NYSE:TDOC Teladoc Health Q4 2024 Earnings Report $7.07 +0.08 (+1.14%) Closing price 05/2/2025 03:59 PM EasternExtended Trading$7.04 -0.03 (-0.35%) As of 05/2/2025 07:59 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Teladoc Health EPS ResultsActual EPS-$0.28Consensus EPS -$0.21Beat/MissMissed by -$0.07One Year Ago EPSN/ATeladoc Health Revenue ResultsActual Revenue$640.49 millionExpected Revenue$639.44 millionBeat/MissBeat by +$1.05 millionYoY Revenue GrowthN/ATeladoc Health Announcement DetailsQuarterQ4 2024Date2/26/2025TimeAfter Market ClosesConference Call DateWednesday, February 26, 2025Conference Call Time4:30PM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Teladoc Health Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 26, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Good afternoon, and thank you all for attending the Eladoc Health Q4 twenty twenty four Earnings Call. My name is Brikla, and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Michael Mickmeier, Vice President, Investor Relations at Belladoc Health. Thank you. Operator00:00:29You may proceed. Michael MinchakVice President, Investor Relation at Teladoc Health00:00:31Thank you and good afternoon. Today, after the market closed, we issued a press release announcing our full year and fourth quarter twenty twenty four financial results. This press release and the accompanying slide presentation are available in the Investor Relations section of the teledochealth.com website. On this call to discuss the results are Chuck Davita, Chief Executive Officer and Mala Murthy, Chief Financial Officer. During this call, we will also discuss our outlook and our prepared remarks will be followed by a question and answer session. Michael MinchakVice President, Investor Relation at Teladoc Health00:01:01Please note that we will be discussing certain non GAAP financial measures that we believe are important in evaluating Teladoc Health's performance. Details on the relationship between these non GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Also, please note that certain statements made during this call will be forward looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward looking statements are subject to risks, uncertainties and other factors that could cause the actual results for Teladoc Health to differ materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website. Michael MinchakVice President, Investor Relation at Teladoc Health00:01:46I would now like to turn Michael MinchakVice President, Investor Relation at Teladoc Health00:01:47the call over to Chuck. Charles DivitaCEO at Teladoc Health00:01:50Thanks, Mike. We reported a solid finish to 2024 and continue to make progress on our strategic priorities. Mahler will comment more on our results and initial 2025 guidance in a moment. As we close out the year and look forward, I would also like to provide some updates on the business and areas of focus. Charles DivitaCEO at Teladoc Health00:02:10As you know, we operate in a complex and dynamic healthcare market, which continues to be impacted by macro factors such as medical cost inflation, disease prevalence, mental health challenges, pressures on healthcare providers and regulatory matters amongst others. We believe virtually enabled care can play an important and constructive role in supporting the needs of our customers in this regard and that we are uniquely positioned given our scale, experience and range of products and services. To strengthen our ability to pursue opportunities in this environment and navigate through respective challenges, we've taken several actions over the past several months to streamline the organization, deepen market focus and advance important initiatives. These changes are well aligned with our priorities, have driven significant cost savings and created additional capacity to invest. With respect to integrated care, we're building on these and other efforts to enhance our competitive position and pursue important growth factors focused on four strategic priorities. Charles DivitaCEO at Teladoc Health00:03:11First is net growth in customers and membership and the engagement and usage of our services. In 2024, we added over 4,000,000 members in The U. S. And grew underlying visit volumes by 6%, a key metric as the market continues to move towards visit oriented arrangements. And we recently implemented new technology at the point of care to support additional services for our customers. Charles DivitaCEO at Teladoc Health00:03:36We see this as an important element of our value proposition and differentiation going forward. We also grew chronic care management enrollment by 4% in 2024, and we see opportunities to further innovate in this space as well, including through our recently announced agreement to acquire Catapult Health. More on that in a moment. From a selling season perspective, we saw some nice wins to close out the year, including the strongest year of bookings since 2020 in our employer channel and the important addition of TRICARE in the government space. We've also had some key client expansions with respect to chronic care programs, including weight management, which is seeing continued interest in the market. Charles DivitaCEO at Teladoc Health00:04:16Of note, one of our largest customers added our solution for 2025 and we expect their enrollment to ramp over the year. As we mentioned in the third quarter call, we are seeing pressures in the health plan channel given some of the broader challenges. With that said, we expect to have opportunities during 2025 across our various channels, and we will remain focused on managing through these uncertainties as well, both of which are reflected in the guidance ranges that Mala will cover. I'm pleased to report that we had a very successful implementation season with over 800 new clients launched on January 1. This was a critical priority given earlier challenges, and I'm proud of how the team collaborated and delivered for our customers. Charles DivitaCEO at Teladoc Health00:04:58Another important priority is deepening our impact on patient care and outcomes. For example, in addition to the point of care technology I mentioned earlier, we're also excited about a new capability we'll be bringing to market soon that provides the ability for external ecosystem partners to efficiently integrate with us to support longitudinal care needs and other strategies of our customers. We're also focused on driving greater impact through our suite of products and we're looking forward to jointly leveraging the capabilities of Catapult, including an initial focus on patients with chronic conditions. And with Catapult's approach to preventative care, including convenient testing, screening and nurse led engagement model, as well as an impressive Net Promoter Score of 80, we see opportunities to further complement our solution set. From a revenue growth perspective, we intend to leverage our scale distribution to offer Catapult services into our customer base. Charles DivitaCEO at Teladoc Health00:05:53And for Catapult's patients that are also eligible for our other services, we'll be creating a seamless enrollment pathway for our chronic care management and additional entry points for services such as mental health and primary care based on patient needs and preferences. As context, roughly half of the people engaged by Catapult have one or more chronic conditions. Many indicate challenges with depression and anxiety. And nearly one third share that they don't have an established primary care relationship. Our products and services align very well with these needs. Charles DivitaCEO at Teladoc Health00:06:27Through these and other initiatives, we're looking to extend our clinical care capabilities and ultimately to further participate in the value we can create for customers. Another important priority is expanding our international integrated care business. I recently had the opportunity to meet with our international team and hear from some key clients as well. I was highly impressed with our team and how they are building strong and sustainable positions in their respective markets. And their efforts drove another strong year in 2024, delivering mid teens revenue growth and continuing to expand markets and services. Charles DivitaCEO at Teladoc Health00:07:00For example, in France, we're partnering with the public health system to provide virtual psychiatry services in places with a scarcity of providers. And in Canada, we are combining virtual services with the proprietary devices and software of our hospital and health system solutions to serve needs across several provinces. These are great examples of organizational collaboration and differentiation in the market. Finally, a priority of increasing access to virtual mental health services through our scaled position. In addition to BetterHelp, we also have a scaled B2B mental health offering in integrated care, where we offer digital tools, coaching, therapy and psychiatry services. Charles DivitaCEO at Teladoc Health00:07:40We completed nearly 1,000,000,000 visits in 2024, a 10% increase from 2023. Over 60% of our membership base in The U. S. Has access to our mental health offering. And at an enterprise level, B2B mental health generated approximately $150,000,000 in revenues in 2024. Charles DivitaCEO at Teladoc Health00:07:58We will continue to assess synergies across our mental health offerings going forward. Moving now to the BetterHelp segment specifically. The business continues to be the largest of its kind, serving unmet need in a way that resonates with consumers as evidenced by its high consumer net promoter score above 70. And in January of twenty twenty five, we surpassed a historical milestone by having served over 5,000,000 people across dozens of countries. With that said, the business continues to operate in a challenging environment, which impacted financial performance in 2024 and our expectations for 2025. Charles DivitaCEO at Teladoc Health00:08:36We remain highly focused on stabilizing results and returning to a long term growth posture. And we aim to do this through four key priorities. The first is growing the user base and levels of engagement. During 2024, BetterHelp served over 1,000,000 unique pain users supported by a broad and diverse therapist network. We were encouraged to see sequential growth in average pain users in the fourth quarter versus the third quarter, but we have not yet reached the level of stability we are striving for. Charles DivitaCEO at Teladoc Health00:09:05We also have a priority on advancing our value proposition through new features and enhancements. This includes ways to improve affordability and accessibility, such as a pilot we launched in the third quarter of twenty twenty four to test a weekly pricing model. Initial results were positive and the model was subsequently extended and now widely available. We'll continue to monitor performance on key measures such as conversion rates, retention and net user growth. We're also pursuing new features and other offerings, including furthering international expansion through new localized country models with respect to language, content and therapists. Charles DivitaCEO at Teladoc Health00:09:41This includes a recent launch in France and additional markets in Europe over the course of 2025. And international was again a bright spot for BetterHelp in 2024, accounting for approximately 20% of segment revenues. Finally, BetterHelp's initiative to provide consumers with an ability to access their mental health benefits coverage continues to progress. Operational capabilities are now in place and initial network discussions with select health plans have begun. As shared previously, we don't expect any material contribution during 2025 in this area and will also continue to explore additional ways to accelerate our progress consistent with our broader mental health strategy. Charles DivitaCEO at Teladoc Health00:10:20In closing, I'm gratified by the way we finish 2024 and how the organization is aligning around our strategic priorities, which are focused on delivering long term sustainable growth. While there's more work ahead, we are operating with appropriate urgency and a strong commitment to driving performance across our business. With that, I'll turn it over to Mala. Mala MurthyChief Financial Officer at Teladoc Health00:10:41Thank you, Chuck, and good afternoon, everyone. Fourth quarter results were generally in line with our previously discussed expectations. Consolidated revenue was $640,000,000 and adjusted EBITDA of $75,000,000 represented an 11.7% margin. Net loss per share was $0.28 Full year 2024 consolidated revenue of $2,600,000,000 decreased 1% versus 2023, while adjusted EBITDA of $311,000,000 represented a 12.1% margin. Net loss per share of $5.87 included a non cash goodwill impairment charge of $4.63 per share pre tax, amortization of acquired intangibles of $1.35 per share pre tax and stock based compensation expense of $0.86 per share pre tax. Mala MurthyChief Financial Officer at Teladoc Health00:11:49Full year free cash flow was $170,000,000 and we closed 2024 with nearly $1,300,000,000 in cash and cash equivalents on the balance sheet. Turning to segment results. Fourth quarter integrated care revenue increased 2% year over year to $391,000,000 above the midpoint of our guidance range, driven by virtual care visits, chronic care and international. We added 4,200,000 U. S. Mala MurthyChief Financial Officer at Teladoc Health00:12:26Integrated care members versus the prior year period and ended the fourth quarter with 93,800,000 members, up 5% year over year. Chronic care program enrollment was just over 1,200,000 at quarter end, growing by 4% versus the prior year period. Fourth quarter integrated care adjusted EBITDA was $53,000,000 representing a 13.6% margin. This was near the upper end of our guidance range and down 95 basis points versus the prior year period. Recall that based on upside in the third quarter, we discussed incremental investments in the fourth quarter to advance our key priorities, which drove a headwind to adjusted EBITDA margin. Mala MurthyChief Financial Officer at Teladoc Health00:13:21For the full year, Integrated Care segment revenue increased 4% to 1,500,000,000 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 our 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 two fifteen basis points versus 2023, landing in the upper half of the initial guidance range we had provided last February. Mala MurthyChief Financial Officer at Teladoc Health00:14:18Shifting to BetterHelp, fourth quarter revenue was $250,000,000 down 9.5% versus the prior year period reflecting a modestly lower rate of decline versus the third quarter. Fourth quarter average monthly paying users grew