Teladoc Health Q1 2025 Earnings Report

Teladoc Health EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.32
• Beat/Miss: N/A
• One Year Ago EPS: -$0.49

Teladoc Health Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $619.38 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Teladoc Health Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 4:30PM ET

Teladoc 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. Teladoc Health, Inc. was incorporated in 2002 and is headquartered in Purchase, New York.

Teladoc Health Q1 2025 Earnings Call Transcript

Key Takeaways

• Reported Q1 consolidated revenue of $629.4 M (-3% YoY) and adjusted EBITDA of $58.1 M at the high end of guidance, with net loss per share of $0.53 including non-cash goodwill impairment.
• Signed acquisition of virtual mental health provider Uplift (100 M covered lives, 1,500 clinicians) to integrate in-network benefits into BetterHelp, aiming to boost conversion and lower customer acquisition costs.
• Integrated Care segment reached 102.5 M U.S. members (+12% YoY), with revenue up 3.3%, virtual visits +7%, chronic care enrollment +3%, and a 12.9% adjusted EBITDA margin aided by Catapult Health integration.
• BetterHelp segment revenue fell 11% YoY to $239.9 M, with a 3.2% adjusted EBITDA margin (down 250 bps) and full-year outlook of ‑3.75% to ‑9.75% growth, citing softer consumer sentiment and expected Uplift integration costs.
• Flagged potential $5 M–$10 M EBITDA headwind from tariffs, offset by ongoing cost-savings initiatives, $1.2 B cash balance, and planned retirement of convertible debt in June.

Presentation

[Operator]

Good afternoon. Thank you for attending today's Teladoc Health First Quarter twenty twenty five Earnings Call. My name is Cole and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'd now like to hand it over to Mike Menchak, Head of Investor Relations, Teladoc Health. Please go.

[Michael Minchak, Vice President, Investor Relation at Teladoc Health]

Thank you and good afternoon. Today, after the market closed, we issued a press release announcing our first quarter twenty twenty five financial results. This press release and the accompanying slide presentation are available in the Investor Relations section of the teladochealth.com website. We also issued a press release today announcing the acquisition of virtual mental health company Uplift, supporting the strategic priorities of our Better Health segment. On this call to discuss the first quarter results and this acquisition are Chuck DaVita, Chief Executive Officer and Mala Murthy, Chief Financial Officer.

[Michael Minchak, Vice President, Investor Relation at Teladoc Health]

During this call, we will also discuss our outlook and our prepared remarks will be followed by a question and answer session. Please note that we will be discussing certain non GAAP financial measures that we believe are important in evaluating our performance. Details on the relationship between these non GAAP measures and the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Also, 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 our actual results to differ materially from those expressed or implied on this call.

[Michael Minchak, Vice President, Investor Relation at Teladoc Health]

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. I would now like to turn the call over to Chuck.

[Charles Divita, CEO at Teladoc Health]

Thanks, Mike. I'm pleased to report a solid start to the year. On a consolidated basis, we reported revenues and adjusted EBITDA at the higher end of our first quarter guidance ranges with Integrated Care results exceeding our ranges for both measures and better health in the upper half of our ranges as well.

[Charles Divita, CEO at Teladoc Health]

Mahal will provide more details on our first quarter results and our outlook later in the call. We also continue to make progress towards the strategic priorities that we've spoken about previously. And I would like to highlight some important developments in that regard, beginning with our BetterHelp segment. After the market closed today, we announced that we have acquired Uplift, an innovative and tech enabled provider of virtual mental health therapy, psychiatry and medication management services. This transaction aligns with our key priority of advancing our position in virtual mental health, including our ability for our BetterHelp segment to support consumers seeking to use their covered benefits.

[Charles Divita, CEO at Teladoc Health]

Uplift is an in network provider to health plans and has arrangements totaling over 100,000,000 covered lives. With a strong team, important capabilities and an existing network of over 1,500 mental health professionals, we view Uplift as a great addition to the organization. And we see significant business synergies with our current BetterHelp segment, which will enable us to serve a broader population seeking mental health care. Specifically, we intend to leverage BetterHelp's deep consumer expertise and market position to provide more options for people to address their mental health needs, including the ability to access their benefits coverage through BetterHelp's relationship with Uplift, as well as continued access to direct pay options in The U. S.

[Charles Divita, CEO at Teladoc Health]

And internationally. Today, BetterHelp is the largest direct to consumer virtual therapy business of its kind and served over 1,000,000 unique users globally in 2024 with forty percent of those users new to therapy. Its high net promoter score of over 70 is reflective of its consumer orientation, including the ability to match over 90% of users with a therapist in forty eight hours or less through a network of over 35,000 therapists. And whether direct pay or through covered benefits, the ability to activate consumers at scale is essential in virtual care. To illustrate this further, four million people in The U.

[Charles Divita, CEO at Teladoc Health]

S. Registered with BetterHelp in 2024. While often more affordable than traditional in person therapy, out of pocket cost is a key reason cited by those not ultimately subscribing to BetterHelp and many express an interest in accessing their covered benefits. And this transaction will accelerate our ability to offer this choice to consumers and capture a larger portion of the scaled funnel that we have built with BetterHelp. As part of Teladoc and the BetterHelp segment, Uplift will continue to manage and oversee the network of mental health professionals accepting benefits coverage, including quality assurance, clinical performance and in network administration functions.

[Charles Divita, CEO at Teladoc Health]

Therapists serving BetterHelp will also have an opportunity to be considered for inclusion in this network based on the respective requirements, needs and interests. We see this as important to meet market demand as we scale benefits coverage and continue supporting direct to consumer access as well. In addition, we continue to advance other priorities of our BetterHelp segment, including growth in international markets, new pricing models and other product enhancements. We believe that these and other actions will drive improved performance. Turning to the Integrated Care segment.

[Charles Divita, CEO at Teladoc Health]

We're pleased with our performance in the quarter as well as the progress we're making on key priorities for the segment, including our focus on growing customers, members and usage of services. In The U. S, we surpassed 100,000,000 members, a significant milestone and grew by 8,700,000 members sequentially. And compared to the prior year's quarter, U. S.

