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DATE
July 29, 2025, 8:30 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Chuck Divita
Chief Financial Officer — Mala Murthy
Vice President, Investor Relations — Mike Minchak
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Risks
Chief Financial Officer Mala Murthy stated that BetterHelp average paying users declined by nine thousand sequentially to 388,000 in the second quarter of 2025, marking a 5% decrease year over year, driven by ongoing headwinds in the United States cash pay business and increasing competition for insurance-covered therapy.
Guidance for the BetterHelp segment now suggests a year-over-year revenue decline of 6.8%-9.2% in 2025, reflecting a lowered outlook for 2025 compared to prior expectations, due to continued consumer softness and muted United States user additions.
Murthy indicated a $3 million unfavorable adjusted EBITDA (non-GAAP) impact from new China tariffs in 2025, reflecting a partial year effect and ongoing supply chain exposure.
Integrated Care chronic care program enrollment was 1.12 million at the end of the second quarter of 2025, representing a sequential decline attributed to a previously disclosed contract loss; underlying enrollment would have shown low single-digit sequential growth without this loss.
Takeaways
Consolidated revenue— $631.9 million, down 1.6% year over year for the second quarter of 2025, near the high end of guidance, with declines at BetterHelp partially offset by growth in integrated care.
Adjusted EBITDA— $69.3 million adjusted EBITDA for the second quarter of 2025, at the high end of guidance, representing an 11% adjusted EBITDA consolidated margin.
Net loss per share— $0.19 net loss per share for the second quarter of 2025 (GAAP), improved from $4.92 net loss per share in the second quarter of 2024 (GAAP), mainly due to the absence of a large goodwill impairment charge previously recorded.
Free cash flow— $61 million free cash flow for the second quarter of 2025, slightly ahead of the prior-year period.
Cash position— $618 million in cash and cash equivalents at the end of the second quarter of 2025 after repaying $551 million in convertible senior notes.
Integrated care revenue— $391.5 million, up 3.7% year over year for the second quarter of 2025; outperformed guidance with Catapult Health contributing approximately 240 basis points to integrated care segment revenue growth, and foreign exchange adding 50 basis points to integrated care segment revenue growth.
United States integrated care membership— 102.4 million United States integrated care members for the second quarter of 2025, up 11% year over year, at the high end of the guidance range.
Chronic care program enrollment— 1.12 million chronic care program enrollment for the second quarter of 2025, down sequentially due to a contract loss; excluding this, underlying enrollment would have modestly increased sequentially.
Integrated care adjusted EBITDA— $57.5 million, 14.7% margin, at the high end of guidance for the second quarter of 2025 adjusted EBITDA (non-GAAP) in the Integrated Care segment, with adjusted EBITDA margin contraction from 17% in the second quarter of 2024 due to the absence of prior period tailwinds.
BetterHelp revenue— $240.4 million, up slightly sequentially for the second quarter of 2025, driven by international performance and Uplift's contribution.
BetterHelp average paying users— 388,000 average paying users for the second quarter of 2025, down by nine thousand sequentially and 5% year over year, marking ongoing weakness in United States cash pay users.
BetterHelp adjusted EBITDA— $11.9 million adjusted EBITDA, margin of 4.9% for the second quarter of 2025, reflecting early stages of insurance initiative investments.
BetterHelp insurance revenue— $2.4 million, in line with expectations, attributed to Uplift operations.
Segment revenue mix shift— Chief Executive Officer Divita reported that in 2025, over 50% of virtual care revenue and about 70% of mental health revenue are now visit-based rather than subscription-based.
International revenue mix— International now composes over 15% of consolidated revenue for the second quarter of 2025 and grew at a mid-teens rate on a constant currency basis, with integrated care delivering steady double-digit growth.
Full-year 2025 revenue guidance— Consolidated revenue now expected between $2.501 billion and $2.548 billion for 2025; the midpoint for 2025 consolidated revenue guidance was slightly increased due to strong first-half integrated care results.
Full-year 2025 adjusted EBITDA guidance— Adjusted EBITDA guidance range lowered to $263 million-$294 million for 2025, incorporating a lower BetterHelp outlook and new tariff effects.
Stock-based compensation— 2025 stock-based compensation expense now expected at $95 million-$105 million, roughly $10 million below the prior outlook.
New revolving credit facility— $300 million revolving credit facility entered in July 2025, undrawn at period end, intended to provide further financial flexibility.
