBITDA grew 21% over 2023, driven by revenue growth as well as cost and productivity initiatives. Adjusted EBITDA margin increased by about 215 basis points versus 2023.
• BetterHelp: Fourth quarter revenue was $250 million, down 9.5% versus the prior year period. Fourth quarter average monthly paying users grew by 2,000 users over the third quarter to 400,000. Fourth quarter Better Health adjusted EBITDA increased to $22 million from $15 million in the third quarter, an adjusted EBITDA margin of 8.7% compared to 5.9% in third quarter. Full year 2024 BetterHelp revenue was $1 billion, a decline of 8% versus the prior year, while adjusted EBITDA of $78 million represented a margin of 7.5%.

Guidance

• Full year 2025 consolidated revenue expected to be in the range of $2.47 billion to $2.58 billion. Consolidated adjusted EBITDA expected to be in the range of $278 million to $319 million. Full year free cash flow expected to be $190 million to $220 million. First quarter consolidated revenue expected in the range of $608 million to $629 million and adjusted EBITDA in the range of $47 million to $59 million.
• For Integrated Care, 2025 revenue expected flat to up 3% year-over-year on an as reported basis, with constant currency growth including about 200 basis points from Catapult acquisition. Adjusted EBITDA margin guided at 14.8% plus or minus 50 basis points. For BetterHelp, 2025 revenue expected down 3.75% to 9.75% on an as reported basis, adjusted EBITDA margin guided at 6.25% to 7.75%. First quarter BetterHelp segment revenue expected down 9% to 13.5% year-over-year.

Risks

• Impact of macro factors such as medical cost inflation, disease prevalence, mental health challenges, pressures on healthcare providers, and regulatory matters on the business. Pressures in the health plan channel. Uncertainties in BetterHelp's business including customer acquisition costs, churn rate, and macro backdrop for international expansion.

Q: Lisa Gill with JPMorgan asked about how contracts have changed in 2025, utilization trends, and flu season.

A: Chuck Divita and Mala Murthy responded discussing shift to visit fee arrangements, ongoing trend, and stable utilization trends with focus on driving value in visits.

Q: Jessica Tassan with Piper Sandler asked about BetterHelp efforts to expand payer coverage and difference between Integrated Care and BetterHelp offerings.

A: Chuck Divita responded talking about B2B mental health offerings in Integrated Care and BetterHelp's strong consumer brand, massive volume, and ability to match patients with providers.

Q: David Roman with Goldman Sachs asked about operational factors and sustainable direction in BetterHelp.

A: Mala Murthy responded discussing revenue growth drivers, international efforts, and focus on stabilization in BetterHelp.

Q: Sean Dodge with RBC asked about BetterHelp's average revenue per user decline.

A: Mala Murthy responded explaining it's driven by international revenue with lower headline price and international taxes.

Q: Richard Close with Cannacord Genuity asked about BetterHelp's international revenue and health plan channel headwinds.

A: Mala Murthy provided BetterHelp's international revenue in 2024 and Chuck Divita discussed health plan channel headwinds.

Q: Daniel Grosslight with Citi asked about Chronic Care growth and GLP-1 costs.

A: Chuck Divita responded talking about traction in bundled services and employers' trepidation with GLP-1s.

Q: Jailendra Singh with Truist asked about client transitioning business in second quarter.

A: Chuck Divita responded mentioning macro factors and continued business with the entity.

Q: George Hill with Deutsche Bank asked about BetterHelp's cost cuts and profitability.

A: Mala Murthy responded discussing variable margin business, advertising and marketing spend, and balancing growth with bottom line.

Q: Charles Rhyee with Truist asked about TRICARE and visit type model contracts.

A: Chuck Divita and Mala Murthy responded talking about broad based approach and pricing structure in contract transitions.

Q: Michael Cherny with Leerink Partners asked about philosophical model for generating profit.

A: Mala Murthy responded discussing combination of top line growth and cost structure discipline for both segments.