[Charles Divita, CEO at Teladoc Health]

Virtual visit volumes grew 7% and Chronic Care enrollment increased by 3%. Also a key priority for integrated care, our international business continues to grow with the team again delivering strong results, including revenue growth in the mid teens on a constant currency basis with notable successes in both B2B and public health channels and across various geographies as well. We are also actively working on several initiatives to better leverage our clinical strength and range of products to impact patient outcomes. I'll share a few updates there as well. At the February, we closed the acquisition of Catapult Health to expand further into preventative care.

[Charles Divita, CEO at Teladoc Health]

Integration is well underway, including activating cross selling opportunities and creating seamless ways for Catapult to connect patients with our chronic care management programs and other services based on eligibility and patient interest. While early, the value proposition is resonating with the market and we're excited about our prospects with Catapult. Regarding chronic care, we recently introduced our next generation solution for cardiometabolic health delivered through an integrated program and member experience. It builds on our successful programs with new features to support a healthy lifestyle, including member specific nutrition support from a registered dietitian, at home diagnostic testing for certain measures, and even includes a premium subscription to our Better Sleep app among other enhancements. And in the weight management space, we recently announced a relationship with Lilly Direct, Eli Lilly's self pay pharmacy program and its pharmacy integration partner, GetHealth.

[Charles Divita, CEO at Teladoc Health]

The arrangement will allow us to further support members without GLP-one coverage for obesity that are enrolled in our comprehensive weight care program or in our primary care offering. If clinically appropriate, a Teladoc licensed provider can prescribe GLP-one medications as part of our broader support programs and at a reduced price point for the member. We also continue to invest in technology and other capabilities to support patient care, including enhancements to our Teladoc Health Prism care delivery platform. For example, we've added new point of care functionality to support product features we intend to bring to market later this year. And we implemented additional AI enabled clinical documentation tools to better support our care teams using the platform.

[Charles Divita, CEO at Teladoc Health]

Additionally, we broadened our ability for customers to leverage our scale by connecting our solutions with other ecosystem partners through Prism. All of this is aimed at driving greater value from virtual care, creating a more connected experience and further differentiating us in the marketplace. Before I hand it over to Mala, let me briefly touch on the operating environment. As you know, the healthcare industry continues to be impacted by medical cost trends, disease prevalence, pressure on providers and mental health challenges among others. These factors continue to impact the markets we serve, including health plans as they adjust to higher cost trends and other developments.

[Charles Divita, CEO at Teladoc Health]

These dynamics can represent both opportunities and challenges for us and we're committed to being a company that plays a constructive role through our solutions. We believe the actions we're taking will provide additional opportunities to serve customers in this dynamic environment as well as improve the performance of our business. Beyond healthcare, the broader economic environment plays a role as well. With respect to tariffs, we do source certain equipment from various global markets, including our connected devices and equipment used for patient monitoring and virtual consultations in the hospital setting. While the tariff situation is fluid, to offset potential impacts to our business, we're implementing mitigation strategies such as pursuing exemptions, pricing actions and assessing alternative sourcing.

[Charles Divita, CEO at Teladoc Health]

Mahlo will comment more on this in a moment. It also remains unclear how tariffs and trade negotiations will impact the broader economy in the coming months. Recent macroeconomic data has shown signs of weakening business and consumer sentiment and we're closely monitoring our business in this fluid economic and policy backdrop. As we mentioned in the last quarter, we are running modestly ahead of our prior targets for cost savings and productivity initiatives and we've made progress across many areas including technology and development, administrative costs and stock based compensation. We further streamlined our cost base in the quarter and we will continue to look for ways to drive greater efficiencies in our business.

[Charles Divita, CEO at Teladoc Health]

In closing, we're pleased with the start of the year and we remain on track with our 2025 revenue outlook. We're excited about completing the Catapult Health acquisition and the significant opportunities that lie ahead with BetterHelp and Uplift joining forces to expand access to virtual mental health services. We see many opportunities ahead to further strengthen our position and unlock future growth potential. Despite uncertainties in the macro environment, we are focused on what we can most impact and we're executing with urgency against the strategic priorities we previously outlined. With that, I'll turn it over to Mala.

[Mala Murthy, CFO at Teladoc Health]

Thank you, Chuck, and good afternoon, everyone. First quarter consolidated revenue was $629,400,000 down 3% year over year and at the high end of the guidance range. Adjusted EBITDA of $58,100,000 was near the high end of the guidance range and represented a margin of 9.2%. Consolidated net loss per share was $0.53 compared to a net loss per share of $0.49 in the first quarter of twenty twenty four. Net loss per share included a non cash goodwill impairment charge of $0.34 per share pretax, which occurred after the issuance of our prior guidance and was not included.

[Mala Murthy, CFO at Teladoc Health]

Excluding this charge, net loss per share in the quarter would have been near the upper end of our guidance range. As discussed in our 10 ks, the Integrated Care reporting unit's fair value was below its carrying value based on the results of our annual goodwill impairment test in the fourth quarter of twenty twenty four and continued to be at the time of the Catapult acquisition. As a result, any goodwill recorded in the Integrated Care segment could require immediate impairment. Net loss per share also included amortization of intangibles of $0.48 per share pretax and stock based compensation expense of $0.14 per share pre tax. These items were partially offset by a discrete tax benefit related to an R and D tax credit of zero one two dollars per share.

[Mala Murthy, CFO at Teladoc Health]

First quarter free cash flow was a net outflow of $16,000,000 an improvement of $11,000,000 versus the prior year period. We ended the quarter with nearly $1,200,000,000 in cash and cash equivalents on the balance sheet. Turning to our segment results. Integrated Care segment revenue of $389,500,000 increased 3.3% over the prior year period and exceeded the top end of our guidance range. Factors that contributed to the upside versus the guidance range included timing shifts related to favorable performance on risk based deals in Chronic Care as well as FX.

