Teladoc (TDOC) Q3 2025 Earnings Call Transcript

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DATE

Wednesday, Oct. 29, 2025, at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Charles Divita
• Chief Financial Officer — Mala Murthy

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RISKS

• Chief Financial Officer Mala Murthy reported, "Revenue declined 2.2% year over year as growth in our integrated care segment was offset by a decline at BetterHelp."
• Murthy stated that net loss per share included "a non-cash goodwill impairment charge of $0.07 per share pre-tax," which was "not contemplated in our guidance range as it occurred after the guidance was issued."
• Murthy disclosed, Average paying users declined 4% year over year to 382,000, with high single-digit growth in non-U.S. users only partially offsetting a high single-digit decline in U.S. users.
• Murthy noted, "the ongoing headwinds we have discussed in our U.S. cash pay business, partially offset by our non-U.S. business and insurance rollout and growth initiatives," are expected to result in a full-year revenue decline of 8%-9.2% in the segment for fiscal 2025.

TAKEAWAYS

• Revenue -- $626 million in consolidated revenue, representing a 2.2% decrease year over year and positioned above the midpoint of guidance.
• Adjusted EBITDA -- Adjusted EBITDA of $70 million, yielding an 11.2% margin and landing at the high end of the guidance range.
• Net Loss Per Share -- $0.28 net loss per share, impacted by a non-cash goodwill impairment charge of $0.07 per share pre-tax, not included in prior guidance.
• Free Cash Flow -- Free cash flow was $68 million, totaling $113 million year-to-date.
• Cash and Cash Equivalents -- $726 million in cash and cash equivalents at quarter end, up $47 million sequentially.
• Integrated Care Revenue -- $390 million, up 1.5% from the prior year, including a 115 basis point headwind from a prior billing adjustment.
• Integrated Care U.S. Membership -- 102.5 million, rising 9% year over year and reaching the high end of guidance.
• Chronic Care Program Enrollment -- 1.17 million, reflecting a 4% sequential increase and growth of 48,000 lives.
• Integrated Care Adjusted EBITDA -- $66 million adjusted EBITDA, representing a 17% margin, above segment guidance.
• Integrated Care International Revenue Growth -- 14% year-over-year growth on a constant currency basis, with Catapult and TeleCare acquisitions contributing approximately 245 basis points.
• BetterHelp Revenue -- $236.9 million, with ~$4 million from insurance, mostly Uplift-related.
• BetterHelp Average Paying Users -- 382,000, down 4% year over year, with high single-digit international growth partially offsetting a U.S. decline.
• BetterHelp Adjusted EBITDA -- $4 million, a margin of 1.6% for the segment.
• Guidance: Consolidated Revenue -- Now $2.51 billion to $2.539 billion for fiscal 2025; full-year midpoint unchanged versus prior outlook.
• Guidance: Adjusted EBITDA -- $270 million to $287 million adjusted EBITDA for full year 2025; midpoint unchanged versus prior outlook.
• Guidance: Free Cash Flow -- $170 million to $185 million expected for full year 2025.
• Guidance: Stock-Based Compensation -- $85 million to $95 million for fiscal 2025, reduced by $10 million relative to prior outlook.
• Integrated Care Guidance Update -- Full-year 2025 revenue expected up 2.4%-3.5%, midpoint raised 40 basis points versus previous range; half of this from the TeleCare acquisition.
• Integrated Care Adjusted EBITDA Margin Guidance -- 15%-15.4% adjusted EBITDA margin for full-year 2025, up about 30 basis points at midpoint versus prior guidance.
• BetterHelp Full-Year Revenue Guidance -- Narrowed to the lower half of prior range; anticipated year-over-year segment revenue decline is 8%-9.2% for full-year 2025.
• BetterHelp Insurance Revenue -- Expected $12 million to $14 million in insurance revenue in 2025, including Uplift launches.
• BetterHelp Adjusted EBITDA Margin Guidance -- Full-year 2025 BetterHelp adjusted EBITDA margin range of 3.8%-4.6%; midpoint down 55 basis points due to revenue and investment flow-through.
• Recent Acquisitions -- TeleCare acquired for $17 million in net cash in August; Catapult and Uplift continue to be integrated in line with strategic priorities.
• Balance Sheet -- Net debt to trading adjusted EBITDA was under 1.0x at quarter end.
• Product and Strategic Development -- Management highlighted new AI-enabled risk stratification models and the rollout of WellBound, as well as pilots for clinical intervention expected to reach market in 2026.
• Operational Excellence -- Achieved ISO 9001 certification for key U.S. Integrated Care processes and reported across-the-board Net Promoter Score improvement in client surveys.
• Visit-Based Revenue Model -- U.S. virtual care visit-based revenue now exceeds 50%, up from approximately 40% in 2023.
• Guidance: Fourth-Quarter Expectations -- Consolidated revenue expected between $622 million and $652 million; adjusted EBITDA between $73 million and $90 million.

SUMMARY

Teledoc (NYSE:TDOC) management confirmed that visit-based revenue models now comprise over 50% of U.S. virtual care revenue. The company launched BetterHelp Insurance in seven states and the District of Columbia, with all key user and conversion metrics reported as "in line with our expectations." Recent acquisitions -- Catapult, Uplift, and TeleCare -- drove incremental revenue and are now incorporated into segment guidance and product strategy. Operating discipline led to year-over-year improvements in technology, general and administrative expenses, and cost structure, with management citing further opportunities for expense streamlining. A recent ISO 9001 certification and improved client Net Promoter Score metrics were specifically cited as operational milestones. Contracting is increasingly performance-based, and the rollout of new product enhancements is expected to further support future growth in both visit-based and integrated care service lines.