by 2,000 users over the third quarter to 400,000, marking the first sequential increase since the second quarter of twenty twenty three and driven by continued international growth and a net benefit from the weekly pricing model. Fourth quarter Better Health adjusted EBITDA increased to $22,000,000 from $15,000,000 in the third quarter and adjusted EBITDA margin of 8.7% compared to 5.9% in the third quarter. This was consistent with commentary on our third quarter call regarding a much smaller sequential step up in fourth quarter adjusted EBITDA. For the full year, BetterHelp revenue was $1,000,000,000 a decline of 8% versus the prior year, while adjusted EBITDA of $78,000,000 represented a margin of 7.5%. Mala MurthyChief Financial Officer at Teladoc Health00:15:41Now turning to guidance. We expect full year 2025 consolidated revenue Consolidated adjusted EBITDA is expected to be in the range of $278,000,000 to $319,000,000 We expect full year free cash flow of $190,000,000 to $220,000,000 which represents year over year growth of 12% to 30% driven mainly by net working capital benefits. We project stock based compensation expense of $120,000,000 to $130,000,000 in 2025, down by about $20,000,000 at the midpoint versus 2020 four and thirty eight percent lower versus 2023 levels. For the first quarter, we expect consolidated revenue in the range of $6.00 $8,000,000 to $629,000,000 and adjusted EBITDA in the range of $47,000,000 to $59,000,000 Looking at the segments. For Integrated Care, we expect 2025 revenue to be flat to up 3% year over year on an as reported basis. Mala MurthyChief Financial Officer at Teladoc Health00:17:15This assumes 0.5% to 3.5% constant currency growth and a roughly 50 basis point headwind from foreign exchange. Constant currency growth includes about 200 basis points of contribution from the Catapult acquisition, which is expected to close at the February. We are guiding to an adjusted EBITDA margin of 14.8% plus or minus 50 basis points, inclusive of a roughly 40 basis point headwind from the Catapult acquisition, which we expect to be dilutive to adjusted EBITDA margin in 2025. Excluding Catapult, our adjusted EBITDA margin guidance for 2025 would be roughly flat year over year at the midpoint. And this is consistent with our preliminary 2025 outlook where we said we endeavor to maintain adjusted EBITDA margin in line with 2024 levels. Mala MurthyChief Financial Officer at Teladoc Health00:18:21FX is neutral to Integrated Care adjusted EBITDA margin. There are several factors that are impacting the first quarter and quarterly cadence. First, we expect a slightly greater sequential revenue decline in the first quarter versus prior years. While typical seasonality is driven in part by enrollment dynamics within our chronic care business, two additional factors are contributing to a lower 2025 starting point. The first is the selling season, which we had previously discussed. Mala MurthyChief Financial Officer at Teladoc Health00:19:01And the second is an FX headwind due to currency movements since our October earnings call. Next, while we continue to expect increased membership to drive visit growth over time, based on recent trends, we now expect a more extended visit ramp at TRICARE as it takes time for the contractors to implement the new program, impacting what is typically a strong quarter for visit volumes. In addition, we have some key expansions in our chronic care business in 2025 with enrollment expected to grow over the course of the year. However, tempering this benefit is an incremental impact from attrition as we were informed by a client earlier this month of plans to transition a portion of their business during the second quarter. Finally, we we expect a full quarter of contribution from Catapult Health beginning in the second quarter, while the fourth quarter is typically their seasonally strongest of the year. Mala MurthyChief Financial Officer at Teladoc Health00:20:14Taken together, these factors are expected to lead to a first half, second half revenue split in 2025 that would be slightly more back half weighted relative to 2024. From an adjusted EBITDA standpoint, the expected ramp in chronic care enrollment and TRICARE visits will have a more significant positive impact on adjusted EBITDA in the second half, while we also will be comping against some discrete benefits in the second and third quarter of twenty twenty four. We are guiding to first quarter integrated care revenue down 0.5% to up 2% versus the prior year period on an as reported basis. A year over year tailwind from Catapult and an FX headwind largely offset. Adjusted EBITDA margin is expected to be in the range of 11.25% to 12.75% with Catapult about 20 basis points dilutive to the adjusted EBITDA margin and an immaterial FX impact. Mala MurthyChief Financial Officer at Teladoc Health00:21:28Moving to the BetterHelp segment. We are guiding to 2025 revenue down 3.75% to down 9.75% versus 2024 on an as reported basis. This assumes a decline of 3% to 9% on a constant currency basis and a roughly 75 basis point foreign exchange headwind. Based on what's currently known, we are comfortable near the midpoint, while the wider range reflects uncertainties given the early stage of the year, including traction from growth initiatives, as well as the macro backdrop, demand levels, customer acquisition costs and churn rate. We are guiding to an adjusted EBITDA margin of 6.25% to 7.75%. Mala MurthyChief Financial Officer at Teladoc Health00:22:20Excluding an FX headwind of roughly 50 basis points, adjusted EBITDA margin would be generally flat at the midpoint versus 2024. For the first quarter, we are guiding the Better Health segment's revenue down 9% to 13.5% year over year on an as reported basis. This assumes that 8.25% to 12.75% decline on a constant currency basis and a 75 basis point FX headwind. We expect an adjusted EBITDA margin of 2% to 4.25% with a roughly 60 basis point headwind from foreign exchange in the first quarter. Higher conversion rates related to the weekly offer has led to a year over year improvement in customer acquisition costs and we expect it to remain at current levels for the balance of the year. Mala MurthyChief Financial Officer at Teladoc Health00:23:19While churn is higher, we expect the weekly offer to remain a net positive. We are also assuming an increase in users and revenue as we roll out our localized offering to additional markets in Europe. Although we are being methodical as we learn and refine our approach in each market. As a result of these factors, we are targeting modest sequential revenue improvement beginning with the second quarter and continuing through the balance of the year. And as year over year comps ease as we progress through 2025, we are targeting BetterHelp fourth quarter revenue to be relatively flat on a year over year basis. Mala MurthyChief Financial Officer at Teladoc Health00:24:04I'll now provide an update on our cost savings and productivity initiatives. We continue to execute against our previously discussed program and are exceeding those targets modestly. This is helping fund investments in the business to position the company for long term success. We remain focused on managing to an appropriate level of performance and are committed to taking additional actions accordingly. As we continue to evaluate opportunities for further efficiencies, our focus will be on optimizing technology and development and G and A costs, as well as lowering stock based compensation expense. Mala MurthyChief Financial Officer at Teladoc Health00:24:46Finally, we closed the year with $1,300,000,000 in cash on our balance sheet and our business is generating solid free cash flow, which we believe provides us a high degree of financial flexibility. As it relates to our capital allocation priorities, first and foremost, we intend to maintain a strong balance sheet. This is a key area of client interest ensuring continuity and demonstrating an ability to invest in innovation. We continue to expect to retire our convertible bond due in June 2025 with cash. We are evaluating our long term financing and believe we have options as we look ahead to the June 2027 maturity. Mala MurthyChief Financial Officer at Teladoc Health00:25:35Second, we will focus on investing in the business to support our strategy, both on an organic and inorganic basis. As we further expand our capabilities, we can leverage our large customer base and scale distribution platform further executing on our land and expand strategy. And third, share buybacks remain a potential use of excess cash. With that, I will turn the call back to Chuck. Charles DivitaCEO at Teladoc Health00:26:03Thanks, Mala. To wrap up, we are continuing to make progress against the key strategic priorities that we have laid out, although there is more work ahead. Despite some likely near term headwinds from macro and other factors, we are focused on execution and delivering on our commitments to all stakeholders. I am confident that the actions we're taking this year will provide a strong foundation for us to deliver improved performance over the longer term. We look forward to sharing more in the coming months. Charles DivitaCEO at Teladoc Health00:26:31With that, we will open it up for questions. Operator? Operator00:26:37Thank you, Chuck. We will now begin the question and answer session. Your first question comes from Lisa Gill with JPMorgan. Please go ahead. Lisa GillManaging Director at JP Morgan00:27:11Thanks very much. And Chuck, I want to go back to a comment that you made when you were talking about net customer growth and talked about some of your contracting being more focused on visits. Can you talk about how contracts have changed if at all in 2025? And it looks like at the midpoint, you're adding about 8% growth in integrated members based on the guidance that you're giving. What are you seeing as far as utilization trends? Lisa GillManaging Director at JP Morgan00:27:40And the flu season started much later than we've seen in the last couple of years. But historically, the flu has been good for Teladoc. So just curious like what you've seen more recently, on the overall utilization trend. Charles DivitaCEO at Teladoc Health00:27:54Yes. Thanks. And I'll make some comments and then certainly, Mala, if you want to jump in. So a few things that I would say. Many years ago in this space, I think there was a lot of PMPM models because it was sort of new to the buyer and new to organizations such as ourselves. Charles DivitaCEO at Teladoc Health00:28:10And so that provides a level of predictability. There's still a predominance of that out there. But as you know, the rest of the health care system primarily works on a visit basis, on a utilization basis. So, you've seen over time, now that this that virtual visit space has matured, more and more interest in moving more to what the rest of the delivery system looks like. So that's not a new trend. Charles DivitaCEO at Teladoc Health00:28:33That's been going on for a while. And that continues. So that's why we highlight the importance of the visit volumes because ultimately that's a driver of revenue, but it's also a signal of the level of engagement that we have. And as we add those members that you mentioned, we should and we expect as we have, see increases in visit volumes, which we have seen pretty steadily. And I think that's important. Charles DivitaCEO at Teladoc Health00:28:55It's also important because those visits are more than just a visit for that particular event. They're engagement points. And I think part of our strategy is how do we activate those engagement points more holistically. One last thing I would say before asking Mal to comment. I was very proud of the way that our team responded to the surges this year. Charles DivitaCEO at Teladoc Health00:29:16You think about the volumes that we experienced, which are massively larger than others, you think about the holiday seasons and making sure that we could match providers with patients throughout all of that, nail our SLAs and do it at scale, I think is pretty remarkable. But maybe, Mal, if you want to comment more on the flu season and other matters. Mala MurthyChief Financial Officer at Teladoc Health00:29:37Yes. So I would say, Lisa, just addressing your broader question on trends. As we spoke about at JPMorgan with you, there certainly is a shift we have been seeing over time. To be crystal clear, it isn't as if this is a shift on mass across all of our clients. We have plenty of clients who are still in the traditional structure of access fee, flexibility. Mala MurthyChief Financial Officer at Teladoc Health00:30:06But certainly, we are seeing some amount of interest and migration towards the fee arrangement. And I'd characterize this as the shift has been happening for a time. We continue to expect it to continue gradually over time. I'd say we are in the middle of the middle innings in this. As it relates to the flu season and sort of utilization trends, to the point that Chuck made, this is why the strategic pillars we talked about at JPMorgan really are important, right? Mala MurthyChief Financial Officer at Teladoc Health00:30:38Making every visit count more, driving more value with every visit. Chuck, in his prepared remarks, talked about investments we have made and capabilities we have added to do exactly that, right, to drive the value in the visit. Our utilization trends have remained generally stable, but that is absolutely a point of focus for us from an investment standpoint, both that as well as driving increased enrollment, which is the other way we accrete revenue. In terms of flu, I would say the following. I'd comment more not just on flu, but overall visit volumes and revenue. Mala MurthyChief Financial Officer at Teladoc Health00:31:23We talked about 6% growth last year in our visit volume. That actually translated from a visit revenue perspective to high single digit revenue growth. And we felt the benefit of the visit mix as a part of that that drove that kind of visit revenue growth. I would expect that momentum to continue this year, both in the first quarter, but also as we go through the rest of the year. Lisa GillManaging Director at JP Morgan00:31:55Thank you. Operator00:31:59Your next question comes from Jessica Tucham with Piper Sandler. Jessica TassanSenior Equity Research Analyst at Piper Sandler Companies00:32:05Hi guys. Thanks again for the detail. I just have a question on the, the BetterHelp efforts to expand, to expand payer coverage. I guess, can you just give us, a little bit of qualitative detail around, what today, what behavioral health offerings exist within the integrated care segment? And then just what incremental capabilities or network access would a, an employer or a payer be gaining