[Mala Murthy, CFO at Teladoc Health]

Growth over the prior year was driven by visit revenue, international and our Chronic Care business as well as the addition of Catapult, which contributed approximately 90 basis points to segment growth. U. S. Integrated Care segment membership at quarter end was 102,500,000 members above the high end of our guidance range and up 12% year over year, while U. S.

[Mala Murthy, CFO at Teladoc Health]

Virtual visit volume increased by 7%. Chronic Care ended the quarter with total program enrollment of 1,150,000, up approximately 3% year over year as enrollment gains from existing and new clients were partially offset by the slightly higher attrition that we have previously discussed. Our Integrated Care segment continues to show strong momentum internationally with related revenue growth in the mid teens on a constant currency basis. First quarter Integrated Care adjusted EBITDA was $50,400,000 a 6% increase over the first quarter of twenty twenty four. Adjusted EBITDA margin of 12.9% was up approximately 30 basis points year over year and above our guidance range of 11.25% to 12.75%, driven by flow through from the revenue upside from performance on our risk based deals, partially offset by a pull forward of paid media spend as we continually seek to optimize spend throughout the year.

[Mala Murthy, CFO at Teladoc Health]

Turning to the BetterHelp segment. First quarter revenue of $239,900,000 was down 11% versus the prior year and above the midpoint of our guidance range. In the quarter, we continued to see improved stability in average paying users, which declined by less than 1% sequentially, while total users at March month end exceeded that of December. Overall, customer acquisition costs have remained relatively stable since our prior update and retention rates were generally consistent with the fourth quarter. Over the next several years, we believe the unification of the customer acquisition funnel between cash pay and benefit coverage will allow us to leverage BetterHelp's marketing budget more effectively, resulting in a lower acquisition cost per user.

[Mala Murthy, CFO at Teladoc Health]

BetterHelp adjusted EBITDA was $7,700,000 in the first quarter versus $15,500,000 in the prior year period. Adjusted EBITDA margin was 3.2% compared to 5.7% in the prior year. Now, let me turn to guidance. For full year 2025, we expect consolidated revenue of $2,470,000,000 to $2,580,000,000 which is unchanged versus our prior outlook. We now expect adjusted EBITDA in the range of $263,000,000 to $3.00 $4,000,000 and full year free cash flow of $170,000,000 to $200,000,000 both of which have been updated to reflect the impact of the Uplift acquisition, which I will discuss in a moment.

[Mala Murthy, CFO at Teladoc Health]

Stock based compensation expense is now expected to be in the range of $105,000,000 to $115,000,000 approximately $15,000,000 below our prior estimate. For the second quarter, we expect consolidated revenue in the range of $614,000,000 to $633,000,000 and adjusted EBITDA in the range of $56,000,000 to $70,000,000 which includes the Uplift acquisition. Moving to the segments. For Integrated Care, we are maintaining our full year 2025 revenue guidance of flat to up 3% year over year. We continue to expect Catapult to contribute roughly 200 basis points to full year revenue growth.

[Mala Murthy, CFO at Teladoc Health]

Our full year 2025 adjusted EBITDA margin guidance of 14.3% to 15.3 is unchanged. And as previously discussed, includes a roughly 40 basis point headwind from the Catapult acquisition. Excluding Catapult, adjusted EBITDA margin would be roughly flat year over year at the midpoint of the guidance range. We are also confirming our full year member guidance range of 101 to 103,000,000 members. Importantly, given the fluidity of the situation, we have not included the impact of announced tariffs in our current guidance.

[Mala Murthy, CFO at Teladoc Health]

However, we feel that it is important to size the potential impact to the current year. Based on the start date, current rates by country, including the 145% China tariff and our mitigation effort, which includes the amount of inventory on hand, we estimate a potential 5,000,000 to $10,000,000 headwind to adjusted EBITDA in 2025, largely in the second half. We will continue to monitor developments and explore additional mitigation opportunities. For the second quarter, we expect Integrated Care segment revenue growth of 0.25% to 2.75% and an adjusted EBITDA margin between thirteen point two five percent and fourteen point seven five percent. This includes a full quarter of contribution for Catapult, which is expected to add approximately two forty basis points to growth, as well as a sequential decline in chronic care program enrollment in the second quarter due to the previously discussed contract loss.

[Mala Murthy, CFO at Teladoc Health]

Importantly, we expect sequential growth in Chronic Care enrollment to resume in the third quarter, driven in part by growth from our new weight management contract with one of our largest customers. Also recall that our adjusted EBITDA margin in the second quarter of twenty twenty four included a roughly three forty basis point tailwind due to several discrete factors including performance based revenue, compensation accruals and the timing of certain marketing and operating expenses. Moving to BetterHelp. I wanted to start by providing some additional color on Uplift. Echoing Chuck's thoughts, I'm very excited about the transaction and believe it has the opportunity to advance our strategic priorities and drive a material improvement in segment performance over time.

[Mala Murthy, CFO at Teladoc Health]

In terms of background, we have acquired Uplift for $30,000,000 in cash with up to $15,000,000 in additional contingent earn out consideration based on certain performance related milestones. OPMA generated approximately 15,000,000 in revenue in 2024 and completed approximately 114,000 sessions. Adjusted EBITDA was a loss of roughly $6,000,000 which reflected investments to build out the operating infrastructure. With that as a starting point, let me provide some additional detail on several factors. First, we believe that access to benefits coverage will lead to significantly higher conversion rates relative to BetterHelp's cash pay business, driven by greater affordability as prospective users would incur relatively low or potentially no out of pocket costs to access mental health care based on their particular benefits.

[Mala Murthy, CFO at Teladoc Health]

Next, we expect increased member duration relative to the current BetterHelp model as many cash pay users that pause subscriptions cite costs as a primary factor. For covered benefits, we initially assume that sessions per user will be 30% above that of cash pay, which is conservatively below Uplift's historical utilization rates. As we progress through the remainder of 2025, we will advance business plans at an appropriate pace with increased scaling over time. This means that for users coming through the BetterHelp platform, we will enable access to insurance benefits coverage in a staged manner as we scale Uplift's operations, including the provider network to ensure access and a high quality consumer experience. Therefore, we expect a ramp in revenue contribution from benefits coverage as we enable more access over the next six to twelve months.