• Chief Executive Officer Charles Divita said, "Visit-based revenues in 2025 now comprise over 50% of our U.S. Virtual care revenues compared to approximately 40% in 2023."
• Murthy stated, "Key metrics at this point are in line with our expectations, including conversion rates, user growth, and sessions per user, among others," with respect to BetterHelp Insurance's rollout in multiple states.
• Divita noted the strategic focus on converting member engagements to clinical and financial outcomes with new AI-enabled risk stratification models and broader care interventions set for rollout in 2026.
• Murthy highlighted, "We now expect 2025 stock-based compensation expense of $85 million to $95 million, a $10 million reduction versus our prior outlook."
• Integrated Care segment growth was boosted by the recent TeleCare acquisition in Australia and sustained international expansion.
• Marketing spend patterns for BetterHelp are anticipated to be similar to prior years, with a slightly larger step down in the fourth quarter, while some marketing spend is being pulled forward for Integrated Care.
• Management emphasized robust demand planning discipline in BetterHelp Insurance launches, with therapist capacity closely matched to demand in newly launched states.
• Adoption of bundled, multi-solution offerings is enabling cross-engagement of members, particularly leveraging synergies between Catapult, chronic care, and integrated care relationships.

INDUSTRY GLOSSARY

• PMPM: Per Member Per Month, a common subscription pricing model in healthcare services contracts, highlighted in integrated care revenue discussions.

Full Conference Call Transcript

Charles Divita: Thanks, Mike. Consistent with our preliminary results released last week, our third quarter consolidated revenue and adjusted EBITDA both came in above the midpoint of our respective guidance ranges. This performance reflects our continued focus on execution. Mala will provide more details on our financial results later in the call, including segment-level information and our updated full-year outlook. First, I would like to provide an update on the business and our strategic priorities. With respect to Integrated Care, we continue to build on our U.S. market leadership position with an emphasis on performance, innovation, and client impact.

Today, over 100 million people have access to one or more of our services, a testament to the scale and value of our platform. With this reach and vantage point, we are advancing initiatives that expand our service offerings, further connect and orchestrate care, and deliver differentiated outcomes for patients and clients. For example, through enhancements to our Prism care delivery platform this year, we now have a much greater opportunity to surface important information directly at the point of care. This offering enables our providers and care teams to address gaps in care, manage specialists and other referrals, and activate relevant programs based on the member's eligibility and needs.

Further, our ability to embed provider-to-provider specialist consults into the experience improves timely resolution of the member's care needs and drives cost savings and differentiated value for the client. As I have shared previously, having visits and other interactions serve as broader engagement points is central to our strategy and value proposition, which we believe will ultimately drive overall growth in virtual care revenues. In chronic care, where program enrollment in the third quarter grew 4% on a sequential basis, we also continue to advance important innovations there as well. In addition to new connected devices and new program features, we are developing enhanced clinical intervention models for rising risk and high-risk populations.

These models will apply AI-enabled risk evaluation and stratification capabilities and leverage our clinical and care delivery capabilities to identify and activate intervention opportunities. And through these interventions, including engaging with the patient's existing care provider to develop and support the respective care plan, we see additional opportunities to improve clinical outcomes and drive greater client ROI and impact. We have active pilots underway and expect to bring these new innovations to market in 2026. And through Catapult, acquired earlier in the year, including through health screenings, at-home diagnostic testing, and clinical support. Our integration with Catapult also provides additional opportunities to create awareness of other eligible Teladoc services and support member activation.

We are seeing strong client interest in Catapult, both as a standalone offering and as part of a broader health engagement capability. We believe that our unique and skilled position at the intersection of technology and clinical care will continue to provide opportunities to expand services and impact over time. As a partner to our clients, we deliver, enable, and orchestrate care across a wide spectrum of needs, meeting members where they are, supporting their health and mental well-being, and driving better outcomes. We've shared previously, virtual care revenue models continue to move towards fee-for-service visits, and we're leaning into this change with an approach built around engagement, activation, and measurable value.

Visit-based revenues in 2025 now comprise over 50% of our U.S. Virtual care revenues compared to approximately 40% in 2023. While we expect this mix shift to continue, we also expect a level of impact on overall revenues going forward to see some moderation compared to the impact over the past few years. And through the strength of our model, and ability to serve expanded clinical use cases, through our new product enhancements, we look to participate in the value we create, which we believe puts us on a path to sustainable underlying growth in our virtual care business. Now turning to our second strategic priority, leveraging our scaled mental health position.

In the third quarter, we again achieved double-digit growth in B2B mental health visits and remain on track for generating over $150 million in total revenue excluding BetterHelp's new entry into insurance cover benefits. We're excited about building on this success with our new employee assistance program offering called WellBound, which leverages strengths of both integrated care and BetterHelp, including unmatched scale, a robust network, consumer engagement capabilities, and efficient connectivity to a range of services. While early, we're seeing strong interest in WellBound and our pipeline continues to build out. With respect to BetterHelp's new insurance offering, the Uplift acquisition has brought together important capabilities and payer arrangements.

As I shared last quarter, BetterHelp's first state for insurance, Virginia, was launched within sixty days of the transaction closing. This initial state demonstrated the strength and effectiveness of our combined technology, operations, and ability to effectively deliver on our user and provider experience objectives. Key metrics at this point are in line with our expectations, including conversion rates, user growth, and sessions per user, among others. We're encouraged by the results and we're continuing to invest to support the broader rollout of this business. We are now live in seven states, including the additions of Florida, Texas, and New York, as well as being live in the District Of Columbia.