by bringing BetterHelp in network? Jessica TassanSenior Equity Research Analyst at Piper Sandler Companies00:32:38If you could just kind of qualitatively describe the nature and difference between those two offerings? Thanks. Charles DivitaCEO at Teladoc Health00:32:45Yes. Happy to. And on the B2B side, on integrated care side, as I mentioned, we have a scaled mental health position there and it's been growing nicely. We have about 60% of our installed base has access to our services, which is we have digital tools, we have coaching, we have psychiatry and a range of services and as I mentioned around $150,000,000 in aggregate on B2B revenue. So that's scaling well. Charles DivitaCEO at Teladoc Health00:33:12I think when you step back from this issue, mental health has actually been one of the most widely adopted in the virtual care setting post the pandemic and continues to have a lot of secular trends around that and we see that continuing. I think when you get into network contracting, there's two pieces. One is getting a network and meeting those requirements and so forth. And the other is actually utilization. It's one thing to be a network, but you need to actually have a brand and resonate and people use your services. Charles DivitaCEO at Teladoc Health00:33:43And that's what BetterHelp really brings. Not only do they have a strong consumer brand and well known brand, but massive amounts of volume. And so you've seen post pandemic, a lot of players were able to get into network arrangements and so forth, but some are struggling to get the volumes because you have to activate the membership. And so I think both are important, getting a network but also having the brand and the ability to market your services and meet the need. And I think that's where people are seeing an interest in BetterHelp. Charles DivitaCEO at Teladoc Health00:34:15I mean, the ability for it to match patients with providers, you know, 95% within forty eight hours, a diverse therapist network. So there's a lot to bring to the table, notwithstanding the challenges that it takes to get into that space. Jessica TassanSenior Equity Research Analyst at Piper Sandler Companies00:34:33Thank you. Operator00:34:36Thank you. Your next question comes from David Roman with Goldman Sachs on the line. David RomanManaging Director at Goldman Sachs00:34:45Thank you and good afternoon everybody. Maybe you could help us break down a little bit beyond the guidance just some of the operational factors as you look at 2025 compared to 2024. Can you maybe walk through how some of the key business dynamics are evolving on a year over year basis by segment? And then as you consider the factors in the BetterHelp side, we understand the weekly pay model, I think, and then the evolution of the business model. But how are you going to sort of land the plane on what a sustainable direction is in that business as you look forward? Mala MurthyChief Financial Officer at Teladoc Health00:35:32Yes. Let me address those questions in order and Chuck, chime in please. Let me start with Integrated Care. As I think about revenue growth for Integrated Care, we have essentially on a constant currency basis guided up 0.5% to 3.5% revenue growth on a year over year basis. The way I think about the drivers and the components of that are as follows: number one, international within that growing in the low double digits on a constant currency basis. Mala MurthyChief Financial Officer at Teladoc Health00:36:16So that's one. Second, in The U. S, if I think about our B2B business, there are certain things that are informing that growth. Number one, we have assumed ten months of Catapult. We expect to close that transaction shortly. Mala MurthyChief Financial Officer at Teladoc Health00:36:37So that is number one. The second is, as we just talked about, we are seeing visit revenue growth, as I just talked about, showing nice momentum. And I expect TRICARE, as we ramp through the year, to add to that visit momentum as well. We did talk about an extended ramp for TRICARE. That said, we should expect to see TRICARE momentum in the back half of the year. Mala MurthyChief Financial Officer at Teladoc Health00:37:08So that is number two. Number three, as always, chronic care, enrollment ramp through the year. So certainly a slower start in Q1 because of the selling season challenges and dynamics we talked about in the October and April and Chuck talked about that in his prepared remarks. But enrollment in chronic care happens through the year and so that will contribute as we go through the year. And included within that is the traction that we are seeing from Wage Management. Mala MurthyChief Financial Officer at Teladoc Health00:37:47I would say the couple of headwinds offsetting all of these are first, we have talked about the foreign exchange dynamics overall from a revenue growth standpoint. And then the second I would say is, we as we said in our prepared remarks are incorporating in our guidance the impact of a client loss that we were informed about earlier this month. So those are the different puts and takes that essentially are informing our overall revenue growth momentum. From an adjusted EBITDA standpoint, I would say, in Integrated Care, we typically will see adjusted EBITDA margin ramp as we go through the year as revenue ramps, especially in chronic care. Now keep in mind, adjusted EBITDA margins are impacted seasonally by trauma visit volumes in 1Q and 4Q. Mala MurthyChief Financial Officer at Teladoc Health00:38:45But absent that, it is sort of advancing through the year. The only other thing I would say for adjusted EBITDA margins is, we are comping benefits from Q2 and Q3 of twenty twenty four for different reasons that we have spoken about in those quarters. So just something to keep in mind on that. Now turning to BetterHelp, I would say, what we have talked about consistently internally for BetterHelp and externally is, we are looking for stabilization as we go through the year. What does that mean? Mala MurthyChief Financial Officer at Teladoc Health00:39:31It means a few things. One, we have to keep monitoring the customer acquisition cost landscape. We are assuming that it stays relatively stable in our guidance. But the reason we have provided a relatively wide guidance is because we have learned in the last eighteen months to two years that this can be very volatile and can change quickly. So that is sort of customer acquisition trends are an important driver. Mala MurthyChief Financial Officer at Teladoc Health00:40:06The second is, we have talked about our international efforts and our international growth. That is an important contributor to our growth revenue growth this year. And we have talked about within international growth, we are making efforts at localizing our product and platform experience. We have, for example, launched a localized experience in France, early days yet, going well thus far, but we need to monitor how that does. And we have plans to localize in other countries. Mala MurthyChief Financial Officer at Teladoc Health00:40:45We don't want to be public with which countries, but we do have plans. So I would say, international growth and efforts remain an important initiative for BetterHelp. What we've also talked about is just continuing to improve the core platform and user experience across the board and in The U. S. This is a product and a platform with high NPS. Mala MurthyChief Financial Officer at Teladoc Health00:41:13We need to continue to invest in it and nurture it. And so making sure that the core experience is good and continues to be good is an important driver for us. So I would say to you, it is all of those things. We are making efforts on driving benefit coverage. We have always said we do not expect it to be a material revenue growth driver in 2025. Mala MurthyChief Financial Officer at Teladoc Health00:41:42We expect it to be material in the year ahead as we ramp up in future years. So that's a little bit of a longer answer to your question on the dynamics across the different segments. David RomanManaging Director at Goldman Sachs00:41:58I appreciate all the detail and thanks for letting me sneak a multi part one in here. Operator00:42:06Thank you. We now have Sean Dodge with RPC. Please go ahead. Sean DodgeEquity Research Analyst at RBC Capital Markets00:42:12Yes, thanks. Maybe just staying on BetterHelp. Chuck, as you mentioned, it's encouraging to see the paying user number stabilize, but it looks like the average revenue per user declined sequentially. Is that just a function of the rollout of the weekly membership offering you mentioned? Or is it growth in international? Sean DodgeEquity Research Analyst at RBC Capital Markets00:42:32Is that price lower than in Sean DodgeEquity Research Analyst at RBC Capital Markets00:42:34The U. S? Or maybe does it have to do with the elevated churn Mala mentioned? Just trying to understand why revenue per user is down and maybe the extent we should expect that to continue or not? Mala MurthyChief Financial Officer at Teladoc Health00:42:48Yes. Maybe I'll handle this. So it's driven by a couple of things. First, just to be very clear, right now the weekly pricing is really no different on a versus the monthly in that our weekly is essentially our monthly pricing divided by four. That's what it is. Mala MurthyChief Financial Officer at Teladoc Health00:43:13Now I will tell you, based on the traction that we are seeing with our weekly offer in better conversion, we are absolutely going to experiment with different pricing constructs on the weekly. And that is something that is on docket for us to look into for 2025. But so far, any change that you see in our average revenue per user on a monthly basis is really not driven by weekly being different from monthly. What you said, Sean, is absolutely right. We have talked about the fact that our international headline price is lower. Mala MurthyChief Financial Officer at Teladoc Health00:43:57And I would also say to you, this is where the fact that we are in international markets and we do pay international taxes on our revenue does matter to our overall revenue per user because it's a contra revenue, it's an offset to our revenue. Again, this is something that has been factored into our overall international economics, but that is the reason why you're seeing the ARPU, our revenue per user going down. And certainly as international grows and has been growing, you will see that impact. Sean DodgeEquity Research Analyst at RBC Capital Markets00:44:35Okay. That's great. Thanks for the detail, Mala. Operator00:44:42Thank you. We have Richard Close with Canaccord Genuity. Please go ahead. Richard CloseManaging Director at Canaccord Genuity Group00:44:50Yes. Thanks for the question. Maybe a follow-up on the international Better Health. If Mala, if you could remind us what that was last year? And then a follow-up for Chuck, if you can just talk about the health plan channel, you said it's slow, obviously there's some issues there. Richard CloseManaging Director at Canaccord Genuity Group00:45:11Does it have anything to do with your product set or how are you thinking about that channel evolving this year? Charles DivitaCEO at Teladoc Health00:45:20Yes. Let me start with the last part first. So I think there's a few things going on. Obviously, everyone on the call is familiar with all the dynamics and the health plan marketplace that they're navigating through. And they will. Charles DivitaCEO at Teladoc Health00:45:35These are sophisticated organizations and they're adept at doing that. But if you're a player in the Affordable Care Act, you've got the subsidies ending at the hand subsidies at the end of twenty twenty five. If you're heavy in Medicaid, you've got some questions going back and forth around that and Medicaid expansion. If you're in the commercial business, you've got some inflationary trends working their ways through the system. So there's a variety of things that the health plans are working through. Charles DivitaCEO at Teladoc Health00:46:03We continue to have business with health plans. We've grown business with health plans. People have expanded. But I do think it's reasonable to think as they work through their strategies and how they're going to play those strategies going forward that that creates some level of headwind in terms of whether it's belt tightening or focusing on other strategies. I will say this though, the secular tailwinds around, unfortunately, the medical cost inflation, the disease prevalence, the reason why I highlighted all those things in my prepared remarks is because those haven't gone away. Charles DivitaCEO at Teladoc Health00:46:38And that's why we're making a lot of the investments we are in terms of how do we activate our engagement points differently in support of those strategies, how do we make our chronic care management programs even more impactful in terms of cost of care and so forth. So, I don't think it's necessary I mean, our products companies like us always have to innovate our products. But we continue to resonate in the market. Having said that, I do think that we've got this near term headwind that I think is reasonable for us to sort of navigate through. Amala, do you want to talk about BetterHelp? Mala MurthyChief Financial Officer at Teladoc Health00:47:08Yes. So international for BetterHelp was 20% of the segment's revenues in 2024, and that's up from mid teens in 2023. Richard CloseManaging Director at Canaccord Genuity Group00:47:22Thank you. Operator00:47:26Thank you. We have Daniel Grossley with Citi on the line now. Daniel GrosslightSenior Research Analyst at Citi00:47:33Hi. Thanks for taking the question. As we think about chronic care growth for this year, can you rank which programs are growing the fastest? And with respect to the weight loss program, it sounds like you've had nice traction there for this year. We've heard from some employers a little trepidation adding in utilization management to GLPs as that could put rebates at risk. Daniel GrosslightSenior Research Analyst at Citi00:48:00Can you also just speak to how you work with PBMs and employers to help control GLP-one costs without necessarily impacting rebate dollars? Thank you. Charles DivitaCEO at Teladoc Health00:48:11Yes. A couple of things. What we're seeing the most traction in right now is in our bundled services where we have a variety of things that we can offer for a set price and then we activate those members. Certainly, weight management is on the mind and a source of interest and a source of growth for us. I think the challenge with the GLP-1s and you've mentioned it is there's a lot of well, first of all, employers are trying to figure out their strategy. Charles DivitaCEO at Teladoc Health00:48:41So there's not a sort