[Mala Murthy, CFO at Teladoc Health]

Consistent with others accepting benefit coverage, we expect gross margins for therapy covered by insurance benefits to be lower than that of the cash pay business, with our results to reflect a shift in mix over time. We expect this mix shift to be driven by new users accessing benefits coverage as well as the potential shift of a portion of existing BetterHelp cash pay users to in network arrangements. However, we expect higher conversion rates to lead to an increase in users and visit volumes and higher gross profit dollars should more than offset the lower gross margin profile for benefits coverage. We expect to achieve this increase by leveraging existing advertising and marketing spend and activation expertise. Given consumer demand and preferences and our market leading position, we do expect to maintain a sizable direct to consumer cash pay business at BetterHelp, which will include users without benefits coverage, those with a health plan that is not in our network and also users who prefer a direct pay arrangement.

[Mala Murthy, CFO at Teladoc Health]

And as a reminder, BetterHelp's international business is cash pay and our Better Sleep consumer offering is Cash Pay Today as well. In terms of how this translates to our outlook, we anticipate approximately $10,000,000 of incremental benefits coverage related revenue in 2025, net of any shift from the existing cash pay business. We expect a more material revenue contribution in 2026 as we continue to methodically scale operations and the therapist network to meet demand and enable access, returning the Better Health segment to a growth trajectory. These estimates will be further refined as we progress through the year and move into 2026. To support the scaling of the insurance business, we expect additional OpEx investments in areas such as provider recruitment, credentialing, support functions and technology.

[Mala Murthy, CFO at Teladoc Health]

These investments combined with some dilution from the legacy Uplift business are expected to lead to an incremental headwind of approximately 10,000,000 to $15,000,000 to 2025 adjusted EBITDA for the Better Health segment and overall. Moving to our updated outlook for Better Health. We continue to expect full year 2025 revenue to decline 3.75% to 9.75% versus 2024, which includes the incremental contribution from benefits coverage and reflects updated views on the cash pay business with recent softening consumer sentiment and increasingly uncertain macroeconomic backdrop. Demand for mental health services remained resilient in the first quarter as we delivered revenues in the upper half of our guidance range. Having said that, we observed a slight uptick in churn rates more recently, something we are monitoring closely and factoring into our guidance range.

[Mala Murthy, CFO at Teladoc Health]

However, providing customers with the ability to access benefits coverage can help to ease this risk over time. For adjusted EBITDA margin, we now expect a range of 4.75% to 6.25% for the full year, which is down 150 basis points versus our prior outlook and includes the impact of the Uplift acquisition and increased investments to support the insurance business. For the second quarter, we are guiding to Better Health segment revenue to be down 7.5% to 11.25% year over year with the midpoint reflecting modest sequential revenue improvement over the first quarter. We expect an adjusted EBITDA margin of 2.5% to 5.25% for the second quarter. Both reflect uplift from the closing date forward.

[Mala Murthy, CFO at Teladoc Health]

Lastly, from a balance sheet standpoint, we continue to have a high degree of financial flexibility with nearly $1,200,000,000 in cash and cash equivalents on the balance sheet as of the end of the first quarter. Our 2025 convertible bond comes due in June, which we will retire with cash on hand at maturity. We continue to evaluate our long term financing, although we believe our strong cash position, cash flow generation and business position provides us with optionality in the future. With that, I will turn the call back to Chuck.

[Charles Divita, CEO at Teladoc Health]

Thanks, Mala. Before we open it up for your questions, I wanted to highlight some exciting recognition we recently received. Teladoc was named to Newsweek's most trustworthy companies in America for 2025 and ranked number one in the healthcare and life sciences industry. We were also included in USA Today's inaugural list of America's most trusted brands and one of just five companies to earn a top five star rating in the pharmacies, health and wellness category. We are honored to be recognized for the trust we earned from members, clients and partners and I could not be more proud of the entire team and their commitment to integrity and excellence.

[Charles Divita, CEO at Teladoc Health]

With that, we will open it up for questions. Operator?

[Operator]

Our first question is from Jessica Tsaung with Piper Sandler. Your line is now open.

[Jessica Tassan, Senior Equity Research Analyst at Piper Sandler Companies]

Hi, guys. Thanks for taking the questions and congratulations on the acquisition and bringing behavioral health and network or expanding that offering. I'm wondering if you guys can talk a little bit about the shorter duration contracts that were made available in BetterHelp, I think in the fourth quarter, so weekly billing. It doesn't look like that had too much of a corrosive impact on average PMPMs in the first quarter, which is good. But just if you could speak a little bit to the impact of that offering on churn and then the expectations embedded in the next three quarters as well, that'd be helpful.

[Jessica Tassan, Senior Equity Research Analyst at Piper Sandler Companies]

And then just a quick follow-up would be, have you done any evaluation or assessment as to why the core BetterHelp network was not able to ultimately get payer coverage? And upfront obviously was just kind of any distinctions you want to make on the two different networks? Thanks.

[Mala Murthy, CFO at Teladoc Health]

Thank you, Jessica. I'll start with your first question. So I'll take them in order.

[Mala Murthy, CFO at Teladoc Health]

So we have been talking about the weekly offering now for several months. Just to recap the activities we've had there, we started essentially in September with the weekly offer. Prior to that, our BetterHelp offering was only a monthly subscription. What we did do then is to start this weekly offer with a price point that is essentially a fourth of the monthly subscription price point. So we didn't really do any kind of discounting.

[Mala Murthy, CFO at Teladoc Health]

We have essentially taken that price point and priced it at a fourth of that. What we are seeing and I will say a lot of our acquisitions now is around the weekly offer versus the monthly offer. The trends that we have been seeing over the past several months is as follows. First, because the weekly offer is at a more accessible price point, unsurprisingly, we're actually seeing stronger conversion, I would say much stronger conversion. The second though is because the user is reminded on a weekly basis, we are also seeing higher churn, both of which we expected.