Several more states are planned over the remainder of 2025. We also continue to expand the credentialed therapist network for insurance to support the rollout. With BetterHelp's substantial network of therapists in the U.S. supporting our D2C business, the strong interest we've seen from our network in the new offering, as well as Uplift's existing 1,500 plus credential providers, we expect to be able to add the necessary capacity to meet demand. Separately, BetterHelp's non-U.S. business continued to perform well in this quarter, delivering high single-digit user growth aided in part by our localized market launches.

As we've shared previously, the rollout and scaling of insurance, as well as growth in non-U.S. markets, continue to be essential to BetterHelp's future given continued pressure on the U.S. cash pay business. Our third strategic priority is driving continued growth in our international integrated care business. For the third quarter, revenues grew 14% year over year on a constant currency basis, and we see continued opportunities for growth ahead. This includes in Australia, where we recently acquired TeleCare, which operates Australia's leading virtual care clinic to provide software solutions across the healthcare sector. We intend to build on our existing presence in Australia and deepen our penetration in the public health sector.

Finally, operational excellence remains a key strategic priority. In terms of elevating performance, I'm pleased that we recently achieved ISO 9001 certification for key processes within U.S. Integrated care. This speaks to the great work done by our operations team to deliver a high-quality experience for our clients and members. We are seeing operational improvements and other client service enhancements reflected in the results of our client survey data, which showed across-the-board strengthening in Net Promoter Scores in our U.S. Integrated Care business. In terms of cost efficiencies, we've driven improvements in a number of areas, including technology and development, administrative costs, and share-based compensation.

And as we close out the year and move into 2026, we will continue to focus on opportunities to further streamline our cost structure across expense categories and capital expenditures. In closing, while we've made considerable progress across each of our strategic priorities, we know that we have important work ahead of us. The challenges in healthcare are substantial, including affordability and rising costs, prevalence of chronic disease, unmet mental health need, and intense pressure on providers, among others. And as a market leader, we know that our clients rely on us to help mitigate the impact of these pressures.

We remain committed to driving the next evolution of virtual care and believe that our strategic priorities, investments, and product innovations will provide opportunities to drive even greater value and impact going forward. Before I turn it over to Mala to share more on our results, I want to take a moment to recognize her contributions to Teladoc Health, Inc. As we announced last week, Mala will be stepping down as Chief Financial Officer next month. Over the past six years, Mala has played a pivotal role in shaping Teladoc's financial strategy and strategic growth initiatives through a period of significant transformation.

On behalf of the Board, our leadership team, and all of Teladoc Health, Inc., we thank Mala for her outstanding contributions and wish her continued success in her next chapter. With that, let me turn it over to Mala.

Mala Murthy: Thank you, Chuck, and good afternoon, everyone. As Chuck outlined, we are executing well against our strategic priorities. And our third quarter results reflect that momentum with consolidated revenue of $626 million above the midpoint of our guidance range. Revenue declined 2.2% year over year as growth in our integrated care segment was offset by a decline at BetterHelp. Adjusted EBITDA of $70 million was at the high end of our guidance range, representing an 11.2% margin and reflecting disciplined execution across the business. Net loss per share was $0.28, which included a non-cash goodwill impairment charge of CAD0.07 per share pre-tax. A charge that was not contemplated in our guidance range as it occurred after the guidance was issued.

As outlined in our 10-Q, the carrying value of the integrated care reporting unit continued to exceed its fair value, which triggered the impairment charge. Net loss per share in the quarter also included amortization of intangibles, of $0.48 per share pre-tax, and stock-based compensation expense of $0.10 per share pre-tax. Free cash flow was $68 million in the third quarter, bringing year-to-date free cash flow to $113 million. We ended the quarter with $726 million in cash and cash equivalents, an increase of $47 million sequentially, further reinforcing our strong liquidity position. Turning to our segment results. Integrated Care revenue was $390 million, up 1.5% over the prior year period.

As previously discussed, the resolution of a prior period billing adjustment in 2024 created a 115 basis point headwind to revenue growth this quarter. We see continued strong performance in our international business, which delivered mid-teens growth on a constant currency basis alongside solid growth in visit revenue. The acquisitions of Catapult and TeleCare contributed approximately 245 basis points to segment growth. We delivered solid results across key underlying metrics. U.S. integrated care membership ended the quarter at 102.5 million members at the high end of the guidance range and up 9% year over year.

And as Chuck mentioned, chronic care program enrollment grew 4% on a sequential basis, adding 48,000 lives and reaching 1.17 million, marking a return to sequential growth. Third quarter Integrated Care adjusted EBITDA was $66 million, representing a 17% margin, which was above the high end of our guidance range. Excluding the 95 basis point benefit from the prior period billing adjustment in 2024, adjusted EBITDA margin would have increased modestly year over year. The upside in the quarter reflects the revenue mix and flow-through as well as continued cost discipline, including hiring deferrals. We saw year-over-year improvement in both technology and development and G&A expenses, two key areas of focus. Moving to the BetterHelp segment.