Summary
Teladoc(TDOC 0.50%) management highlighted material advancements in cost structure efficiency and product innovation, citing the WellBound launch and upgrades to the cardiometabolic health suite as strategic differentiators. The addition of Catapult Health and Uplift was positioned as expanding preventative care capabilities and accelerating BetterHelp's insurance acceptance initiative, with early traction evidenced by new payer contracts covering an additional 15 million lives over the past few months. The majority of virtual care revenue now comes from visit-based models as of 2025, marking a shift in reporting structure and underlying growth drivers. The company’s operational strategy emphasized data-driven engagement and clinical intervention to generate client value in an increasingly competitive market, while signaling sustained investment in organic and inorganic growth opportunities. Balance sheet strength was reinforced by the retirement of convertible notes, a low net leverage ratio, and access to an undrawn revolving credit facility.
Divita stated, "exceeding 100 million United States integrated care members," referring to the second quarter of 2025 and underscoring the scale for further revenue penetration efforts.
Insurance is currently live on the BetterHelp platform in one state, with early positive performance and a methodical multi-state rollout planned as therapist credentialing progresses.
International expansion in integrated care has leveraged platform technology and devices to address rural hospital and public health system needs, cited as driving both revenue growth and strategic market relevance.
Murthy described persistent declines in BetterHelp United States cash pay in the second quarter of 2025, driven by consumer migration to insurance-funded mental health services and increased advertising by insurance-enabled competitors.
Seasonal and implementation-related increases in revenue and adjusted EBITDA are anticipated in the fourth quarter, linked to infectious disease contracts and new business launches.
Industry glossary
Integrated care: Teladoc segment offering a combination of virtual health services across chronic, acute, and preventive medical conditions, often for employer or health plan customers.
BetterHelp: Direct-to-consumer mental health service segment under Teladoc, available via both cash pay and insurance models.
Catapult Health: Acquisition contributing virtual checkups and preventative care engagement, integrated into Teladoc's portfolio.
Uplift: Acquisition focused on facilitating insurance operations for BetterHelp and expanding payer network credentialing.
Visit-based revenue: Revenue stream model in which payment is tied to each completed virtual care encounter, rather than subscription or recurring membership fees.
Chronic care program enrollment: Headcount of members enrolled in Teladoc solutions targeting ongoing conditions such as diabetes or hypertension.
United States cash pay business: Direct-to-consumer revenue derived from users paying out-of-pocket for mental health services, without insurance reimbursement.
Adjusted EBITDA margin: Segment or consolidated adjusted EBITDA expressed as a percentage of associated revenue, a key Teladoc profitability metric.
Full Conference Call Transcript
Mike Minchak: Thank you, and good afternoon. Today, after the market closed, we issued a press release announcing our second quarter 2025 financial results. This press release and the accompanying slide presentation are available in the Investor Relations section of the teladochealth.com website. On this call to discuss our results are Chuck Divita, Chief Executive Officer, and Mala Murthy, Chief Financial Officer. During this call, we will also discuss our outlook, and our prepared remarks will be followed by a question and answer session. 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 to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Also, please note that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website.
I would now like to turn the call over to Chuck.
Chuck Divita: Thanks, Mike. I'm pleased with our strong performance in the second quarter, with consolidated revenue and adjusted EBITDA both at the higher end of our guidance ranges. This reflects continued disciplined execution and builds on our solid results from the first quarter. Based on our results and outlook for the second half of the year, we are narrowing our guidance range in 2025 consolidated revenue adjusted EBITDA. Mala will provide more details on our performance and outlook later in the call. It's now been a year since I joined Teladoc Health, and I would like to take the opportunity to comment on the progress we've made and the direction of the company.
It's been a transformative year in many respects, as we've worked with urgency and purpose to improve performance and reposition the business. As I shared when I first joined, I saw the need to strengthen our market focus and increase the efficiency of our business. We've taken decisive actions that have resulted in a more streamlined organization with greater agility and market orientation, and a more efficient and scalable cost structure. I also shared the importance of accelerating innovation across our products and capabilities. We've made considerable progress in that regard, including a product innovation pipeline that's gaining momentum. Let me share some examples. We recently launched WellBound, a new employee assistance program offering for the US integrated care market.
It provides mental health and well-being support, including access to online therapy services from BetterHelp, and seamless access to other available Teladoc services. While early, we're pleased with the level of interest we're seeing, and we look forward to building a position in the EAP market. We're enhancing our cardiometabolic health program this year, including new connected devices, as well as registered dietitian access, sleep support, and other new features. To further engage and support enrollees with rising risk and higher acuity conditions, we're developing additional clinical interventions leveraging our primary care specialists and care support teams.