of monolithic view of how they're approaching that. But generally speaking, if those GLP-1s are out there, there are significant rebate dollars. And I think the PBMs are looking at that as well and I think employers are working with their PBMs as to how to address this issue. And I think that's something that we're just going to have to work through. I think the rebate question in my mind is, if I'm an employer and those rebates are their dollars, they're not the PBMs' dollars, and I think the employer should have the ability to design programs that are best for their employees and their dependents and not be sort of held hostage in terms of rebates. Charles DivitaCEO at Teladoc Health00:49:21Now, that's up to individual employers and how they want to approach that. But from my perspective as a former health plan person, the rebates are the employers, not the PBMs. Operator00:49:40Thank you. Operator00:49:44We now have Jalendra Singh with Truist. Please go ahead when you're ready. Jailendra SinghManaging Director at Truist Securities00:49:50Thank you. This is Jalendra Singh from Truist. Thanks for taking my question. I actually wanted to follow-up on your comment around, your client planning to transition a portion of their business in second quarter. Can you provide any more color there in terms of drivers behind that change? Jailendra SinghManaging Director at Truist Securities00:50:06Was it a health plan and what offerings were they using? Any color on membership revenue will be helpful. And how do you feel about the confidence in looks like you still work with them on other offerings, but just curious to help us your confidence in retaining that client for other offerings? Charles DivitaCEO at Teladoc Health00:50:20Yes. Look, I'm not going to comment on specific clients in that regard. But I will say a lot of the comments that I've already made in terms of the macro factors are in play here. It was in the health plan channel. We continue to do some business with this particular entity. Charles DivitaCEO at Teladoc Health00:50:35And I think it's just a sign of the times in terms of some of the pressures that health plans are under and some are making decisions in certain ways like that. But again, I'll go back to what I said. We continue to have significant business with health plans. We've expanded our services with health plans. The conversations that we're having now and that we're participating in, they're really looking for new types of solutions and how can we better support their strategies in a variety of ways. Charles DivitaCEO at Teladoc Health00:51:03So I feel very comfortable that we've got a strong offering, including the investments that we've been making in terms of how we can create more value for customers. Jailendra SinghManaging Director at Truist Securities00:51:13Great. Thanks, Jeff. Operator00:51:18Thank you. We now have a question from George Hill with Deutsche Bank. George HillManaging Director & Equity Research Analyst at Deutsche Bank00:51:25Hey, good evening, guys, and thanks for taking the question. My question is on BetterHelp, but if you look at the full year guidance, it looks like there's significant discretionary cost cuts that will have to come out of the business to hit your EBITDA targets. So I guess I would just love to hear you talk about like, as costs come down, as the business kind of comes down a little bit, is there more like I guess, is there more should we see more like pressure on the gross margin line or in the discretionary cost base? And then I just I would love to hear you talk about where costs come out of that business. Mala MurthyChief Financial Officer at Teladoc Health00:51:58Yes. So, what I would first give context on the BetterHelp business is and we have said this before, George. This is a business that runs from a fixed OpEx and infrastructure point of view relatively lean. It's a largely variable margin business. And I would say if I think about the key expense items in that P and L, it really is around advertising and marketing spend because that is an important driver of user acquisition. Mala MurthyChief Financial Officer at Teladoc Health00:52:39The yield on that and the efficiency on that are important as we think about the bottom line, the adjusted EBITDA margin for that business. One thing that we are looking to do as we have now talked about for a while is balancing top line growth with bottom line growth. And what that means is we are certainly going to be even paced and I want to say, if I think about the A and M as we go through the year, it will not be as hockey stick as it has been in certain years past. You actually saw that in fact in Q4 of this year. Q4 adjusted EBITDA in Better Health was largely in line with our expectations, because we wanted to invest in international markets. Mala MurthyChief Financial Officer at Teladoc Health00:53:36That is an area of growth for us. That is an area where we are going to be acquiring users and new users. So we made those investments in the fourth quarter in the Better Health business. That said though, I will say we expect to be relatively judicious and prudent on how we are going to spend advertising and marketing in the Better Health business in 2025 and even going beyond. And that is certainly going to be a key factor in the overall better help adjusted EBITDA margin in 2025. Mala MurthyChief Financial Officer at Teladoc Health00:54:15But I'll remind you, this is largely a variable margin business and it will continue to be so. George HillManaging Director & Equity Research Analyst at Deutsche Bank00:54:23Okay. And if I can have a quick follow-up, is just the gap between the EBITDA guidance and the cash flow guidance, the cap software, are there any other big moving pieces there? Mala MurthyChief Financial Officer at Teladoc Health00:54:32Yes. It's a good question. So the difference between the two is the following. There are two important pieces besides the growth in if you think about our adjusted EBITDA growth, we look at it internally in terms of what are the actual segments delivering. And then we also look at our internal compensation in terms of what it takes to drive those results. Mala MurthyChief Financial Officer at Teladoc Health00:55:06We certainly are picking up from a cash flow perspective, some year over year benefit in 2025 relative to 2024 in terms of compensation, cash based compensation. And look, that is based on our results for 2024 and that has a consequence on our overall compensation. The second is we are driving and focusing on working capital improvements, collections, DSOs, etcetera. So you see those two things essentially resulting in the cash flow dynamic that you see. George HillManaging Director & Equity Research Analyst at Deutsche Bank00:55:53Helpful. Thank you. Operator00:55:56Thank you, George. We now have the next question from Charles Rhyee with TD Cowen. Charles RhyeeManaging Director at TD Cowen00:56:04Yes. Thanks for taking the question. Maybe just asking about sort of TRICARE and sort of like how should we think about the offering into the TRICARE membership and talk a little bit how more specifically you plan to market directly to this population? What kind of requirements does that require in terms of either investments or investments you've already made? And because you made the comment earlier, that customer acquisition cost has been moderating or falling and certainly that's a function I think of, right, marketing spend versus sort of the conversion of that dollars into paying members, at least on the BetterHelp side. Charles RhyeeManaging Director at TD Cowen00:56:51Just trying to think through the different avenues, right? Sorry, it's really kind of two questions. It's really sort of what are you doing sort of better conversion and how are you kind of applying that as we think about TRICARE in generally in the business? Charles DivitaCEO at Teladoc Health00:57:05Yes. I wouldn't necessarily single out TRICARE. I think our strategies around activating visits are pretty consistent. And obviously, with the brand that Teladoc has and the reach we have in terms of our marketing campaigns, we think we've got that covered. So I don't want to talk about specific tactics on a particular account, but I will say it's a pretty broad based approach and been effective at generating business volume. Charles RhyeeManaging Director at TD Cowen00:57:32If I could just have one quick follow-up. And if we think about the new visit type of model contract versus your existing old contracts, on a like for like basis, is that similar profitability and similar revenue to you from the old access model? Mala MurthyChief Financial Officer at Teladoc Health00:57:48So that's a slightly nuanced question. I would say the following. Typically, when we have these conversations with our clients in transitioning from the traditional model to visit the model. We are looking to structure the pricing such that it is gross margin neutral over time. It may not be so right at the outset from the point of transition, but typically when we have these conversations, it will be in the context of the expand part of Land and Expand. Mala MurthyChief Financial Officer at Teladoc Health00:58:29So Charles, what will happen is, we will talk about revenue accretive products that we will now be selling into the population or other factors that will essentially allow us in most instances to essentially be gross margin neutral or gross profit dollar accretive. But it really does depend on a case by case basis. Charles RhyeeManaging Director at TD Cowen00:58:59Got it. That's helpful. Thank you. Operator00:59:03Thank you, Charles. We now have Michael Cherny with New York Partners. Michael ChernySenior Managing Director & Senior Research Analyst at Leerink Partners00:59:11Afternoon, thanks for taking my question. Maybe if I can just go back to George's a bit on the dynamics on the cost side and, Yamal, I know you mentioned numerous times the idea of balancing growth or profitable growth. I know you don't have a long term guidance on it, but how should we think, whether it's exiting the year or what may it be, about the long term opportunity for you to generate profit dollars through revenue contribution versus profit dollars versus through discretionary cost cuts? What should the philosophical model look like going forward? Mala MurthyChief Financial Officer at Teladoc Health00:59:47Yes, it's a great question. So here's what I would say and let me start with BetterHelp. I'm assuming your question is for BetterHelp or is it broader than that? I'll address it for both segments. So look, for BetterHelp, I would say it really all comes down to us being able to see the sequential progression in the business and stabilization in the business as we go through the year because what matters for a variable margin business like BetterHelp is revenue growth. Mala MurthyChief Financial Officer at Teladoc Health01:00:27And so we need to see that improvement and lower and lower decline with every quarter as we roll through the year. So that is what we are looking to see as we think about the longer term for better health. Now I will say, you know, that model and the comments I made, is certainly going to be different when we think about benefit coverage that has different unit economics, that has different margins, etcetera. And so we will address that when that becomes material, which it isn't in 2025. On the Integrated Care side, it really is about two things. Mala MurthyChief Financial Officer at Teladoc Health01:01:13One is, it is about driving revenue growth because what we have always said is the Integrated Care segment is the one that has operating leverage. So the more revenue growth and gross profit dollars you drive, the more leverage you drive. And the way we are looking to drive revenue growth and gross profit dollar growth is certainly by the all the strategic things, the priorities that Chuck mentioned in his prepared remarks, right? It is driving member engagement and greater utilization and enrollment. It is driving greater value in every visit and making it more impactful because that allows us to sit down with our clients and certainly earn a greater share of their spend wallet. Mala MurthyChief Financial Officer at Teladoc Health01:02:03So things like that, that is going to drive greater top line growth. We will continue to drive productivity in our cost of goods sold and and we will continue to drive productivity in our OpEx items, specifically I would say around technology and development and G and A. And then we have shown some really nice discipline in stock based comp and I expect that to continue as well. So hopefully that gives you some color on how we think about us progressing on driving profit. But it's a combination of top line growth and driving and maintaining discipline on our cost structure. Michael ChernySenior Managing Director & Senior Research Analyst at Leerink Partners01:02:49Thanks, Malin. Sorry to get ahead on the question. Operator01:02:54No worries. Thank you. I can confirm that does conclude today's question and answer session. And I can confirm that does conclude today's conference call here. Thank you all for joining and please enjoy the rest of your day. Operator01:03:06You may now disconnect from the call.Read moreParticipantsExecutivesMichael MinchakVice President, Investor RelationCharles DivitaCEOMala MurthyChief Financial OfficerAnalystsLisa GillManaging Director at JP MorganJessica TassanSenior Equity Research Analyst at Piper Sandler CompaniesDavid RomanManaging Director at Goldman SachsSean DodgeEquity Research Analyst at RBC Capital MarketsRichard CloseManaging Director at Canaccord Genuity GroupDaniel GrosslightSenior Research Analyst at CitiJailendra SinghManaging Director at Truist SecuritiesGeorge HillManaging Director & Equity Research Analyst at Deutsche BankCharles RhyeeManaging Director at TD CowenMichael ChernySenior Managing Director & Senior Research Analyst at Leerink PartnersPowered by Conference Call Audio Live Call not available Earnings Conference CallTeladoc Health Q4 202400:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) Teladoc Health Earnings HeadlinesWilliam Blair Comments on Teladoc Health Q1 EarningsMay 3 at 5:07 AM | americanbankingnews.comTeladoc Health (NYSE:TDOC) Earns "Hold" Rating from Needham & Company LLCMay 3 at 3:59 AM | americanbankingnews.comThe Man I Turn to In Times Like ThisA storm is brewing in the markets: new tariffs, recession warnings, and panic in the headlines. That’s when publisher Brett Aitken turns to Whitney Tilson—a man CNBC once dubbed “The Prophet.” Tilson just released a new prediction that runs counter to what mainstream finance is telling you.May 3, 2025 | Stansberry Research (Ad)Evercore ISI Issues Pessimistic Forecast for Teladoc Health (NYSE:TDOC) Stock PriceMay 3 at 3:59 AM | americanbankingnews.comForecasting The Future: 8 Analyst Projections For Teladoc HealthMay 2 at 11:08 PM | benzinga.comTeladoc Health Announces Employee Inducement Awards under NYSE Rule 303A.08May 2 at 9:30 PM | globenewswire.comSee More Teladoc Health Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Teladoc Health? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Teladoc Health and other key companies, straight to your email. Email Address About Teladoc HealthTeladoc Health (NYSE:TDOC) provides virtual healthcare services worldwide. The company operates through Teladoc Health Integrated Care and BetterHelp segments. The Integrated Care segment offers virtual medical services, including general medical, expert medical, specialty medical, chronic condition management, and mental health, as well as enabling technologies and enterprise telehealth solutions for hospitals and health systems. The BetterHelp segment operates a mental health platform that provides online counseling and therapy services through website, mobile applications, phones, and text-based interactions by its licensed clinicians. The company offers its products and services under the Teladoc, Livongo, and BetterHelp brands. It serves employers, health plans, hospitals and health systems, and insurance and financial services companies, as well as individual members. The company was formerly known as Teladoc, Inc. and changed its name to Teladoc Health, Inc. in August 2018. 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PresentationSkip to Participants Operator00:00:00Good afternoon, and thank you all for attending the Eladoc Health Q4 twenty twenty four Earnings Call. My name is Brikla, and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Michael Mickmeier, Vice President, Investor Relations at Belladoc Health. Thank you. Operator00:00:29You may proceed. Michael MinchakVice President, Investor Relation at Teladoc Health00:00:31Thank you and good afternoon. Today, after the market closed, we issued a press release announcing our full year and fourth quarter twenty twenty four financial results. This press release and the accompanying slide presentation are available in the Investor Relations section of the teledochealth.com website. On this call to discuss the results are Chuck Davita, Chief Executive Officer and Mala Murthy, Chief Financial Officer. During this call, we will also discuss our outlook and our prepared remarks will be followed by a question and answer session. Michael MinchakVice President, Investor Relation at Teladoc Health00:01:01Please note that we will be discussing certain non GAAP financial measures that we believe are important in evaluating Teladoc Health's performance. Details on the relationship between these non GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Also, please note that certain statements made during this call will be forward looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward looking statements are subject to risks, uncertainties and other factors that could cause the actual results for Teladoc Health to differ materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website. Michael MinchakVice President, Investor Relation at Teladoc Health00:01:46I would now like to turn Michael MinchakVice President, Investor Relation at Teladoc Health00:01:47the call over to Chuck. Charles DivitaCEO at Teladoc Health00:01:50Thanks, Mike. We reported a solid finish to 2024 and continue to make progress on our strategic priorities. Mahler will comment more on our results and initial 2025 guidance in a moment. As we close out the year and look forward, I would also like to provide some updates on the business and areas of focus. Charles DivitaCEO at Teladoc Health00:02:10As you know, we operate in a complex and dynamic healthcare market, which continues to be impacted by macro factors such as medical cost inflation, disease prevalence, mental health challenges, pressures on healthcare providers and regulatory matters amongst others. We believe virtually enabled care can play an important and constructive role in supporting the needs of our customers in this regard and that we are uniquely positioned given our scale, experience and range of products and services. To strengthen our ability to pursue opportunities in this environment and navigate through respective challenges, we've taken several actions over the past several months to streamline the organization, deepen market focus and advance important initiatives. These changes are well aligned with our priorities, have driven significant cost savings and created additional capacity to invest. With respect to integrated care, we're building on these and other efforts to enhance our competitive position and pursue important growth factors focused on four strategic priorities. Charles DivitaCEO at Teladoc Health00:03:11First is net growth in customers and membership and the engagement and usage of our services. In 2024, we added over 4,000,000 members in The U. S. And grew underlying visit volumes by 6%, a key metric as the market continues to move towards visit oriented arrangements. And we recently implemented new technology at the point of care to support additional services for our customers. Charles DivitaCEO at Teladoc Health00:03:36We see this as an important element of our value proposition and differentiation going forward. We also grew chronic care management enrollment by 4% in 2024, and we see opportunities to further innovate in this space as well, including through our recently announced agreement to acquire Catapult Health. More on that in a moment. From a selling season perspective, we saw some nice wins to close out the year, including the strongest year of bookings since 2020 in our employer channel and the important addition of TRICARE in the government space. We've also had some key client expansions with respect to chronic care programs, including weight management, which is seeing continued interest in the market. Charles DivitaCEO at Teladoc Health00:04:16Of note, one of our largest customers added our solution for 2025 and we expect their enrollment to ramp over the year. As we mentioned in the third quarter call, we are seeing pressures in the health plan channel given some of the broader challenges. With that said, we expect to have opportunities during 2025 across our various channels, and we will remain focused on managing through these uncertainties as well, both of which are reflected in the guidance ranges that Mala will cover. I'm pleased to report that we had a very successful implementation season with over 800 new clients launched on January 1. This was a critical priority given earlier challenges, and I'm proud of how the team collaborated and delivered for our customers. Charles DivitaCEO at Teladoc Health00:04:58Another important priority is deepening our impact on patient care and outcomes. For example, in addition to the point of care technology I mentioned earlier, we're also excited about a new capability we'll be bringing to market soon that provides the ability for external ecosystem partners to efficiently integrate with us to support longitudinal care needs and other strategies of our customers. We're also focused on driving greater impact through our suite of products and we're looking forward to jointly leveraging the capabilities of Catapult, including an initial focus on patients with chronic conditions. And with Catapult's approach to preventative care, including convenient testing, screening and nurse led engagement model, as well as an impressive Net Promoter Score of 80, we see opportunities to further complement our solution set. From a revenue growth perspective, we intend to leverage our scale distribution to offer Catapult services into our customer base. Charles DivitaCEO at Teladoc Health00:05:53And for Catapult's patients that are also eligible for our other services, we'll be creating a seamless enrollment pathway for our chronic care management and additional entry points for services such as mental health and primary care based on patient needs and preferences. As context, roughly half of the people engaged by Catapult have one or more chronic conditions. Many indicate challenges with depression and anxiety. And nearly one third share that they don't have an established primary care relationship. Our products and services align very well with these needs. Charles DivitaCEO at Teladoc Health00:06:27Through these and other initiatives, we're looking to extend our clinical care capabilities and ultimately to further participate in the value we can create for customers. Another important priority is expanding our international integrated care business. I recently had the opportunity to meet with our international team and hear from some key clients as well. I was highly impressed with our team and how they are building strong and sustainable positions in their respective markets. And their efforts drove another strong year in 2024, delivering mid teens revenue growth and continuing to expand markets and services. Charles DivitaCEO at Teladoc Health00:07:00For example, in France, we're partnering with the public health system to provide virtual psychiatry services in places with a scarcity of providers. And in Canada, we are combining virtual services with the proprietary devices and software of our hospital and health system solutions to serve needs across several provinces. These are great examples of organizational collaboration and differentiation in the market. Finally, a priority of increasing access to virtual mental health services through our scaled position. In addition to BetterHelp, we also have a scaled B2B mental health offering in integrated care, where we offer digital tools, coaching, therapy and psychiatry services. Charles DivitaCEO at Teladoc Health00:07:40We completed nearly 1,000,000,000 visits in 2024, a 10% increase from 2023. Over 60% of our membership base in The U. S. Has access to our mental health offering. And at an enterprise level, B2B mental health generated approximately $150,000,000 in revenues in 2024. Charles DivitaCEO at Teladoc Health00:07:58We will continue to assess synergies across our mental health offerings going forward. Moving now to the BetterHelp segment specifically. The business continues to be the largest of its kind, serving unmet need in a way that resonates with consumers as evidenced by its high consumer net promoter score above 70. And in January of twenty twenty five, we surpassed a historical milestone by having served over 5,000,000 people across dozens of countries. With that said, the business continues to operate in a challenging environment, which impacted financial performance in 2024 and our expectations for 2025. Charles DivitaCEO at Teladoc Health00:08:36We remain highly focused on stabilizing results and returning to a long term growth posture. And we aim to do this through four key priorities. The first is growing the user base and levels of engagement. During 2024, BetterHelp served over 1,000,000 unique pain users supported by a broad and diverse therapist network. We were encouraged to see sequential growth in average pain users in the fourth quarter versus the third quarter, but we have not yet reached the level of stability we are striving for. Charles DivitaCEO at Teladoc Health00:09:05We also have a priority on advancing our value proposition through new features and enhancements. This includes ways to improve affordability and accessibility, such as a pilot we launched in the third quarter of twenty twenty four to test a weekly pricing model. Initial results were positive and the model was subsequently extended and now widely available. We'll continue to monitor performance on key measures such as conversion rates, retention and net user growth. We're also pursuing new features and other offerings, including furthering international expansion through new localized country models with respect to language, content and therapists. Charles DivitaCEO at Teladoc Health00:09:41This includes a recent launch in France and additional markets in Europe over the course of 2025. And international was again a bright spot for BetterHelp in 2024, accounting for approximately 20% of segment revenues. Finally, BetterHelp's initiative to provide consumers with an ability to access their mental health benefits coverage continues to progress. Operational capabilities are now in place and initial network discussions with select health plans have begun. As shared previously, we don't expect any material contribution during 2025 in this area and will also continue to explore additional ways to accelerate our progress consistent with our broader mental health strategy. Charles DivitaCEO at Teladoc Health00:10:20In closing, I'm gratified by the way we finish 2024 and how the organization is aligning around our strategic priorities, which are focused on delivering long term sustainable growth. While there's more work ahead, we are operating with appropriate urgency and a strong commitment to driving performance across our business. With that, I'll turn it over to Mala. Mala MurthyChief Financial Officer at Teladoc Health00:10:41Thank you, Chuck, and good afternoon, everyone. Fourth quarter results were generally in line with our previously discussed expectations. Consolidated revenue was $640,000,000 and adjusted EBITDA of $75,000,000 represented an 11.7% margin. Net loss per share was $0.28 Full year 2024 consolidated revenue of $2,600,000,000 decreased 1% versus 2023, while adjusted EBITDA of $311,000,000 represented a 12.1% margin. Net loss per share of $5.87 included a non cash goodwill impairment charge of $4.63 per share pre tax, amortization of acquired intangibles of $1.35 per share pre tax and stock based compensation expense of $0.86 per share pre tax. Mala MurthyChief Financial Officer at Teladoc Health00:11:49Full year free cash flow was $170,000,000 and we closed 2024 with nearly $1,300,000,000 in cash and cash equivalents on the balance sheet. Turning to segment results. Fourth quarter integrated care revenue increased 2% year over year to $391,000,000 above the midpoint of our guidance range, driven by virtual care visits, chronic care and international. We added 4,200,000 U. S. Mala MurthyChief Financial Officer at Teladoc Health00:12:26Integrated care members versus the prior year period and ended the fourth quarter with 93,800,000 members, up 5% year over year. Chronic care program enrollment was just over 1,200,000 at quarter end, growing by 4% versus the prior year period. Fourth quarter integrated care adjusted EBITDA was $53,000,000 representing a 13.6% margin. This was near the upper end of our guidance range and down 95 basis points versus the prior year period. Recall that based on upside in the third