Third quarter revenue was $236.9 million, which included approximately $4 million in insurance revenue, the majority of which was from Uplift. As Chuck mentioned, we are still in the early stages of the BetterHelp insurance rollout, and we are encouraged by the initial traction. Average paying users declined 4% year over year to 382,000, with high single-digit growth in non-U.S. users only partially offsetting a high single-digit decline in U.S. users. The backdrop we discussed last quarter, weaker consumer and macroeconomic uncertainty, has remained consistent through the third quarter. Further, while growing consumer willingness to access mental health therapy to cover benefits is a headwind to our cash pay business, it validates our insurance initiative.

We continue to believe insurance coupled with non-U.S. growth positions BetterHelp for a return to growth over time. Adjusted EBITDA for BetterHelp was $4 million, representing a margin of 1.6%. The year-over-year decline was primarily driven by lower revenue and investments to support the insurance rollout, partly offset by lower absent. Turning to guidance. We now expect 2025 consolidated revenue of $2.51 billion to $2.539 billion and adjusted EBITDA of $270 million to $287 million, with the midpoint of both ranges essentially unchanged versus our previous outlook. Free cash flow is expected to be in the range of $170 million to $185 million.

We now expect 2025 stock-based compensation expense of $85 million to $95 million, a $10 million reduction versus our prior outlook. The full-year net loss per share guidance range has been narrowed, with the midpoint remaining unchanged. The third quarter goodwill impairment is expected to be largely offset by the reduction in stock-based compensation expense. Our full-year guidance implies fourth-quarter consolidated revenue in the range of $622 million to $652 million and adjusted EBITDA of $73 million to $90 million. Moving to the segments, starting with integrated care, we are raising and narrowing our full-year 2025 revenue and adjusted EBITDA guidance range.

We now expect revenue to be up 2.4% to 3.5% over 2024, an increase of 40 basis points at the midpoint versus our prior range. Roughly half of this increase relates to the TeleCare acquisition, with the remainder reflecting strong year-to-date performance and execution. We continue to expect Catapult to contribute approximately 200 basis points to full-year revenue growth. We now expect full-year 2025 adjusted EBITDA margin of 15% to 15.4%, up by approximately 30 basis points at the midpoint versus prior guidance, reflecting strong 3Q performance partially offset by a pull-forward of marketing spend in 4Q. While the tariff situation remains fluid, we are maintaining our estimate of a roughly $3 million headwind to adjusted EBITDA.

We will continue to monitor tariff-related developments and evaluate mitigation strategies, including alternative sourcing arrangements to diversify our supply chain. For the fourth quarter, Integrated Care segment revenue is expected to increase 1% to 5.2% over the prior year period. Adjusted EBITDA margin is expected to be in the range of 15.3% to 16.8%, up approximately 250 basis points year over year at the midpoint, reflecting cost discipline and a higher level of investment spend in the prior year period. Moving to BetterHelp. We have narrowed our full-year revenue outlook to the lower half of the prior guidance range.

The expected year-over-year revenue decline of 8% to 9.2% reflects the ongoing headwinds we have discussed in our U.S. cash pay business, partially offset by our non-U.S. business and insurance rollout and growth initiatives. As Chuck outlined, we are encouraged by the early progress of our insurance rollout. And based on early performance from recent state launches, we expect to generate $12 million to $14 million in total insurance revenue in 2025. We now expect BetterHelp adjusted EBITDA margin of 3.8% to 4.6% for the full year, with the midpoint down approximately 55 basis points versus our prior guidance.

This largely reflects the flow-through impact from lower revenue, as well as accelerated investments to support the insurance initiative, based on the successful early launches. Our updated full-year outlook implies fourth-quarter BetterHelp segment revenue down 3.8% to 8.8% year over year and an adjusted EBITDA margin of 5.5% to 8.6%, with a sequential margin improvement driven by the typical seasonal pullback in advertising spend during the holiday period. Lastly, our balance sheet remains strong. In August, we completed the acquisition of TeleCare for $17 million in net cash. We ended the quarter with $726 million in cash and equivalents, and net debt to trading adjusted EBITDA was under one time at quarter end.

We continue to believe our strong cash balance, cash flow generation, and business position provide us optionality in the future. With that, let me turn the call back to Chuck.

Charles Divita: Thanks, Mala. Before we open up for questions, I also wanted to share that we were recently named one of Time Magazine's top health tech companies of 2025. The list honors the most innovative and impactful organizations transforming healthcare through technology. Our company was recognized with the top ranking of outstanding in the telehealth and treatment category, reflecting our high marks across the key evaluation areas of financial performance, reputation analysis, and online engagement. I couldn't be more proud of our colleagues whose dedication and contributions made this recognition possible. Operator, we're now ready for questions.

Operator: Thank you so much. We will now begin our Q&A session. Or if you would like to remove your question for any reason, you can do so by pressing star 2. There will be a one-question limit for our Q&A session. We'll briefly pause here as questions are registered. Our first question comes from the line of Lisa Christine Gill of JPMorgan. Your line is now open.

Lisa Christine Gill: Thanks very much. Good afternoon. First off, Mala, I want to wish you the very best in your next endeavor. It's been great working with you the last, I guess, now six years. And on to my question, Chuck, I just really maybe better understand, you know, in the last year or so, you've talked about it's gonna take time for these initiatives to gain traction. As we sit here today, I would anticipate that you've had most of your conversations for the 2026 selling season. So, really, two things I want to better understand. One, how are you feeling about things that you're selling for 2026?

And one of the things that stood out to me in your prepared comments is you want to participate in the value you create. So should we be assuming that the way that your contract is changing in any way, what you know, the plan sponsor is buying in any way? So any color you can give us around that, you know, the timeline of gaining that traction and what you're actually seeing come to fruition for this year's selling season?