[Mala Murthy, CFO at Teladoc Health]

What is important though is that net of the two, it is still positive, okay? So what we are essentially seeing is it is still net positive relative to the monthly offer. And we are continuing to evaluate how the LTV plays out over time. LTV, as you know, is something that we measure and watch over time. So we are essentially seeing that the metrics that we are looking at remain stable.

[Mala Murthy, CFO at Teladoc Health]

We are pleased with what we are seeing and we will continue to assess and evaluate. The one thing I would also say is, we have to be careful about when we think about the revenue per member, if you will, the revenue per user, because we are acquiring these customers at that lower weekly price point, you will see an impact quite naturally on the revenue per member. But remember, we are also getting a lot more members, so a lot more users. So those are essentially the trends that we are seeing. Chuck, do you want to comment on the second question?

[Charles Divita, CEO at Teladoc Health]

Yes, would just as a reminder, when we talked about getting into the benefit coverage space really through the end of the year, our focus was on the technical capabilities around that and the team had made really good progress and as we had shared on the last call, we were ready operationally to do that. We had hired talent and we were going after and still are going after payer contracts that really started in earnest in the first quarter. We applied to over a dozen payers in terms of getting a network coverage and had a couple that were at the finish line when the uplift transaction started to really gain momentum and we pause things there with those payers. So we didn't send mixed signals and felt like this was a way to accelerate what we're doing. So it wasn't about the BetterHelp network itself, it's about this as an opportunity to accelerate.

[Charles Divita, CEO at Teladoc Health]

We have 35,000 therapists in the network, and we have extensive, we believe there's extensive numbers in there that would be interested and meet the requirements for payer coverage and that's what we're going to activate over time. So again, think the sequencing was, as I just mentioned, and we're excited about this opportunity.

[Mala Murthy, CFO at Teladoc Health]

Awesome. Thank you.

[Operator]

Our next question is from David Roman with Goldman Sachs. Your line is now open.

[Mala Murthy, CFO at Teladoc Health]

David, we can't hear you.

[David Roman, Managing Director at Goldman Sachs]

Can you hear me now?

[Mala Murthy, CFO at Teladoc Health]

Yes.

[David Roman, Managing Director at Goldman Sachs]

Sorry about that. I just wanted to come back to the BetterHelp business here a little bit. And if we can you guys hear me?

[Mala Murthy, CFO at Teladoc Health]

Yes.

[David Roman, Managing Director at Goldman Sachs]

Sorry about that guys. Can you hear me okay?

[Mala Murthy, CFO at Teladoc Health]

Yes, we can.

[David Roman, Managing Director at Goldman Sachs]

Okay. I wanted to come back to the BetterHelp business and specifically look at the member trends actually improved quite a bit. Mentioned Q1 to first Q4 down very marginally sequentially. But if you look at the revenue numbers, you're seeing a pretty significant decline either in PMPM or revenue per member. Can you maybe help us understand the declines that you're seeing both in the Integrated Care business?

[David Roman, Managing Director at Goldman Sachs]

I think you noted an 8% decline in revenue per member there. And obviously, the down 4% on members in BetterHelp compared to the down 11% in revenue. Maybe help us bridge that gap.

[Mala Murthy, CFO at Teladoc Health]

Yes. So on the integrated care side, yes, what we did see is the decline that we spoke of on a year over year basis on revenue per member. However, remember that what that is showing is a very significant increase in number of members. We also reported a 12% increase in members on a year over year basis, David, over 8,000,000 members. So if you just think about what that means, you're onboarding a big cohort of members and that is essentially in ratio.

[Mala Murthy, CFO at Teladoc Health]

We haven't really had time yet to sell into that member population all of the more revenue accretive services that we offer such as chronic care, etcetera. So what you see here is they typically will come in. So take TRICARE is a great example, We onboarded 9,000,000 members essentially starting the beginning of the year. So what you will see is them coming in with essentially core telehealth services. Over time, you know, we will have an opportunity to cross sell and upsell to them additional products and services.

[Mala Murthy, CFO at Teladoc Health]

So the dynamic is essentially what is causing a depression in the year over year metric. I will say if you were to look at it on a think of it on a same store sales basis, you would actually see a slight increase in our revenue per member on the integrated care side. And the fact that we are adding all of these members is a perfect opportunity for us to actually put in action our land and expand, right? We have landed these members and now is an opportunity for us to expand into additional products and services, which will happen over time. So that's on the integrated care side.

[Mala Murthy, CFO at Teladoc Health]

On the BetterHelp side, what I would say is the fact that you're seeing the revenue per user as you are is a combination of a few things. First is, we have said in terms of our priorities, international growth is certainly an area of focus for us in Better Health. And we have said that international revenue per user is lower than in The US. Now keep in mind that in international, the cost of acquisition is also lower. So from a margin perspective, it's slightly lower than The U.

[Mala Murthy, CFO at Teladoc Health]

S. On net margin, but only slightly lower. But certainly, if you look at the headline revenue per user, it is lower. So you are partly seeing a mix effect if you look at the revenue per user. So that is one dynamic.

[Mala Murthy, CFO at Teladoc Health]

And then the other dynamic that you're seeing is what I spoke about a few minutes ago about the weekly price. We are acquiring users at a price point that is lower, but we are also acquiring more users. It's just so that we will be able to, over time, I would say that as our acquisition efforts become more efficient and we are able to use our advertising spend to actually be more efficient and effective, that should essentially result in greater revenue growth over time.

[David Roman, Managing Director at Goldman Sachs]

That's very helpful perspective and thank you for the detail. Maybe just a follow on follow-up on that. As you think strategically, I think one of the themes Chuck that you've talked about over the past year is increasing the profitability per member and really focusing in on profitable member growth. How do you kind of contrast that with sort of the continued focus on member growth, the dilutive impact of that? Are you sure you're being focused enough in the strategy here?