quarter, we discussed incremental investments in the fourth quarter to advance our key priorities, which drove a headwind to adjusted EBITDA margin. Mala MurthyChief Financial Officer at Teladoc Health00:13:21For the full year, Integrated Care segment revenue increased 4% to 1,500,000,000 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 our 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 two fifteen basis points versus 2023, landing in the upper half of the initial guidance range we had provided last February. Mala MurthyChief Financial Officer at Teladoc Health00:14:18Shifting to BetterHelp, fourth quarter revenue was $250,000,000 down 9.5% versus the prior year period reflecting a modestly lower rate of decline versus the third quarter. Fourth quarter average monthly paying users grew by 2,000 users over the third quarter to 400,000, marking the first sequential increase since the second quarter of twenty twenty three and driven by continued international growth and a net benefit from the weekly pricing model. Fourth quarter Better Health adjusted EBITDA increased to $22,000,000 from $15,000,000 in the third quarter and adjusted EBITDA margin of 8.7% compared to 5.9% in the third quarter. This was consistent with commentary on our third quarter call regarding a much smaller sequential step up in fourth quarter adjusted EBITDA. For the full year, BetterHelp revenue was $1,000,000,000 a decline of 8% versus the prior year, while adjusted EBITDA of $78,000,000 represented a margin of 7.5%. Mala MurthyChief Financial Officer at Teladoc Health00:15:41Now turning to guidance. We expect full year 2025 consolidated revenue Consolidated adjusted EBITDA is expected to be in the range of $278,000,000 to $319,000,000 We expect full year free cash flow of $190,000,000 to $220,000,000 which represents year over year growth of 12% to 30% driven mainly by net working capital benefits. We project stock based compensation expense of $120,000,000 to $130,000,000 in 2025, down by about $20,000,000 at the midpoint versus 2020 four and thirty eight percent lower versus 2023 levels. For the first quarter, we expect consolidated revenue in the range of $6.00 $8,000,000 to $629,000,000 and adjusted EBITDA in the range of $47,000,000 to $59,000,000 Looking at the segments. For Integrated Care, we expect 2025 revenue to be flat to up 3% year over year on an as reported basis. Mala MurthyChief Financial Officer at Teladoc Health00:17:15This assumes 0.5% to 3.5% constant currency growth and a roughly 50 basis point headwind from foreign exchange. Constant currency growth includes about 200 basis points of contribution from the Catapult acquisition, which is expected to close at the February. We are guiding to an adjusted EBITDA margin of 14.8% plus or minus 50 basis points, inclusive of a roughly 40 basis point headwind from the Catapult acquisition, which we expect to be dilutive to adjusted EBITDA margin in 2025. Excluding Catapult, our adjusted EBITDA margin guidance for 2025 would be roughly flat year over year at the midpoint. And this is consistent with our preliminary 2025 outlook where we said we endeavor to maintain adjusted EBITDA margin in line with 2024 levels. Mala MurthyChief Financial Officer at Teladoc Health00:18:21FX is neutral to Integrated Care adjusted EBITDA margin. There are several factors that are impacting the first quarter and quarterly cadence. First, we expect a slightly greater sequential revenue decline in the first quarter versus prior years. While typical seasonality is driven in part by enrollment dynamics within our chronic care business, two additional factors are contributing to a lower 2025 starting point. The first is the selling season, which we had previously discussed. Mala MurthyChief Financial Officer at Teladoc Health00:19:01And the second is an FX headwind due to currency movements since our October earnings call. Next, while we continue to expect increased membership to drive visit growth over time, based on recent trends, we now expect a more extended visit ramp at TRICARE as it takes time for the contractors to implement the new program, impacting what is typically a strong quarter for visit volumes. In addition, we have some key expansions in our chronic care business in 2025 with enrollment expected to grow over the course of the year. However, tempering this benefit is an incremental impact from attrition as we were informed by a client earlier this month of plans to transition a portion of their business during the second quarter. Finally, we we expect a full quarter of contribution from Catapult Health beginning in the second quarter, while the fourth quarter is typically their seasonally strongest of the year. Mala MurthyChief Financial Officer at Teladoc Health00:20:14Taken together, these factors are expected to lead to a first half, second half revenue split in 2025 that would be slightly more back half weighted relative to 2024. From an adjusted EBITDA standpoint, the expected ramp in chronic care enrollment and TRICARE visits will have a more significant positive impact on adjusted EBITDA in the second half, while we also will be comping against some discrete benefits in the second and third quarter of twenty twenty four. We are guiding to first quarter integrated care revenue down 0.5% to up 2% versus the prior year period on an as reported basis. A year over year tailwind from Catapult and an FX headwind largely offset. Adjusted EBITDA margin is expected to be in the range of 11.25% to 12.75% with Catapult about 20 basis points dilutive to the adjusted EBITDA margin and an immaterial FX impact. Mala MurthyChief Financial Officer at Teladoc Health00:21:28Moving to the BetterHelp segment. We are guiding to 2025 revenue down 3.75% to down 9.75% versus 2024 on an as reported basis. This assumes a decline of 3% to 9% on a constant currency basis and a roughly 75 basis point foreign exchange headwind. Based on what's currently known, we are comfortable near the midpoint, while the wider range reflects uncertainties given the early stage of the year, including traction from growth initiatives, as well as the macro backdrop, demand levels, customer acquisition costs and churn rate. We are guiding to an adjusted EBITDA margin of 6.25% to 7.75%. Mala MurthyChief Financial Officer at Teladoc Health00:22:20Excluding an FX headwind of roughly 50 basis points, adjusted EBITDA margin would be generally flat at the midpoint versus 2024. For the first quarter, we are guiding the Better Health segment's revenue down 9% to 13.5% year over year on an as reported basis. This assumes that 8.25% to 12.75% decline on a constant currency basis and a 75 basis point FX headwind. We expect an adjusted EBITDA margin of 2% to 4.25% with a roughly 60 basis point headwind from foreign exchange in the first quarter. Higher conversion rates related to the weekly offer has led to a year over year improvement in customer acquisition costs and we expect it to remain at current levels for the balance of the year. Mala MurthyChief Financial Officer at Teladoc Health00:23:19While churn is higher, we expect the weekly offer to remain a net positive. We are also assuming an increase in users and revenue as we roll out our localized offering to additional markets in Europe. Although we are being methodical as we learn and refine our approach in each market. As a result of these factors, we are targeting modest sequential revenue improvement beginning with the second quarter and continuing through the balance of the year. And as year over year comps ease as we progress through 2025, we are targeting BetterHelp fourth quarter revenue to be relatively flat on a year over year basis. Mala MurthyChief Financial Officer at Teladoc Health00:24:04I'll now provide an update on our cost savings and productivity initiatives. We continue to execute against our previously discussed program and are exceeding those targets modestly. This is helping fund investments in the business to position the company for long term success. We remain focused on managing to an appropriate level of performance and are committed to taking additional actions accordingly. As we continue to evaluate opportunities for further efficiencies, our focus will be on optimizing technology and development and G and A costs, as well as lowering stock based compensation expense. Mala MurthyChief Financial Officer at Teladoc Health00:24:46Finally, we closed the year with $1,300,000,000 in cash on our balance sheet and our business is generating solid free cash flow, which we believe provides us a high degree of financial flexibility. As it relates to our capital allocation priorities, first and foremost, we intend to maintain a strong balance sheet. This is a key area of client interest ensuring continuity and demonstrating an ability to invest in innovation. We continue to expect to retire our convertible bond due in June 2025 with cash. We are evaluating our long term financing and believe we have options as we look ahead to the June 2027 maturity. Mala MurthyChief Financial Officer at Teladoc Health00:25:35Second, we will focus on investing in the business to support our strategy, both on an organic and inorganic basis. As we further expand our capabilities, we can leverage our large customer base and scale distribution platform further executing on our land and expand strategy. And third, share buybacks remain a potential use of excess cash. With that, I will turn the call back to Chuck. Charles DivitaCEO at Teladoc Health00:26:03Thanks, Mala. To wrap up, we are continuing to make progress against the key strategic priorities that we have laid out, although there is more work ahead. Despite some likely near term headwinds from macro and other factors, we are focused on execution and delivering on our commitments to all stakeholders. I am confident that the actions we're taking this year will provide a strong foundation for us to deliver improved performance over the longer term. We look forward to sharing more in the coming months. Charles DivitaCEO at Teladoc Health00:26:31With that, we will open it up for questions. Operator? Operator00:26:37Thank you, Chuck. We will now begin the question and answer session. Your first question comes from Lisa Gill with JPMorgan. Please go ahead. Lisa GillManaging Director at JP Morgan00:27:11Thanks very much. And Chuck, I want to go back to a comment that you made when you were talking about net customer growth and talked about some of your contracting being more focused on visits. Can you talk about how contracts have changed if at all in 2025? And it looks like at the midpoint, you're adding about 8% growth in integrated members based on the guidance that you're giving. What are you seeing as far as utilization trends? Lisa GillManaging Director at JP Morgan00:27:40And the flu season started much later than we've seen in the last couple of years. But historically, the flu has been good for Teladoc. So just curious like what you've seen more recently, on the overall utilization trend. Charles DivitaCEO at Teladoc Health00:27:54Yes. Thanks. And I'll make some comments and then certainly, Mala, if you want to jump in. So a few things that I would say. Many years ago in this space, I think there was a lot of PMPM models because it was sort of new to the buyer and new to organizations such as ourselves. Charles DivitaCEO at Teladoc Health00:28:10And so that provides a level of predictability. There's still a predominance of that out there. But as you know, the rest of the health care system primarily works on a visit basis, on a utilization basis. So, you've seen over time, now that this that virtual visit space has matured, more and more interest in moving more to what the rest of the delivery system looks like. So that's not a new trend. Charles DivitaCEO at Teladoc Health00:28:33That's been going on for a while. And that continues. So that's why we highlight the importance of the visit volumes because ultimately that's a driver of revenue, but it's also a signal of the level of engagement that we have. And as we add those members that you mentioned, we should and we expect as we have, see increases in visit volumes, which we have seen pretty steadily. And I think that's important. Charles DivitaCEO at Teladoc Health00:28:55It's also important because those visits are more than just a visit for that particular event. They're engagement points. And I think part of our strategy is how do we activate those engagement points more holistically. One last thing I would say before asking Mal to comment. I was very proud of the way that our team responded to the surges this year. Charles DivitaCEO at Teladoc Health00:29:16You think about the volumes that we experienced, which are massively larger than others, you think about the holiday seasons and making sure that we could match providers with patients throughout all of that, nail our SLAs and do it at scale, I think is pretty remarkable. But maybe, Mal, if you want to comment more on the flu season and other matters. Mala MurthyChief Financial Officer at Teladoc Health00:29:37Yes. So I would say, Lisa, just addressing your broader question on trends. As we spoke about at JPMorgan with you, there certainly is a shift we have been seeing over time. To be crystal clear, it isn't as if this is a shift on mass across all of our clients. We have plenty of clients who are still in the traditional structure of access fee, flexibility. Mala MurthyChief Financial Officer at Teladoc Health00:30:06But certainly, we are seeing some amount of interest and migration towards the fee arrangement. And I'd characterize this as the shift has been happening for a time. We continue to expect it to continue gradually over time. I'd say we are in the middle of the middle innings in this. As it relates to the flu season and sort of utilization trends, to the point that Chuck made, this is why the strategic pillars we talked about at JPMorgan really are important, right? Mala MurthyChief Financial Officer at Teladoc Health00:30:38Making every visit count more, driving more value with every visit. Chuck, in his prepared remarks, talked about investments we have made and capabilities we have added to do exactly that, right, to drive the value in the visit. Our utilization trends have remained generally stable, but that is absolutely a point of focus for us from an investment standpoint, both that as well as driving increased enrollment, which is the other way we accrete revenue. In terms of flu, I would say the following. I'd comment more not just on flu, but overall visit volumes and revenue. Mala MurthyChief Financial Officer at Teladoc Health00:31:23We talked about 6% growth last year in our visit volume. That actually translated from a visit revenue perspective to high single digit revenue growth. And we felt the benefit of the