Teladoc Health, Inc. Q1 FY2025 earnings call

• Acquired UpLift, an innovative virtual mental health provider, for $30 million in cash with up to $15 million in additional contingent considerations. UpLift generated ~$15 million in revenue in 2024 and completed ~114,000 sessions. - In Integrated Care Segment, surpassed 100 million U.S. members, grew U.S. virtual visit volumes 7% year-over-year, and chronic care enrollment increased 3%. Closed acquisition of Catapult Health to expand into preventative care, with integration underway. Introduced Next Generation Solution for Cardiometabolic Health and a relationship with LillyDirect and Gift Health for weight management. - In BetterHelp Segment, continued to advance international markets, new pricing models, and product enhancements. The acquisition of UpLift aligns with strategic priorities to advance virtual mental health and support consumers using covered benefits.

Integrated Care Segment: First quarter revenue was $389.5 million, an increase of 3.3% over the prior year period and exceeded the top end of the guidance range. U.S. integrated care segment membership at quarter end was 102.5 million members, up 12% year-over-year, and U.S. virtual visit volume increased by 7%. Adjusted EBITDA was $50.4 million, a 6% increase over the first quarter of 2024, with an adjusted EBITDA margin of 12.9%. BetterHelp Segment: First quarter revenue was $239.9 million, down 11% versus the prior year and above the midpoint of the guidance range. BetterHelp adjusted EBITDA was $7.7 million in the first quarter versus $15.5 million in the prior year period, with an adjusted EBITDA margin of 3.2% compared to 5.7% in the prior year.

• Full year 2025 consolidated revenue expected to be $2.47 billion to $2.58 billion, unchanged from prior outlook. Adjusted EBITDA expected in the range of $263 million to $304 million, and full year free cash flow of $170 million to $200 million, updated to reflect UpLift acquisition. Stock-based compensation expense expected to be $105 million to $115 million, ~$15 million below prior estimate. - Second quarter consolidated revenue expected in the range of $614 million to $633 million, and adjusted EBITDA in the range of $56 million to $70 million, including UpLift acquisition. - Integrated Care Segment: Maintaining full year 2025 revenue guidance of flat to up 3% year-over-year, expecting Catapult to contribute ~200 basis points to full year revenue growth. Full year 2025 adjusted EBITDA margin guidance 14.3% to 15.3%, unchanged. Confirmed full year member guidance range of 101 million to 103 million members. Estimated potential $5 million to $10 million headwind to adjusted EBITDA in 2025 from tariffs. Second quarter integrated care segment revenue growth expected 0.25% to 2.75% and adjusted EBITDA margin between 13.25% and 14.75%. - BetterHelp Segment: Full year 2025 revenue expected to decline 3.75% to 9.75% versus 2024, including incremental contribution from benefits coverage. Adjusted EBITDA margin expected in the range of 4.75% to 6.25% for full year. Second quarter BetterHelp segment revenue expected down 7.5% to 11.25% year-over-year, with adjusted EBITDA margin of 2.5% to 5.25%.

• Macro environment uncertainties, including medical cost trends, disease prevalence, pressure on providers, and mental health challenges. - Potential $5 million to $10 million headwind to adjusted EBITDA in 2025 from tariffs, largely in the second half, due to factors like China tariff and mitigation efforts.

Q: Jessica Tassan asked about the shorter-duration contracts in BetterHelp, impact on churn and expectations in next three quarters, and evaluation of why BetterHelp Network didn't get payer coverage.

A: Mala Murthy said the weekly offering started in September with a lower price point, seeing stronger conversion but higher churns, metrics remain stable. Chuck Divita said focus was on technical capabilities for payer contracts, paused with UpLift acquisition to accelerate, and there are extensive therapists in BetterHelp network for payer coverage.

Q: David Roman asked about revenue declines in integrated care and BetterHelp, bridging the gap.

A: Mala Murthy said on integrated care, revenue per member decline due to large member increase and not yet selling revenue-accretive services. On BetterHelp, revenue per user affected by international lower revenue per user and weekly price point acquiring more users.

Q: Daniel Grosslight asked about cadence of BetterHelp margin improvement and UpLift pricing model.

A: Mala Murthy said second half margin improvement driven by revenue from international and insurance efforts, and UpLift is visit-based. Chuck Divita said UpLift is visit-based, integrated care mental health offering is different with content and tools, and exploring synergies between integrated care and BetterHelp.

Q: Eduardo Ron asked about CAC trends in BetterHelp.

A: Mala Murthy said CAC trends stable in first quarter 2025, favorable due to good conversion rates from weekly offer, no significant difference between U.S. and international.

Q: Elizabeth Anderson asked about cost saving opportunities in tech and G&A.

A: Mala Murthy said continued to look at cost base, technology and development spend down year-over-year, G&A with restraint, stock-based compensation outlook reduced by $15 million.

Q: Charles Rhyee asked about capital deployment strategy and share buyback.

A: Mala Murthy said active discussion on capital deployment, looking to accrete top and bottom-line growth, considering buybacks but focusing on strategic investments like Catapult and UpLift acquisitions. Chuck Divita added need to invest in strategic priorities to leverage scale position.