[David Roman, Managing Director at Goldman Sachs]

And maybe any color you can give us on what in your mind the signposts that you're watching to give you confidence that you can really return this business to growth?

[Charles Divita, CEO at Teladoc Health]

Are you speaking about members on the BetterHelp side? Or are you talking about the underwriting side?

[David Roman, Managing Director at Goldman Sachs]

I'm talking about total obviously there's a focus on BetterHelp there, but you're still talking about 8% growth on the integrated care side. You have over 100,000,000 members that's a giant number. How do you make sure you're extracting the value there? So we're still not seeing total company revenue turn in any meaningful way. So as you think about the strategic changes you're making and the acquisitions, how does this all fit together for you?

[David Roman, Managing Director at Goldman Sachs]

And what are the signposts you're watching to give you confidence that you can get this company back to revenue and EBITDA growth?

[Charles Divita, CEO at Teladoc Health]

Yeah. Okay. Got it. Just want make sure I was clear on the question. So a couple of things are in play here.

[Charles Divita, CEO at Teladoc Health]

First of all, the growth in customers, growth in members will translate into growth in usage of services. And as our business and integrated care side, we see more movement from subscription based models to visit fee based models, that membership and the activation of that membership to visits is how you get paid. That is the revenue generation. So the growth is important there as well. Why I talked about this a couple of quarters ago, but why it's such a priority for us to make our visits more valuable.

[Charles Divita, CEO at Teladoc Health]

What do I mean by that? Was that as that mix shift changes, we need those visits, we need the activation, we need to do a great job for our customers, great job for our members to have the visit and we need those visits to be able to do more services on behalf of our customers. So that's why we are putting the technology in place that I mentioned in my prepared remarks that allow us to activate and take the next best action for that member. That all of that is underlying the importance that in terms of how we're going to see growth. So I think the headline metric of you know, revenues divided by members, think has historically made some sense, but I think that business is evolving and I would just highlight that.

[Charles Divita, CEO at Teladoc Health]

So that's one. Second, I've talked about the need to make our chronic care management programs and use our clinical strength and product breadth to drive more value. What do I mean by that? We have over a million people that we serve, a massive number of people that we serve in chronic care. These are people with diabetes, hypertension, with weight and obesity issues, and so we're doing a great job in terms of engaging with those members, helping them with their conditions, etcetera.

[Charles Divita, CEO at Teladoc Health]

We have a further opportunity to drive more, I would say outcomes with respect to cost of care, which is a major issue that our health plan customers are facing and our employer customers are facing. And so that's where a lot of the innovation and the product roadmap is headed, which is how do we take those programs next level. It's those things that are going to drive the future growth of the company, both from a top line as well as from a user perspective. So hopefully that's some additional color for you.

[Mala Murthy, CFO at Teladoc Health]

Hey, David, one other thing I would add is on the BetterHelp side, we have for a while now been talking about balancing top and bottom line growth. We are managing our return on ad spend such that we are not chasing unprofitable revenue. One thing I would add as we thought about the rationale, the strategic rationale for the Uplift acquisition is the fact that if you think about the enormous funnel that BetterHelp has with its scale and that scale and the funnel is supported by the advertising and marketing spend that we have in the BetterHelp business, you're talking about close to 4,000,000 users at the top of the funnel who are essentially interested in at least looking into a BetterHelp service, right? Now the fact is as they go through the funnel and they come to a cash pay option, many of them choose not to avail themselves of the service. So you think about the conversion factor for the amount of ad spend we have, we now with offering the covered benefits option with Uplift are essentially leveraging our ad spend to capture those some of those, hopefully many of those users over time with the insurance option.

[Mala Murthy, CFO at Teladoc Health]

So it actually allows us to capture more users through that funnel, leverage our ad spend in a much more effective way and that should help not only top line growth, but that should also translate to bottom line growth.

[Operator]

Our next question is from Daniel Grosslight with Citi. Your line is now open.

[Daniel Grosslight, Senior Research Analyst at Citi]

Thanks for taking the question. I was hoping to get a little bit more detail on the cadence of BetterHelp margin improvement in the back half of the year. Guidance implies nearly $20,000,000 or so improvement from one half to second half. And you noted that there's around, I think you mentioned 10,000,000 to $15,000,000 of additional costs due to uplift and some additional investments you're making in the insured product. So can you help us think through 3Q and 4Q as those two dynamics play out?

[Mala Murthy, CFO at Teladoc Health]

Yes. So the way I would think about the dynamic playing out is the following way, Anja. You know that the Better Health business is essentially largely a variable margin business. You know, there is a relatively low amount of fixed costs. We do, as we said, have investments proposed for the integration and the just getting a quick start on realizing the strategy that we have with the Uplift acquisition.

[Mala Murthy, CFO at Teladoc Health]

Having said that, what I would say is the following. Think of the ramp for the second half to be driven by a few things. One is, if you think about revenue, we will continue to advance on revenue growth as we go to the second half on the back of all of the priorities for the Better Health business that we have already talked about, including insurance sorry, including international. We are continuing to make progress on our international efforts, both English speaking countries as well as the localized market launches that we are in process. We've done France.

[Mala Murthy, CFO at Teladoc Health]

We are doing Germany and Netherlands next. So we are making progress on advancing those international priorities. So the second half ramp is essentially conditioned on the revenue from those efforts. And then we are also as we talked about looking to advance the insurance efforts in the second half. The last thing I will say is, as always, we have talked about pulling back on ad spend in the fourth quarter and we will do so again this year, just like we have done in prior years.

[Mala Murthy, CFO at Teladoc Health]

I will say, I do expect the ad spend in the fourth quarter of this year to be slightly sequentially greater from a pullback standpoint relative to last year. Last year, if you remember, we had very, very little pullback in ad spend in the fourth quarter. I do expect it to be a little bit more pronounced this year. And those are essentially the various factors playing into the second half.

[Daniel Grosslight, Senior Research Analyst at Citi]

Got it. Okay. And then on the Uplift pricing model, is that subscription based and visit based or visit based only? Can you talk a little bit about how that may integrate with the mental health solution on the integrated care side of things?