visit mix as a part of that that drove that kind of visit revenue growth. I would expect that momentum to continue this year, both in the first quarter, but also as we go through the rest of the year. Lisa GillManaging Director at JP Morgan00:31:55Thank you. Operator00:31:59Your next question comes from Jessica Tucham with Piper Sandler. Jessica TassanSenior Equity Research Analyst at Piper Sandler Companies00:32:05Hi guys. Thanks again for the detail. I just have a question on the, the BetterHelp efforts to expand, to expand payer coverage. I guess, can you just give us, a little bit of qualitative detail around, what today, what behavioral health offerings exist within the integrated care segment? And then just what incremental capabilities or network access would a, an employer or a payer be gaining by bringing BetterHelp in network? Jessica TassanSenior Equity Research Analyst at Piper Sandler Companies00:32:38If you could just kind of qualitatively describe the nature and difference between those two offerings? Thanks. Charles DivitaCEO at Teladoc Health00:32:45Yes. Happy to. And on the B2B side, on integrated care side, as I mentioned, we have a scaled mental health position there and it's been growing nicely. We have about 60% of our installed base has access to our services, which is we have digital tools, we have coaching, we have psychiatry and a range of services and as I mentioned around $150,000,000 in aggregate on B2B revenue. So that's scaling well. Charles DivitaCEO at Teladoc Health00:33:12I think when you step back from this issue, mental health has actually been one of the most widely adopted in the virtual care setting post the pandemic and continues to have a lot of secular trends around that and we see that continuing. I think when you get into network contracting, there's two pieces. One is getting a network and meeting those requirements and so forth. And the other is actually utilization. It's one thing to be a network, but you need to actually have a brand and resonate and people use your services. Charles DivitaCEO at Teladoc Health00:33:43And that's what BetterHelp really brings. Not only do they have a strong consumer brand and well known brand, but massive amounts of volume. And so you've seen post pandemic, a lot of players were able to get into network arrangements and so forth, but some are struggling to get the volumes because you have to activate the membership. And so I think both are important, getting a network but also having the brand and the ability to market your services and meet the need. And I think that's where people are seeing an interest in BetterHelp. Charles DivitaCEO at Teladoc Health00:34:15I mean, the ability for it to match patients with providers, you know, 95% within forty eight hours, a diverse therapist network. So there's a lot to bring to the table, notwithstanding the challenges that it takes to get into that space. Jessica TassanSenior Equity Research Analyst at Piper Sandler Companies00:34:33Thank you. Operator00:34:36Thank you. Your next question comes from David Roman with Goldman Sachs on the line. David RomanManaging Director at Goldman Sachs00:34:45Thank you and good afternoon everybody. Maybe you could help us break down a little bit beyond the guidance just some of the operational factors as you look at 2025 compared to 2024. Can you maybe walk through how some of the key business dynamics are evolving on a year over year basis by segment? And then as you consider the factors in the BetterHelp side, we understand the weekly pay model, I think, and then the evolution of the business model. But how are you going to sort of land the plane on what a sustainable direction is in that business as you look forward? Mala MurthyChief Financial Officer at Teladoc Health00:35:32Yes. Let me address those questions in order and Chuck, chime in please. Let me start with Integrated Care. As I think about revenue growth for Integrated Care, we have essentially on a constant currency basis guided up 0.5% to 3.5% revenue growth on a year over year basis. The way I think about the drivers and the components of that are as follows: number one, international within that growing in the low double digits on a constant currency basis. Mala MurthyChief Financial Officer at Teladoc Health00:36:16So that's one. Second, in The U. S, if I think about our B2B business, there are certain things that are informing that growth. Number one, we have assumed ten months of Catapult. We expect to close that transaction shortly. Mala MurthyChief Financial Officer at Teladoc Health00:36:37So that is number one. The second is, as we just talked about, we are seeing visit revenue growth, as I just talked about, showing nice momentum. And I expect TRICARE, as we ramp through the year, to add to that visit momentum as well. We did talk about an extended ramp for TRICARE. That said, we should expect to see TRICARE momentum in the back half of the year. Mala MurthyChief Financial Officer at Teladoc Health00:37:08So that is number two. Number three, as always, chronic care, enrollment ramp through the year. So certainly a slower start in Q1 because of the selling season challenges and dynamics we talked about in the October and April and Chuck talked about that in his prepared remarks. But enrollment in chronic care happens through the year and so that will contribute as we go through the year. And included within that is the traction that we are seeing from Wage Management. Mala MurthyChief Financial Officer at Teladoc Health00:37:47I would say the couple of headwinds offsetting all of these are first, we have talked about the foreign exchange dynamics overall from a revenue growth standpoint. And then the second I would say is, we as we said in our prepared remarks are incorporating in our guidance the impact of a client loss that we were informed about earlier this month. So those are the different puts and takes that essentially are informing our overall revenue growth momentum. From an adjusted EBITDA standpoint, I would say, in Integrated Care, we typically will see adjusted EBITDA margin ramp as we go through the year as revenue ramps, especially in chronic care. Now keep in mind, adjusted EBITDA margins are impacted seasonally by trauma visit volumes in 1Q and 4Q. Mala MurthyChief Financial Officer at Teladoc Health00:38:45But absent that, it is sort of advancing through the year. The only other thing I would say for adjusted EBITDA margins is, we are comping benefits from Q2 and Q3 of twenty twenty four for different reasons that we have spoken about in those quarters. So just something to keep in mind on that. Now turning to BetterHelp, I would say, what we have talked about consistently internally for BetterHelp and externally is, we are looking for stabilization as we go through the year. What does that mean? Mala MurthyChief Financial Officer at Teladoc Health00:39:31It means a few things. One, we have to keep monitoring the customer acquisition cost landscape. We are assuming that it stays relatively stable in our guidance. But the reason we have provided a relatively wide guidance is because we have learned in the last eighteen months to two years that this can be very volatile and can change quickly. So that is sort of customer acquisition trends are an important driver. Mala MurthyChief Financial Officer at Teladoc Health00:40:06The second is, we have talked about our international efforts and our international growth. That is an important contributor to our growth revenue growth this year. And we have talked about within international growth, we are making efforts at localizing our product and platform experience. We have, for example, launched a localized experience in France, early days yet, going well thus far, but we need to monitor how that does. And we have plans to localize in other countries. Mala MurthyChief Financial Officer at Teladoc Health00:40:45We don't want to be public with which countries, but we do have plans. So I would say, international growth and efforts remain an important initiative for BetterHelp. What we've also talked about is just continuing to improve the core platform and user experience across the board and in The U. S. This is a product and a platform with high NPS. Mala MurthyChief Financial Officer at Teladoc Health00:41:13We need to continue to invest in it and nurture it. And so making sure that the core experience is good and continues to be good is an important driver for us. So I would say to you, it is all of those things. We are making efforts on driving benefit coverage. We have always said we do not expect it to be a material revenue growth driver in 2025. Mala MurthyChief Financial Officer at Teladoc Health00:41:42We expect it to be material in the year ahead as we ramp up in future years. So that's a little bit of a longer answer to your question on the dynamics across the different segments. David RomanManaging Director at Goldman Sachs00:41:58I appreciate all the detail and thanks for letting me sneak a multi part one in here. Operator00:42:06Thank you. We now have Sean Dodge with RPC. Please go ahead. Sean DodgeEquity Research Analyst at RBC Capital Markets00:42:12Yes, thanks. Maybe just staying on BetterHelp. Chuck, as you mentioned, it's encouraging to see the paying user number stabilize, but it looks like the average revenue per user declined sequentially. Is that just a function of the rollout of the weekly membership offering you mentioned? Or is it growth in international? Sean DodgeEquity Research Analyst at RBC Capital Markets00:42:32Is that price lower than in Sean DodgeEquity Research Analyst at RBC Capital Markets00:42:34The U. S? Or maybe does it have to do with the elevated churn Mala mentioned? Just trying to understand why revenue per user is down and maybe the extent we should expect that to continue or not? Mala MurthyChief Financial Officer at Teladoc Health00:42:48Yes. Maybe I'll handle this. So it's driven by a couple of things. First, just to be very clear, right now the weekly pricing is really no different on a versus the monthly in that our weekly is essentially our monthly pricing divided by four. That's what it is. Mala MurthyChief Financial Officer at Teladoc Health00:43:13Now I will tell you, based on the traction that we are seeing with our weekly offer in better conversion, we are absolutely going to experiment with different pricing constructs on the weekly. And that is something that is on docket for us to look into for 2025. But so far, any change that you see in our average revenue per user on a monthly basis is really not driven by weekly being different from monthly. What you said, Sean, is absolutely right. We have talked about the fact that our international headline price is lower. Mala MurthyChief Financial Officer at Teladoc Health00:43:57And I would also say to you, this is where the fact that we are in international markets and we do pay international taxes on our revenue does matter to our overall revenue per user because it's a contra revenue, it's an offset to our revenue. Again, this is something that has been factored into our overall international economics, but that is the reason why you're seeing the ARPU, our revenue per user going down. And certainly as international grows and has been growing, you will see that impact. Sean DodgeEquity Research Analyst at RBC Capital Markets00:44:35Okay. That's great. Thanks for the detail, Mala. Operator00:44:42Thank you. We have Richard Close with Canaccord Genuity. Please go ahead. Richard CloseManaging Director at Canaccord Genuity Group00:44:50Yes. Thanks for the question. Maybe a follow-up on the international Better Health. If Mala, if you could remind us what that was last year? And then a follow-up for Chuck, if you can just talk about the health plan channel, you said it's slow, obviously there's some issues there. Richard CloseManaging Director at Canaccord Genuity Group00:45:11Does it have anything to do with your product set or how are you thinking about that channel evolving this year? Charles DivitaCEO at Teladoc Health00:45:20Yes. Let me start with the last part first. So I think there's a few things going on. Obviously, everyone on the call is familiar with all the dynamics and the health plan marketplace that they're navigating through. And they will. Charles DivitaCEO at Teladoc Health00:45:35These are sophisticated organizations and they're adept at doing that. But if you're a player in the Affordable Care Act, you've got the subsidies ending at the hand subsidies at the end of twenty twenty five. If you're heavy in Medicaid, you've got some questions going back and forth around that and Medicaid expansion. If you're in the commercial business, you've got some inflationary trends working their ways through the system. So there's a variety of things that the health plans are working through. Charles DivitaCEO at Teladoc Health00:46:03We continue to have business with health plans. We've grown business with health plans. People have expanded. But I do think it's reasonable to think as they work through their strategies and how they're going to play those strategies going forward that that creates some level of headwind in terms of whether it's belt tightening or focusing on other strategies. I will say this though, the secular tailwinds around, unfortunately, the medical cost inflation, the disease prevalence, the reason why I highlighted all those things in my prepared remarks is because those haven't gone away. Charles DivitaCEO at Teladoc Health00:46:38And that's why we're making a lot of the investments we are in terms of how do we activate our engagement points differently in support of those strategies, how do we make our chronic care management programs even more impactful in terms of cost of care and so forth. So, I don't think it's necessary I mean, our products companies like us always have to innovate our products. But we continue to resonate in the market. Having said that, I do think that we've got this near term headwind that I think is reasonable for us to sort of navigate through. Amala, do you want to talk about BetterHelp? Mala MurthyChief Financial Officer at Teladoc Health00:47:08Yes. So international for BetterHelp was 20% of the segment's revenues in 2024, and that's up from mid teens in 2023. Richard CloseManaging Director at Canaccord Genuity Group00:47:22Thank you. Operator00:47:26Thank you. We have Daniel Grossley with Citi on the line now. Daniel GrosslightSenior Research Analyst at Citi00:47:33Hi. Thanks for taking the question. As we think about chronic care growth for this year, can you rank which programs are growing the fastest? And with respect to the weight loss program, it sounds like you've had nice traction there for this year. We've heard from some employers a little trepidation adding in utilization management to