Charles Divita: Yeah. I appreciate that. You know, a few comments. I mean, as I mentioned before, really coming into 2025, really characterizing the year as a repositioning year in many respects. And included in that was really driving higher levels of performance, and we've done that across a number of levers. And also driving product innovation, which we needed to do in terms of advancing our value proposition. We've talked about making our visits and member touchpoints more valuable. Using our clinical strength and product breadth and so forth. And making a number of important investments.

And I think that is really starting to take hold, both in terms of the discussions that we're having with our client base as well as the new products and enhancements that we're rolling out across virtual care, chronic care, and mental health. And we've talked about WellBound, but there's a number of other pilots we have underway and things that we're gonna be bringing live in 2026. So from my perspective, I think we've made good progress on all of those fronts. I'm excited about the new products and services we will be bringing to market for the 2026 selling season and happy to talk more about those.

I think in terms of the selling season, right now, I think we continue to work on a number of opportunities, obviously, to close out the year. But the environment's in line with what we've spoken about previously, you know, solid overall results in the employer channels, really across the solutions. And ongoing challenges in the health plan sector. You know, we've had some nice wins and some service expansions. But some pressure there as well. And I think to your point, the actions we've taken to innovate and to drive greater value are resonating. I think the conversations we're having there I feel are much more strategic in nature in terms of understanding the problems they're trying to solve.

And how Teladoc Health, Inc. can uniquely go after those. And I think inclusive of that is they're looking for more and more, you know, not just the value that our services can provide, but putting skin in the game in terms of levels of performance that they expect. And in return, as we do that, we should be able to participate in that value if we hit those measures and drive the outcome. So I think over time, while we already have contracting that reflects that kind of nature, you're gonna see more and more of that. And I think it's gonna differentiate us because we have an ability to deliver on that.

Operator: Thank you. Our next question comes from the line of David Harrison Roman of Goldman Sachs. Your line is now open.

David Harrison Roman: Hey, thanks. Good afternoon. This is Jamie on for David. I wanted to ask about BetterHelp margins. They were 1.6% in the third quarter. Just as you start to gain some traction shifting some of your visits away from cash pay towards the insurance offering, it would seem like that would come with some pricing pressure offset maybe by lower customer acquisition costs. Is that thinking appropriate? And any other dynamics to consider as that process happens? And then just, you know, as this transition occurs, it would seem like there could be some lumpiness in overall margin for BetterHelp.

I know we have the guidance for the fourth quarter, but could you frame how this process should impact the profitability of that business on a longer-term basis?

Mala Murthy: Yeah. Thanks, Jamie. Obviously, we will not go into the details of 2026 BetterHelp margin guidance or any guidance. But let me frame the way we expect to see this directionally. As you said, we have given the guidance for April. You know, as we think about the BetterHelp business, think of it in three different ways. One is our U.S. cash pay business. The second is our BetterHelp International business, which is cash pay, to be clear. And third, is the insurance business, including Uplift. So we remain excited about the growth in our BetterHelp international business. It grew nicely. High single-digit user growth for BetterHelp International in the third quarter.

You know, the efforts and the investments we have made in providing localized experiences in various countries, France, Germany, etcetera. And we are seeing the results of those investments now beginning to bear fruit in terms of user acquisition growth and over and, you know, that what goes along with that is revenue growth. So that is on the international, the BetterHelp International side. On the insurance, the BetterHelp Insurance side, if you, you know, based on the prepared remarks we gave, we are seeing good early signs of progress early. We have launched in seven states and DC. Expect to launch in more states by the end of this year.

And then we expect to be largely national by 2026. So think of the ramp from a revenue perspective for BetterHelp Insurance along those lines. You are right in the way you are thinking about margins for BetterHelp Insurance. Right? It is certainly something that we are going to have to monitor carefully, observe carefully. But I will say the metrics that we are looking to see in the BetterHelp insurance rollout, you know, whether it be conversion rates, whether it be number of sessions, whether it be user growth, those are trending in line with what we were expecting. Still early days. Yes.

But we are beginning to see the sort of the operating metrics in line with our expectations. The U.S. direct-to-consumer cash pay business, I would say, continues to be challenged. One of the reasons for it being challenged, by the way, is we are seeing heavy competition on that one from other participants in the market who offer insurance. So, you know, it validates and reinforces the pivot that we are making in BetterHelp in offering insurance as an option. And, you know, we expect that to continue to play out in the months ahead. So I would think about BetterHelp's progress along these lines between now and 2026.

David Harrison Roman: Great. Thank you.

Operator: Thank you. Our next question comes from the line of Jessica Elizabeth Tassan of Piper Sandler. Your line is now open.

Jessica Elizabeth Tassan: Hi, guys. Thanks so much for taking the question. And Mala, thank you for all the help over the last few years. I appreciate it, and good luck when you leave us here. So my question is just we appreciate the commentary on BetterHelp margins in 3Q. But should we conclude that BetterHelp margins today reflect basically a DTC ad customer acquisition cost on commercial reimbursement? And then does that present an opportunity heading into '26 as you can potentially pare back DTC ad spend because you've got full insurance coverage? And customer acquisition costs start to kind of more closely resemble that of an integrated care member? Thanks.

Mala Murthy: Yeah. Thank you, Jess. Look. We are BetterHelp is a scale player with over 4 million users coming to the top of the funnel. The accent that we have in BetterHelp is what drives that amount of traffic to the top of the funnel. The challenge we have had is converting that into paying users. And the progress we are making on insurance is certainly going to help drive greater conversion over time. And with that, we'll help gain efficiencies in cost of acquisition. The thing that I would say is we don't expect BetterHelp to be solely an insurance business. It will always be a mix of direct-to-consumer cash pay business. A direct-to-consumer business.