[Charles Divita, CEO at Teladoc Health]

Yeah, this is in network coverage. So it's there'll be it's visit based, it's not subscription based. So that model is there and we expect as we've seen with others, but also our own experience, more extended usage, more visits because it's covered by insurance. So that's the model there. You know, the integrated care mental health offering, which is quite scaled, you know, over a million visits a year, it's really an offering that is somewhat different.

[Charles Divita, CEO at Teladoc Health]

You know, it's got a lot of content, a lot of different kinds of tools and it's really sort of sold and integrated with our various other offerings on that side. We have looked at and moved a bit on some synergies between integrated care and BetterHelp, for example, how we were doing some of the sales and go to market of the BetterHelp for business offering. There's some products, some joint products that we're exploring right now that we think could be interesting development for the company. Don't want to speak about that too much now. But so I think that they're somewhat different markets they're serving, different use cases for customers.

[Charles Divita, CEO at Teladoc Health]

But again, the macro theme of virtual mental health care being an important priority for Teladoc is what's most important. You know, it's a space that is widely adopted, you know, post pandemic that had the highest sort of penetration, if you will, in virtual care that's sustained that. You think about the shortage of access, the unmet mental health needs that are there both in The U. S. And internationally obviously.

[Charles Divita, CEO at Teladoc Health]

And so we think from a macro perspective, this is the right space to be in. We're scaled in integrated care. We have massive scale in the consumer business with BetterHelp. We have the most well recognized brand in BetterHelp, funnel of 4,000,000 people registering, that's massively higher than anyone else. So if we have this opportunity to sort of help those consumers access their benefit coverage with the great experience that they're looking for with BetterHelp, we think it's the right strategic move for us.

[Charles Divita, CEO at Teladoc Health]

So a different customer basis, but I think broader theme is right on.

[Daniel Grosslight, Senior Research Analyst at Citi]

Got it. Thank you.

[Operator]

Our next question is from Jalinda Singh with Truist. Your line is now open.

[Eduardo Ron, Analyst at Evercore]

Hi, guys. Thanks for the question. This is Eduardo on for Jolyndra.

[Eduardo Ron, Analyst at Evercore]

Can you speak to the what you're seeing in terms of CAC trends in the Better Health business? Is it different on the domestic and international side? And I noticed that advertising and marketing spend, the ratio there is down 130 bps year over year, 50 bps sequentially. So just curious to see what you're seeing there.

[Mala Murthy, CFO at Teladoc Health]

Yes. I would characterize the trends that we are seeing as stable through the first quarter of this year. And I would say, Eduardo, we are actually seeing it more favorable relative to the last many quarters for an important reason. Because we are seeing good conversion rates in our from our weekly offer from the acquisitions we are making on our weekly offer, it is the yield is actually better. So if you just think about why we are seeing favorability in our CAC, it is really because of the acquisitions that we are making on the weekly offer.

[Mala Murthy, CFO at Teladoc Health]

So those are essentially the trends that we are seeing. We are not seeing any significant differences, would say, in U. S. Versus international. I'll say customer acquisition costs have remained relatively stable thus far in 2025 across the board.

[Mala Murthy, CFO at Teladoc Health]

So that's sort of what we are factoring into our guidance. Now one thing I will obviously always caveat is, we started in February with a wide range in our guidance for better health. We are continuing with that wide range for better health. And part of the reason we have that wide range out there is macros are uncertain, consumer sentiment is certainly uncertain, to softening. And I would say overall, what we've also learned over the past couple of years is, this space can move very dynamically, including in ad costs and ad pricing.

[Mala Murthy, CFO at Teladoc Health]

So we have given ourselves room to navigate through these uncertainties as best we can by our guidance range being as wide as it is.

[Eduardo Ron, Analyst at Evercore]

All right. Thanks.

[Operator]

We have a question from Elizabeth Anderson with Evercore. Your line is now open.

[Alan Chen, VP - Equity Research at Citi]

Hi. Thanks for the question. This is Allen Chen on for Elizabeth. I have a question on cost saving. I believe on the 4Q call you mentioned about increased focus on tech and G and A costs.

[Alan Chen, VP - Equity Research at Citi]

Can you share more color on how you're thinking about additional opportunities in those areas? Thanks.

[Mala Murthy, CFO at Teladoc Health]

Yes. So we had talked about the fact that in the February call, we expected the cost savings this year to be modestly higher than what we had originally signaled for 2025. We continue to make efforts. In fact, I would say to you in the first quarter, we took out a little bit of additional costs than we were expecting earlier in the year. And we have accounted for increased restructuring costs and severance costs as a result of that as we have put out the EPS guide.

[Mala Murthy, CFO at Teladoc Health]

Point being, we continue in this uncertain macroeconomic environment, it's prudent for us to think about continuously looking at our cost base and look at streamlining, rationalizing our cost base as appropriate. If you look at the results we delivered in 1Q, I would say we have demonstrated good control over our overall cost base. Technology and development spend is down on a year over year basis. We have spoken about the fact that we are putting scrutiny on this line item. We expect that to continue.

[Mala Murthy, CFO at Teladoc Health]

And I would say, would expect overall T and D dollar spend from an OpEx basis to be down in absolute levels year over year as we go through this year. On the G and A side, we did have a couple of we had some accruals that we took reserves on. So you will see that in our numbers for the first quarter. But I do expect us to continue to demonstrate restraint and discipline as we go through the year. And as you saw in our prepared remarks, we have brought down our stock based compensation outlook for the year by 15,000,000 and it is considerably lower than 2024 and 2023.

[Mala Murthy, CFO at Teladoc Health]

So again, it's a point of focus for us and we'll continue to maintain control exercise control over that.

[Alan Chen, VP - Equity Research at Citi]

Got it. Thanks.

[Operator]

We have a question from Charles Rhyee with Cowen. Your line is now open.