We believe that a comprehensive approach focused on both prevention and the progression of diabetes, hypertension, and obesity will have the greatest sustained impact on patient health and value for our clients. For our hospital and health system clients, we launched a new AI-enabled virtual sitter solution fully integrated into our proprietary technology. This new offering extends and supports our clients' workforce capacity, their care delivery, and patient safety objectives, including matters such as fall risk and patient elopement. In our international integrated care business, we also continue to add new solutions, including hybrid care models for public health systems to support a variety of needs, including access to primary care and emergency department care in rural and remote communities.
Product innovation will be an ongoing focus of our organization. Over the past year, we've also added important capabilities, including through strategic acquisitions. Catapult Health strengthens our approach to preventative care, its virtual checkup and other solutions as well as being an important and complementary engagement capability with other Teladoc services. We recently acquired Uplift to support BetterHelp's entry into insurance, an important initiative I also shared when I joined the company. I'll provide an update on our progress in this area in a moment. Additionally, we've strengthened operational execution, added new partnerships and collaborations, and made advancements in our technological infrastructure, all aimed at supporting our strategic priorities and our ability to deliver more services and value to customers.
We've also hit some noteworthy milestones, including exceeding 100 million US integrated care members, providing additional opportunities to grow our services over time. While there is important work ahead, I'm pleased with the progress overall, and I'm confident we're in a stronger position to execute in an evolving market. As we've all seen, the healthcare challenges are substantial. Affordability and rising costs, the impact of disease and chronic conditions, unmet mental health needs, provider pressures, and other issues continue to impact all stakeholders. It's clear to us that virtual care can and must play a greater role going forward to address the extent and magnitude of these challenges.
Prior to 2020, virtual care was largely about convenience and access to quality, cost-effective care. Teladoc led the way through technology, services, and scale, and also delivered during the pandemic. Now virtual care has become widely adopted, and there's also been a proliferation of point solutions adding to fragmentation and complexity. Teladoc again led the way by taking an integrated approach across physical health, mental health, and chronic conditions, placing the whole patient at the center. Looking ahead, we intend to build on our leadership position, our assets, clinical capabilities, and range of services with an intensified focus on orchestration across patients, providers, platforms, and partners, all aimed at enhancing the patient experience, improving outcomes, and delivering greater value.
We're uniquely positioned to advance this important work, and we're prioritizing investments that are aligned with this vision. We plan to deliver on it through our four strategic priorities.
First, enhancing our integrated care offerings, particularly in the US, to drive a greater impact on both clinical outcomes and the cost equation. We'll support our growth objectives through continued product innovation, and we intend to launch new and enhanced offerings across our portfolio on a sustained basis. Leveraging our millions of engagement points in new and unique ways, advancing clinical intervention opportunities, and orchestrating care more holistically, we intend to deliver greater value for clients and the people we serve. Second, we're further leveraging our scaled mental health position. In addition to new products such as WellBound, we have several initiatives underway to expand mental health access and our ability to serve more needs.
This includes momentum in integrated care, which saw a 13% year-over-year increase in mental health visits in the US during the second quarter. In BetterHelp, we'll be building on our unparalleled consumer position by adding insurance capabilities to grow and expand our market opportunity. On that front, I would like to take a moment to provide an update on BetterHelp's insurance coverage initiative. As we've shared, we believe insurance will leverage BetterHelp's strong consumer activation experience and scale, while having a positive impact on conversion rates, the number of user sessions, and return on advertising spend over time.
With ongoing headwinds in the consumer cash pay business, we see insurance coverage as essential to the stability and growth outlook for BetterHelp, and we believe we can meaningfully scale insurance over time. We are being methodical in our approach to ensure the long-term success of this business. This includes ensuring a robust and scalable operating infrastructure, growing our network of credentialed mental health professionals, and supporting and expanding our payer relationships and corresponding membership coverage. From an operating infrastructure standpoint, the BetterHelp and Uplift teams are partnering in a seamless way. Execution is progressing well, including unifying the platforms and experience, and the ability to leverage and scale the combined capabilities.
In late June, we began a soft launch of BetterHelp Insurance in a single state, laying the groundwork for a methodical ramp of the business over the next several quarters. We're encouraged by the early results, including the performance of our technology, the strength, reliability, and durability of the insurance processes, and the growth of the insurance provider network. As a reminder, BetterHelp's therapists are all fully licensed and with a master's degree or higher. The network averages eight years of experience and consistently delivers results, including over 70% of patients reporting symptom reduction within twelve weeks, as well as high satisfaction rates, including over 80% of patients that would recommend their therapist to others.