It'll be a mix of cash pay and insurance as a payment option. So there certainly will be over time potential efficiencies to begin on our cap, on our cost of acquisition. That is something that we will see have to see play out over time. In the near term, though, just to remind you all, insurance, as we said in our prepared remarks, is between $12 to $14 million. It is small compared to the rest of the BetterHelp business. The economics you see and the margins you see today are almost entirely cash pay.

Operator: Thank you. Our next question comes from the line of Daniel R. Grosslight of Citi. Your line is now open.

Daniel R. Grosslight: Hi guys, thanks for taking the question. You noted you've previously noted that one of the reasons for the Catapult acquisition was to create a larger funnel, which I suppose is most relevant for your chronic care solutions and P360 enrollment. I'm wondering if you can share any qualitative or quantitative data around any of those cross-sales that have materialized or I should guess I should put it cross-reference is that have materialized between Catapult and other areas of the Integrated Care business? Thank you.

Charles Divita: Yes. I appreciate the question. I think I would maybe categorize it in three areas. One is the, you know, the Catapult standalone offering, which continues to have a solid pipeline and grow as it was prior to us acquiring it. And that continues. Second, as we have members come through the Catapult experience, the ability to present and activate as appropriate additional solutions of Teladoc Health, Inc. that may be relevant for that member. That is live and integrated into the experience and going well in terms of being able to meet those members' needs. And I think third, to the main point of your question, the ability to, you know, bundle doesn't do it justice.

It's really to, you know, collaborate and integrate the offering in a way that can capture more lives from an engagement standpoint. And that is what's really resonating with the customer base, substantially, including with the health plans. I mentioned before the strategic conversations we're having with them. Well, Catapult is pretty heavily featured because you think the populations that are giving them challenges, they're typically unengaged or they have conditions that aren't being managed effectively. And they're challenged with their access in terms of their delivery system strategy. So the ability for us to use Catapult and other techniques to reach people, get them aware of their conditions.

As I've mentioned, when we acquired Catapult, not an insignificant percentage of people that come through Catapult are newly diagnosed with conditions that they weren't aware of. Meaning, weren't in the health plans claims data. They weren't on anyone's radar, including the patient. And so somewhat ticking time bombs, if you will, in terms of having high pressure and high sugar. So it's really resonating across all three as a standalone offering, ability to cross-engage members, and third, as part of Teladoc Health, Inc., being able to use it as a broader engagement capability.

Operator: Thank you. Our next question comes from the line of Jailendra P. Singh of Truist. Your line is now open.

Eduardo Ron: Hi, guys. This is Eduardo Ron on for Jailendra. Mala, again, thanks for all the help over here. Maybe just to follow-up on one of the remarks you had about the top of the funnel. I mean, you guys are now live in seven states in DC. Coming off the pilot. You know, just curious what share of new signups that you're seeing come in or choosing and versus the cash pay in those states. And I guess maybe our main question was just, you know, if you can provide an update on your expectations for the 2027 converts. And whether you guys anticipate refinancing those or, you know, using cash to pay it down? Thanks.

Mala Murthy: Yeah. So I don't want to go into detailed metrics on the conversion we are seeing. There's, you know, here's why. At this point in time, Virginia, which is the first state that launched, has achieved some level of seasoning. Enough for us to look at the data and feel confident that there is some stability in the data. But that it is one state. We have launched, as I said, in six other states in DC, just need to give it a little bit of time for all of the other states to season out. To make sure that there is stability in conversion metrics we are seeing, the session metrics we are seeing.

What I would say to you is it is our intent along the way as this scale and season we will provide updates along the way. This is an important initiative for us and we will give the appropriate milestones along the way. It's just too early for us to be public with specific details on it. Even though, as I said, it is in line with our initial expectations. On the 2027 convert, you saw the cash and equivalents that we have at the end of the third quarter. We will continue to obviously generate free cash flow that will add to our cash balance. We have a strong balance sheet.

You know, we have our overall leverage metrics well in hand. Our specific plans on 2027 is really going to be an outcome of, you know, the things that we will do next year in terms of organic investments and inorganic. You know, that as we have shared before, we are in the position of getting a lot of inbound on various M&A. And, you know, we will continue to evaluate them. But hopefully, we have proved out this year the three acquisitions we have done. Uplift, Catapult, and now TeleCare in Australia, are in line with the strategic priorities that Chuck has laid out. Right? Catapult for integrated care, Uplift for better health insurance, and TeleCare for international growth.

And we have been disciplined in terms of our investment in these inorganic. So our specific plans on the 2027 note will be a factor of things we do through the year next year on organic investments and inorganic. And we have, we have some amount of time. We are actively planning already in terms of various options to refinance the note in '27. But we'll, you know, we'll obviously continue to look at our plans and make the right decisions and trigger it at the right moment looking at, you know, what the rate environment looks like and what our internal needs are.

Operator: Thank you. Next question comes from the line of Elizabeth Hammell Anderson of Evercore ISI. Your line is now open.

Elizabeth Hammell Anderson: Hey guys, thank you for the question. This is Ayush on for Elizabeth. As we think about 4Q 2025 and the setup for 2026, how should we view the spending cadence across both sales and marketing expenses? Should we think that you are planning on typical 4Q spending patterns? As we have seen in recent years? And anything to call out in terms of how you guys expect that to impact the growth cadence in 4Q and 1Q '26?

