Teladoc Health, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Integrated Care: Building on U.S. market leadership, expanding services via the Prism care delivery platform to surface important information at the point of care. Chronic care program enrollment grew 4% sequentially, with development of enhanced clinical intervention models using AI. Acquisition of Catapult to engage members earlier in their health journey.
• Mental Health: Double-digit growth in B2B mental health visits. Launch of Wellbound employee assistance program leveraging integrated care and BetterHelp strengths. BetterHelp's insurance rollout with 7 states live, including Florida, Texas, New York, and D.C. Non-U.S. business saw high single-digit user growth.
• International: 14% Y/Y revenue growth in Integrated Care on constant currency. Acquisition of Telecare in Australia to build on existing presence in the country.
• Operational: Achieved ISO 9001 certification for key processes in U.S. Integrated Care. Driven cost efficiencies in technology, development, administrative costs, and share-based compensation.

Segment Performance

• Integrated Care: Revenue was $390 million, up 1.5% over the prior year period. The international business delivered mid-teens growth on a constant currency basis, with acquisitions of Catapult and Telecare contributing approximately 245 basis points to segment growth. U.S. Integrated Care membership ended the quarter at 102.5 million members, up 9% year-over-year. Third quarter Integrated Care adjusted EBITDA was $66 million, representing a 17% margin.
• BetterHelp: Third quarter revenue was $236.9 million, including approximately $4 million in insurance revenue. Average paying users declined 4% year-over-year, but non-U.S. users saw high single-digit growth. Adjusted EBITDA for BetterHelp was $4 million, representing a margin of 1.6%.
• International Integrated Care: Revenues grew 14% year-over-year on a constant currency basis, with the acquisition of Telecare in Australia to build on existing presence and deepen penetration in the public health sector.

Guidance

• Consolidated: 2025 consolidated revenue expected $2.510 billion to $2.539 billion, adjusted EBITDA $270 million to $287 million, free cash flow $170 million to $185 million. Stock-based compensation expense revised to $85 million to $95 million, a $10 million reduction.
• Integrated Care: Raised and narrowed full year 2025 revenue guidance to 2.4% to 3.5% growth over 2024, adjusted EBITDA margin 15% to 15.4%. Fourth quarter revenue expected to increase 1% to 5.2% Y/Y, adjusted EBITDA margin 15.3% to 16.8%.
• BetterHelp: Narrowed full year revenue outlook to 8% to 9.2% Y/Y decline, with insurance revenue $12 million to $14 million in 2025. Full year adjusted EBITDA margin expected 3.8% to 4.6%, with fourth quarter revenue down 3.8% to 8.8% Y/Y.

Risks

• Challenges in healthcare including affordability, rising costs, chronic disease prevalence, and unmet mental health need.
• Pressure on U.S. cash pay business for BetterHelp.
• Fluid tariff situation impacting Integrated Care adjusted EBITDA, with a roughly $3 million headwind expected.

Question and Answer

• Q: Lisa Gill asks about 2026 selling season and contracting changes.

A: Charles Divita talks about progress in product innovation, strategic conversations with clients, and how innovation is resonating in client discussions.

• Q: Jamie asks about BetterHelp margins.

A: Mala Murthy discusses BetterHelp International growth, insurance rollout progress, and challenges in U.S. cash pay.

• Q: Jessica Tassan asks about BetterHelp margins and customer acquisition cost.

A: Mala Murthy talks about insurance conversion potential and cost of acquisition efficiencies over time.

• Q: Daniel Grosslight asks about Catapult cross-sales.

A: Charles Divita discusses Catapult's role in stand-alone offering, member engagement, and collaboration with other Teladoc solutions.

• Q: Eduardo Ron asks about BetterHelp insurance sign-ups and '27 converts.

A: Mala Murthy talks about monitoring insurance metrics and strong balance sheet with cash and equivalents.

• Q: Ayush asks about 4Q spending cadence.

A: Mala Murthy discusses marketing spend patterns in BetterHelp and Integrated Care, with a step down in 4Q marketing spend for BetterHelp.

• Q: Stanislav Berenshteyn asks about Integrated Care pricing trends.

A: Charles Divita says pricing is generally in line with mix shift towards fee-for-service.

• Q: Scott Schoenhaus asks about BetterHelp reimbursement and therapist margins.

A: Mala Murthy talks about adding payers and margin considerations as insurance rollout ramps.

• Q: Brian Tanquilut asks about Integrated Care payer conversations.

A: Charles Divita talks about utilization-based revenue and strategic value in payer discussions.

• Q: Jack Senft asks about BetterHelp supply-demand and clinicians.

A: Charles Divita talks about matching therapist capacity to demand in BetterHelp's insurance rollout.

• Q: Jeffrey Garro asks about chronic care enrollment.

A: Charles Divita talks about sequential growth in chronic care enrollment and innovation in clinical intervention models.

• Q: David Larsen asks about BetterHelp continuity and integrated care overlap.

A: Charles Divita talks about insurance access benefits and the Wellbound product as an overlap between integrated care and BetterHelp.