GLPs as that could put rebates at risk. Daniel GrosslightSenior Research Analyst at Citi00:48:00Can you also just speak to how you work with PBMs and employers to help control GLP-one costs without necessarily impacting rebate dollars? Thank you. Charles DivitaCEO at Teladoc Health00:48:11Yes. A couple of things. What we're seeing the most traction in right now is in our bundled services where we have a variety of things that we can offer for a set price and then we activate those members. Certainly, weight management is on the mind and a source of interest and a source of growth for us. I think the challenge with the GLP-1s and you've mentioned it is there's a lot of well, first of all, employers are trying to figure out their strategy. Charles DivitaCEO at Teladoc Health00:48:41So there's not a sort of monolithic view of how they're approaching that. But generally speaking, if those GLP-1s are out there, there are significant rebate dollars. And I think the PBMs are looking at that as well and I think employers are working with their PBMs as to how to address this issue. And I think that's something that we're just going to have to work through. I think the rebate question in my mind is, if I'm an employer and those rebates are their dollars, they're not the PBMs' dollars, and I think the employer should have the ability to design programs that are best for their employees and their dependents and not be sort of held hostage in terms of rebates. Charles DivitaCEO at Teladoc Health00:49:21Now, that's up to individual employers and how they want to approach that. But from my perspective as a former health plan person, the rebates are the employers, not the PBMs. Operator00:49:40Thank you. Operator00:49:44We now have Jalendra Singh with Truist. Please go ahead when you're ready. Jailendra SinghManaging Director at Truist Securities00:49:50Thank you. This is Jalendra Singh from Truist. Thanks for taking my question. I actually wanted to follow-up on your comment around, your client planning to transition a portion of their business in second quarter. Can you provide any more color there in terms of drivers behind that change? Jailendra SinghManaging Director at Truist Securities00:50:06Was it a health plan and what offerings were they using? Any color on membership revenue will be helpful. And how do you feel about the confidence in looks like you still work with them on other offerings, but just curious to help us your confidence in retaining that client for other offerings? Charles DivitaCEO at Teladoc Health00:50:20Yes. Look, I'm not going to comment on specific clients in that regard. But I will say a lot of the comments that I've already made in terms of the macro factors are in play here. It was in the health plan channel. We continue to do some business with this particular entity. Charles DivitaCEO at Teladoc Health00:50:35And I think it's just a sign of the times in terms of some of the pressures that health plans are under and some are making decisions in certain ways like that. But again, I'll go back to what I said. We continue to have significant business with health plans. We've expanded our services with health plans. The conversations that we're having now and that we're participating in, they're really looking for new types of solutions and how can we better support their strategies in a variety of ways. Charles DivitaCEO at Teladoc Health00:51:03So I feel very comfortable that we've got a strong offering, including the investments that we've been making in terms of how we can create more value for customers. Jailendra SinghManaging Director at Truist Securities00:51:13Great. Thanks, Jeff. Operator00:51:18Thank you. We now have a question from George Hill with Deutsche Bank. George HillManaging Director & Equity Research Analyst at Deutsche Bank00:51:25Hey, good evening, guys, and thanks for taking the question. My question is on BetterHelp, but if you look at the full year guidance, it looks like there's significant discretionary cost cuts that will have to come out of the business to hit your EBITDA targets. So I guess I would just love to hear you talk about like, as costs come down, as the business kind of comes down a little bit, is there more like I guess, is there more should we see more like pressure on the gross margin line or in the discretionary cost base? And then I just I would love to hear you talk about where costs come out of that business. Mala MurthyChief Financial Officer at Teladoc Health00:51:58Yes. So, what I would first give context on the BetterHelp business is and we have said this before, George. This is a business that runs from a fixed OpEx and infrastructure point of view relatively lean. It's a largely variable margin business. And I would say if I think about the key expense items in that P and L, it really is around advertising and marketing spend because that is an important driver of user acquisition. Mala MurthyChief Financial Officer at Teladoc Health00:52:39The yield on that and the efficiency on that are important as we think about the bottom line, the adjusted EBITDA margin for that business. One thing that we are looking to do as we have now talked about for a while is balancing top line growth with bottom line growth. And what that means is we are certainly going to be even paced and I want to say, if I think about the A and M as we go through the year, it will not be as hockey stick as it has been in certain years past. You actually saw that in fact in Q4 of this year. Q4 adjusted EBITDA in Better Health was largely in line with our expectations, because we wanted to invest in international markets. Mala MurthyChief Financial Officer at Teladoc Health00:53:36That is an area of growth for us. That is an area where we are going to be acquiring users and new users. So we made those investments in the fourth quarter in the Better Health business. That said though, I will say we expect to be relatively judicious and prudent on how we are going to spend advertising and marketing in the Better Health business in 2025 and even going beyond. And that is certainly going to be a key factor in the overall better help adjusted EBITDA margin in 2025. Mala MurthyChief Financial Officer at Teladoc Health00:54:15But I'll remind you, this is largely a variable margin business and it will continue to be so. George HillManaging Director & Equity Research Analyst at Deutsche Bank00:54:23Okay. And if I can have a quick follow-up, is just the gap between the EBITDA guidance and the cash flow guidance, the cap software, are there any other big moving pieces there? Mala MurthyChief Financial Officer at Teladoc Health00:54:32Yes. It's a good question. So the difference between the two is the following. There are two important pieces besides the growth in if you think about our adjusted EBITDA growth, we look at it internally in terms of what are the actual segments delivering. And then we also look at our internal compensation in terms of what it takes to drive those results. Mala MurthyChief Financial Officer at Teladoc Health00:55:06We certainly are picking up from a cash flow perspective, some year over year benefit in 2025 relative to 2024 in terms of compensation, cash based compensation. And look, that is based on our results for 2024 and that has a consequence on our overall compensation. The second is we are driving and focusing on working capital improvements, collections, DSOs, etcetera. So you see those two things essentially resulting in the cash flow dynamic that you see. George HillManaging Director & Equity Research Analyst at Deutsche Bank00:55:53Helpful. Thank you. Operator00:55:56Thank you, George. We now have the next question from Charles Rhyee with TD Cowen. Charles RhyeeManaging Director at TD Cowen00:56:04Yes. Thanks for taking the question. Maybe just asking about sort of TRICARE and sort of like how should we think about the offering into the TRICARE membership and talk a little bit how more specifically you plan to market directly to this population? What kind of requirements does that require in terms of either investments or investments you've already made? And because you made the comment earlier, that customer acquisition cost has been moderating or falling and certainly that's a function I think of, right, marketing spend versus sort of the conversion of that dollars into paying members, at least on the BetterHelp side. Charles RhyeeManaging Director at TD Cowen00:56:51Just trying to think through the different avenues, right? Sorry, it's really kind of two questions. It's really sort of what are you doing sort of better conversion and how are you kind of applying that as we think about TRICARE in generally in the business? Charles DivitaCEO at Teladoc Health00:57:05Yes. I wouldn't necessarily single out TRICARE. I think our strategies around activating visits are pretty consistent. And obviously, with the brand that Teladoc has and the reach we have in terms of our marketing campaigns, we think we've got that covered. So I don't want to talk about specific tactics on a particular account, but I will say it's a pretty broad based approach and been effective at generating business volume. Charles RhyeeManaging Director at TD Cowen00:57:32If I could just have one quick follow-up. And if we think about the new visit type of model contract versus your existing old contracts, on a like for like basis, is that similar profitability and similar revenue to you from the old access model? Mala MurthyChief Financial Officer at Teladoc Health00:57:48So that's a slightly nuanced question. I would say the following. Typically, when we have these conversations with our clients in transitioning from the traditional model to visit the model. We are looking to structure the pricing such that it is gross margin neutral over time. It may not be so right at the outset from the point of transition, but typically when we have these conversations, it will be in the context of the expand part of Land and Expand. Mala MurthyChief Financial Officer at Teladoc Health00:58:29So Charles, what will happen is, we will talk about revenue accretive products that we will now be selling into the population or other factors that will essentially allow us in most instances to essentially be gross margin neutral or gross profit dollar accretive. But it really does depend on a case by case basis. Charles RhyeeManaging Director at TD Cowen00:58:59Got it. That's helpful. Thank you. Operator00:59:03Thank you, Charles. We now have Michael Cherny with New York Partners. Michael ChernySenior Managing Director & Senior Research Analyst at Leerink Partners00:59:11Afternoon, thanks for taking my question. Maybe if I can just go back to George's a bit on the dynamics on the cost side and, Yamal, I know you mentioned numerous times the idea of balancing growth or profitable growth. I know you don't have a long term guidance on it, but how should we think, whether it's exiting the year or what may it be, about the long term opportunity for you to generate profit dollars through revenue contribution versus profit dollars versus through discretionary cost cuts? What should the philosophical model look like going forward? Mala MurthyChief Financial Officer at Teladoc Health00:59:47Yes, it's a great question. So here's what I would say and let me start with BetterHelp. I'm assuming your question is for BetterHelp or is it broader than that? I'll address it for both segments. So look, for BetterHelp, I would say it really all comes down to us being able to see the sequential progression in the business and stabilization in the business as we go through the year because what matters for a variable margin business like BetterHelp is revenue growth. Mala MurthyChief Financial Officer at Teladoc Health01:00:27And so we need to see that improvement and lower and lower decline with every quarter as we roll through the year. So that is what we are looking to see as we think about the longer term for better health. Now I will say, you know, that model and the comments I made, is certainly going to be different when we think about benefit coverage that has different unit economics, that has different margins, etcetera. And so we will address that when that becomes material, which it isn't in 2025. On the Integrated Care side, it really is about two things. Mala MurthyChief Financial Officer at Teladoc Health01:01:13One is, it is about driving revenue growth because what we have always said is the Integrated Care segment is the one that has operating leverage. So the more revenue growth and gross profit dollars you drive, the more leverage you drive. And the way we are looking to drive revenue growth and gross profit dollar growth is certainly by the all the strategic things, the priorities that Chuck mentioned in his prepared remarks, right? It is driving member engagement and greater utilization and enrollment. It is driving greater value in every visit and making it more impactful because that allows us to sit down with our clients and certainly earn a greater share of their spend wallet. Mala MurthyChief Financial Officer at Teladoc Health01:02:03So things like that, that is going to drive greater top line growth. We will continue to drive productivity in our cost of goods sold and and we will continue to drive productivity in our OpEx items, specifically I would say around technology and development and G and A. And then we have shown some really nice discipline in stock based comp and I expect that to continue as well. So hopefully that gives you some color on how we think about us progressing on driving profit. But it's a combination of top line growth and driving and maintaining discipline on our cost structure. Michael ChernySenior Managing Director & Senior Research Analyst at Leerink Partners01:02:49Thanks, Malin. Sorry to get ahead on the question. Operator01:02:54No worries. Thank you. I can confirm that does conclude today's question and answer session. And I can confirm that does conclude today's conference call here. Thank you all for joining and please enjoy the rest of your day. Operator01:03:06You may now disconnect from the call.Read moreParticipantsExecutivesMichael MinchakVice President, Investor RelationCharles DivitaCEOMala MurthyChief Financial OfficerAnalystsLisa GillManaging Director at JP MorganJessica TassanSenior Equity Research Analyst at Piper Sandler CompaniesDavid RomanManaging Director at Goldman SachsSean DodgeEquity Research Analyst at RBC Capital MarketsRichard CloseManaging Director at Canaccord Genuity GroupDaniel GrosslightSenior Research Analyst at CitiJailendra SinghManaging Director at Truist SecuritiesGeorge HillManaging Director & Equity Research Analyst at Deutsche BankCharles RhyeeManaging Director at TD CowenMichael ChernySenior Managing Director & Senior Research Analyst at Leerink PartnersPowered by