Mala Murthy: Yeah. So I'll take it by segment. As you know, most of our marketing spend really is in BetterHelp. And you will see we do expect a step down in marketing spend in 4Q sequentially relative to March in 2025, very similar to past years. The one additional comment I would make is we do expect the step down in 4Q 2025 to be slightly higher than the step down between March and April marketing spend in BetterHelp in 2024. But the pattern will be the same.

On the integrated care side, we did make a decision given the profitability delivery that we had in March for integrated care, we did make a decision to pull forward a modest amount of marketing spend into 4Q to just get going in terms of our key priorities for next year. You know, in terms of key client launches, etcetera. So I would say to you, the pattern and the cadence will largely be the same. The one other thing to note is last year in April, we did actually have a fairly significant marketing spend that we had done. We don't our April investment in marketing for integrated care is not going to be that significant.

A step up as it was in 2024.

Operator: Thank you. Our next question is from the line of Stan Beresten of Wells Fargo Securities. Your line is now open.

Stan Beresten: Thanks. That's close enough, I guess. I want to first echo my well wishes to Mala in her next role. As for my question, just want to circle back to integrated care. So you mentioned you're seeing continued mix shift towards fee-for-service. But I'm curious, what are you seeing in terms of pricing trends for customers that are renewing their PMPM subscriptions? Thanks.

Charles Divita: I think, generally speaking, the pricing is in line. I think it's more of the mix shift that's the factor there. So I haven't seen, you know, that much pressure in that area, but obviously, highly competitive market, that could be a factor. And if we're expanding services and other things, we take all of that into consideration.

Operator: Thank you. Our next question is from the line of Scott Schonhaus of KeyBanc. Your line is now open.

Scott Schonhaus: Thanks, guys, for taking my question and congrats, Mala, on the new role and opportunity. I guess switching back to BetterHelp, can you give us a sense of what the payers are talking about for the reimbursement side, several of the other players that participate on the payer side have always seen low single-digit maybe even mid-single-digit increases on the reimbursement side. What are your discussions like with the payers? And then as you credential your therapist, maybe you can talk about the margin upfront margin headwinds that turn into tailwinds? Thank you.

Mala Murthy: I don't want to go into detail on the reimbursement. The thing I will point out is since we announced the Uplift acquisition and over the past few months, we have actually added several new payers to our book of business. And, you know, it's several millions of incremental additional lives that we have now on the BetterHelp side with insurance. So that's all I will be that's as far as I would go on your first question. On the second question, I would say, yes. This is certainly going to be the insurance business. You know, there are well-known public proxies for insurance, you know, margins in that space.

That is going to be something that we are going to monitor. And to be clear, that is something from a unit economic standpoint we have factored in as we thought about the strategic pivot into insurance. The thing that we are focused on certainly is margins. But what is exciting is the fact that this is going to allow us to capture incremental paying users, more sessions, and therefore, more LTV. And all of that is about revenue growth and therefore profit dollar growth. So that is what we are looking to grow in the months ahead as we ramp. As you said, this is something that is certainly going to take time.

We need to see the revenue ramp. We are making disciplined investments in the back-end capabilities in our cycle management capabilities, etcetera. And as you can see, we are scaling relatively quickly. And feel good about that. But the revenue does need to ramp and through the year next year, for us to be able to get to the dollar profitability growth that is in our thesis.

Charles Divita: Well said, Mala. And I think the only thing I would add is clearly as we are ramping up the credential network and what that takes. You know, the revenue, you know, will follow in terms of acquired users and sessions and so forth. I think the way that BetterHelp is approaching this is quite unique too in terms of how they're not just approaching credentialing, but how they're again, with the significant network that they have already, we're putting into the experience, the therapist part of the experience, the ability to indicate interest and move along that. So I think they're approaching it in a way that will give us that scale benefit, as we grow those revenues.

But clearly, we're ramping up the Therapist Network, there's an investment that's happening.

Operator: Thank you. Our next question comes from the line of Brian Tanquilut of Jefferies. Your line is now open.

Brian Tanquilut: Hey. Good afternoon. Maybe kinda along the same lines as the last question, but slightly different here. As I think about integrated care, and seeing how the utilization-based revenue there is starting to grow. Are there any conversations happening with payers, whether that's rate-driven or trying to figure out how to manage on their side the utilization of that service?

Charles Divita: Yeah. It's a great question. There's a couple of things there. Clearly, you know, the customer base has seen and continues to see the value of having a virtual capability and visit. And we have good utilization, relative to, you know, other market players. And drive savings. You know, think about ER avoidance and those kinds of things. I think we're and you're kinda going back to the comments I made earlier about these strategic conversations. These are not just visits, but they are, you know, they are engagement points.

And as we've expanded and will be expanding in 2026, the capabilities we have in what we call our twenty-four seven care offering being able to address more care needs for the member, ability to reduce unnecessary specialist referrals by bringing a specialist consult to the table, closing care gaps, navigating the member, doing follow-up, ordering labs, those kinds of things. The clients will see even more value in what we're driving. I think that's where we're gonna see both, you know, additional opportunities for activation, but also back to the earlier question, opportunities to participate in that value as we drive stronger outcomes.

So as we migrate to this visit-based environment, like I said in my prepared remarks, we're leaning into that. And the good news is we have millions and millions of visits each year. We're the largest by far, and I think it's an important strategic lever in that broader integrated care strategy. So yeah, I think all of that is in play, in the virtual care side.