[Charles Rhyee, Managing Director at TD Cowen]

Yes. Thanks for taking the question. I guess, firstly, if we think about sort of the path here with I guess, I just want to talk about uplift here, you're paying about two times revenue up to three times depending on the contingent payments into the future. You go back to Catapult, you paid about two times revenue as well. I guess both of these bring to you guys some important capabilities certainly with Uplift getting sort of insurance based coverage here.

[Charles Rhyee, Managing Director at TD Cowen]

But when you're factoring at less than one times, to 0.5 times revenue. Can you talk about more about why the Board is not more actively perhaps looking at a share buyback? Understanding you have the converts coming due, you're to pay down in cash. But when you look at overall leverage, it's not that drastic and you certainly have a lot of financial capacity as it stands. Can you talk a little bit about your capital deployment strategy at this point and maybe why share buyback is not a perhaps a bigger part of that? Thanks.

[Mala Murthy, CFO at Teladoc Health]

Yes. So it's a very fair question, Charles. Unsurprisingly, this is a point of active discussion amongst the management team internally. And as we think about the various options we have to deploy our capital, first, we are looking to deploy capital to amass capabilities that we need for us to be able to drive sustained top line growth as we move forward over the next twelve thirty six months. When Chuck came on board middle of last year, '1 of the things that we talked about then and since on earnings call is the fact that we are a company looking to reposition and turn around our performance that takes capital deployment, that can be organic, that can be inorganic, as you have seen us use inorganically over the past couple of quarters.

[Mala Murthy, CFO at Teladoc Health]

So we are looking to as we have always done to look at adding to our capabilities, whether it be services, whether it be other capabilities, so that we can drive sustained top line and bottom line growth in the months and years ahead. So that's number one. Number two, we definitely are looking at our overall leverage and our debt. As we talked about in our prepared remarks, we'll pay down the upcoming note that's due. We are looking at the 2027 note that is outstanding.

[Mala Murthy, CFO at Teladoc Health]

And we know that it's trading below par. So we are assessing that. The third and we have never taken this off the table, you know, we are absolutely looking at buybacks as well. So it's a matter of and we have been talking to the board about all of this. So as, you know, as a part of normal course of conversations that the leadership team has with the board, I would say to you none of these is off the table.

[Mala Murthy, CFO at Teladoc Health]

It's a matter of us at this moment because of looking to accrete to our top line growth and bottom line growth in the years ahead, there are opportunities that are coming our way. You know, we are with the scale we have in this space, we do tend to get a lot of inbounds and we look at them in terms of what it will do for our future performance. So the fact that we are going out with Catapult and we have just gone out with the Uplift acquisition is a reflection of the fact that we have these interesting opportunities that we were looking at. And that came to us and we felt that it was really important for us to move forward with this. Chuck?

[Charles Divita, CEO at Teladoc Health]

Yes, just the only thing I would add is, we need to invest in those key strategic priorities. Our biggest opportunity as a company and for our shareholders is to leverage the scale position that we have with the 100,000,000 lives with this really unparalleled position over 12,000 customers, international business. So we need to invest in those capabilities that are going to really achieve the outcomes against the scale that's been built. And on the BetterHelp side, the acquisition I mentioned it two times, this is a company that had invested in their capabilities as a really strong team, but are limited in terms of their ability to activate. At the end of the day, you need to activate the consumer, make them aware of what you're doing and activate them into your solution.

[Charles Divita, CEO at Teladoc Health]

That's what BetterHelp does. BetterHelp is an expert at that, massive scale. So that's how we look at that acquisition and we're really excited about the fact that we can accelerate our progress. Obviously, we're going to do it in a measured way as Marla said. We want to build it for the long term, but it really is an unparalleled opportunity to take something as massively scaled as Better Health and to start to bring that consumer orientation and activate with that benefit coverage.

[Charles Divita, CEO at Teladoc Health]

So that's how we're looking at capital. Obviously, the things that Marla said are on the table, but we also want to make sure we're investing in this business for the future.

[Charles Rhyee, Managing Director at TD Cowen]

And as a follow-up question, can I just ask, so obviously, you talked about getting into the TRICARE population at the start of this year, looking to activate on that side, cross sell products above the basic sort of telehealth offering to start? You're talking about your BetterHelp here with Uplift and trying to transition that a little bit away from direct to consumer model. Can you talk about of the capacity internally at the management level to kind of handle these processes? Because they seem very distinctly different challenges that you're facing that you have been facing over the last year plus. And I guess, fundamentally, I guess, the question, the strategic value of having both of these assets under a single roof here and whether your management attention or resources are being kind of pulled in different directions and perhaps a more focused strategy on one or the other might move things along quicker? Thank you.

[Charles Divita, CEO at Teladoc Health]

Yes, I think it's a fair question. One of the very first things when I came on board and we've spoken about this in prior quarters was that we needed to take a look at the way we were organized. I think we were organized in a way that we're not as close to the customer as we needed to be. And we've made a number of changes to streamline the organization and focus them on their markets that not only did it save costs, you will, it improved agility and put the right leadership and management structure in place so that we can activate on each one of these strategies. So we are organized to execute against this, feel comfortable that we have the ability to kind of drive those forward.

[Charles Divita, CEO at Teladoc Health]

I think the importance of we had these two scaled businesses that are part of Teladoc, it's incumbent upon us to make sure that we're maximizing the value out of those. We need to make sure that Better Health is positioned for the future. As we said, we think that's the right thing to do regardless. And I think activating against these strategies on the integrated care side are going to yield benefits as well. So it's a fair point, but we feel like we've got it adequately covered.

Participants

Executives

• Michael Minchak, Vice President, Investor Relation
• Charles Divita, CEO
• Mala Murthy, CFO

Analysts

• Jessica Tassan, Senior Equity Research Analyst at Piper Sandler Companies
• David Roman, Managing Director at Goldman Sachs
• Daniel Grosslight, Senior Research Analyst at Citi
• Eduardo Ron, Analyst at Evercore
• Alan Chen, VP - Equity Research at Citi
• Charles Rhyee, Managing Director at TD Cowen