Operator: Thank you. Our next question comes from the line of Kevin Caliendo of UBS. Your line is now open.

Jack Stumped: Hey, guys. This is Jack Stumped on for Kevin. Thanks for taking questions. And, Mala, I also want to wish you the best of luck in your next endeavor. Your prepared remarks, you guys mentioned that you expect to add necessary capacity to meet demand in the BetterHelp business. Just as you take it in network. I mean, the BetterHelp users have been declining. What does the supply-demand imbalance look like now for the insurance offering? And I guess, like, how do you expect that to change going forward? And maybe just the second part to that, like, how much supply or, I guess, like, how many clinicians do you need to add to meet the extended demand there?

Just kind of interested to hear how, like, clinicians are viewing the offering versus staying cash pay. Hope that makes sense. Thanks.

Charles Divita: Yeah. It did make sense. At this point, we are keeping up with the demand in the states that we've launched in. In fact, that's a key criteria before we launch. That we have the adequate therapist capacity because we want to make sure that user experience and access is strong. So we've been able to do that. And again, we've been able to meet demand both on the direct-to-consumer side quite well, the ability to match a therapist with the consumer not over 90% of the time in less than forty-eight hours.

And it's because this is a consumer-oriented business regardless of whether it's cash pay or the insurance is paying, we want to make sure we maintain that strong Net Promoter Score and experience. So right now, as we speak, it's a critical part of our rollout plan. And again, we don't go live in a state unless we feel like we have adequate capacity to support the demand.

Operator: Thank you. Our next questions are from the line of Jeff Garro of Stephens. Your line is now open.

Jeff Garro: Yes, good afternoon and thanks for taking the question. I want to hit on chronic care enrollment trends. Nice to see that rebound sequentially in Q3. But curious how that played out relative to expectations. We should think about the ability to ramp from here? And any comments you could give on kind of the built-in growth opportunity there versus the need to sell additional solutions into the client base before converting potential members. Thanks.

Charles Divita: Yeah. I'll make a few comments and Mala can add. You know, I want to steer away from sort of 2026 in that question. But we were pleased to see the sequential growth in the quarter. We expected to see that and we had communicated that and we delivered. We were excited to see that. We have, you know, many more millions of recruitables in our chronic care programs. And we have had a lot of interest in the bundling of programs. So there's a lot of opportunity for us to go after and within what we've already sold. And I think importantly, and I alluded to this earlier, but the new innovations we're bringing to market.

Again, we entered 2025 largely with the product portfolio we had in 2024. Got a number of innovations. We've got new connected devices, which I think is going to be streamlined and helpful. New features with our programs and all of that. But importantly, we are working on things to drive additional clinical interventions for rising risk populations and high-risk populations because we have the ability to deliver care and because of the unique nature of Teladoc Health, Inc., we believe there's an opportunity for us to engage people that are having challenges getting under control, understand their needs, understand if they have an existing care provider great. If they do, we want to be a complimentary part of that.

If they don't, we want to make sure we intervene and get the conditions under control and improve their health outcomes. And I think that will not only drive greater clinical outcomes, which is critical but greater financial ROI for our customers as those patients are better served. And that will also create an opportunity for us with those customers to activate more engagement strategies as a result. So there's a number of levers that we can pull to continue to build upon the progress we saw in the third quarter. Mala, anything you want to add?

Mala Murthy: I think that's really well said. The only thing I would add is we are also investing in connecting all of the data that we have to be able to, you know, when Chuck talks about clinical intervention, be able to enable our providers at the point of care with the right data with the right 360 view so that they are not only treating and helping the very sick but most importantly, they're also helping and treating the emerging sick. And that is, you know, when Chuck talks about being able to participate in the value, being able to drive greater ROI, it is it's really on the back of both.

Operator: Thank you. Our next question comes from the line of David Larson of BTIG. Your line is now open.

David Larson: Hi. Can you talk a little bit about BetterHelp's continuity of care? So, like, after one year, what percentage of patients are still on therapy? Can you talk a little bit about continuity of care? My view is like with if somebody's taking insurance and the patient doesn't have to actually pay for it out of pocket, more likely to stay on therapy just any thoughts there. And then also, what portion of BetterHelp members are also like, part of the integrated care platform would think if you're serving employer groups or plans, and you can basically, you know, refer them to BetterHelp. There would be sort of an immediate opportunity to cover the mental health visit with insurance.

So any color there would be helpful. Thank you.

Charles Divita: Yeah. I'll make some general comments and see if Mala wants to add anything. Yes. I do we do very much expect and believe that as people are able to activate insurance, that if they need more therapy, that they're able to access it. Right now, from a BetterHelp standpoint, you know, those consumers are making decisions and trade-off decisions in terms of their priorities around their wallet. And it's typically probably not because they've fully addressed their mental health needs and then they've got some challenges. So think, you know, we do a great job there. We have great clinical outcomes on the BetterHelp side. But having the ability to access their insurance should be a benefit.

Now to your second point, our real entree in terms of overlap between integrated care and BetterHelp is the launch of our new WellBound product. That really is bringing together both really the best of both in the ability to support, you know, those people with a range of needs, mental health needs, other kinds of support that they have. And I think that's where we're gonna see the ability to bring BetterHelp into that arena in terms of serving integrated care. Mala, would you add anything?

Mala Murthy: I think that's well put.

Operator: Thank you very much. That was all the time we have for questions for today's call. That will be the conclusion for today's call. Thank you for your participation. You may now disconnect.

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