In this regard, we've begun initial outreach to many of our BetterHelp therapists to join the insurance network, and we're seeing good interest. To date, over 2,000 have engaged and are now in various stages of the credentialing process. This outreach will continue as we look to complement and further build on Uplift's already robust base of over 1,500 mental health professionals. We're also seeing success in further expanding payer relationships. Uplift brought arrangements covering over 100 million lives, and over the past few months, we have signed additional new contracts adding over 15 million lives. We'll provide further updates on progress during the third quarter call. Our third strategic priority is international growth.
Our international business now accounts for over 15% of our consolidated revenue. We see continued growth potential. We already operate a robust international business in integrated care that has delivered steady double-digit growth and is well-positioned to meet diverse needs across countries, markets, and client segments, including leveraging our hospital health system technologies to support public health systems in several countries. We continue to evaluate opportunities to increase our position across both existing and new geographies. Fourth, we're highly focused on operational excellence to consistently deliver for clients and to achieve our business and financial objectives.
We've made considerable progress in driving operational excellence, including a highly successful client implementation season for 2025, coming off of a very challenging one in 2024. This was also a key priority when I joined. With respect to cost efficiency, as noted last quarter, we're tracking modestly ahead of our cost savings and productivity targets. We've made meaningful progress across several areas, including technology and development, administrative costs, and stock-based compensation. We'll continue to make progress while balancing the need to invest in our strategic priorities. In closing, I'm encouraged by our first-half performance. We're making progress against each of our key strategic priorities, and our teams continue to operate with focus, urgency, and discipline.
We're committed to maintaining a balanced approach by delivering solid financial performance and investing in the products and capabilities important to our future. While broader market dynamics continue to impact healthcare and the operating environment, I remain confident in our strategy and our ability to return the company to an overall growth trajectory over time, including through the initiatives I have outlined. With that, I'll turn it over to Mala.
Mala Murthy: Thank you, Chuck. Good afternoon, everyone. Second quarter consolidated revenue was $631.9 million, near the high end of the guidance range and down 1.6% year over year, driven by a decline at BetterHelp offset to some extent by growth in integrated care revenue. Adjusted EBITDA of $69.3 million was also at the upper end of the guidance range and represented a margin of 11%. Net loss per share was 19¢, compared to a net loss per share of $4.92 in 2024, which included a $4.64 related to a pretax noncash goodwill impairment charge. Net loss per share in 2025 included amortization of intangibles of 50¢ per share pretax and stock-based compensation expense of 13¢ per share pretax.
These items were partially offset by a discrete tax benefit of 6¢ per share. Free cash flow was $61 million in the second quarter, slightly ahead of the prior year period. On a year-to-date basis, free cash flow increased by $11 million compared to the same period last year. We ended the quarter with $618 million in cash and cash equivalents after retiring $551 million in convertible senior notes that matured during the quarter. Turning to our segment results, integrated care segment revenue of $391.5 million increased 3.7% over the prior year period and exceeded the high end of our guidance range.
We saw good growth in visit revenue and continued strong performance in our international business, which has delivered mid-teens growth on a constant currency basis. Catapult contributed approximately 240 basis points to segment growth. Foreign exchange also contributed roughly 50 basis points to growth in the quarter. Underlying fundamentals continue to trend favorably. US integrated care segment membership at quarter end was 102.4 million members, towards the high end of our guidance range, and up 11% year over year. While 6% versus the prior year period, chronic care program enrollment at quarter end was 1.12 million, down versus the first quarter due to the previously discussed contract loss.
Excluding the impact of this loss, underlying program enrollment would have increased by a low single-digit percentage on a sequential basis. Second quarter Integrated Care adjusted EBITDA was $57.5 million, which represented a margin of 14.7% and was at the high end of our guidance range. This benefited from revenue flow-through, which was partially offset by higher OpEx in the quarter, including marketing spend and legal fees. While this compares to an adjusted EBITDA margin of 17% in the prior year period, recall that we had cited a roughly 340 basis point tailwind to adjusted EBITDA margins in 2024 from performance-based revenue, variable compensation costs, and the timing of certain marketing and other operating expenses.
Moving to the BetterHelp segment, second quarter revenue was $240.4 million, up slightly sequentially and just above the midpoint of our guidance range. Foreign exchange contributed approximately 45 basis points to year-over-year growth, while Uplift contributed roughly 100 basis points. Second quarter average paying users declined by roughly 9,000 sequentially to 388,000 and were 5% lower versus 2024. Despite encouraging early progress on our insurance and international initiatives, we continue to see headwinds in the underlying US cash pay business. While the year-over-year decline has moderated relative to 2024 levels, US cash pay users saw a high single-digit percentage decline versus 2024.
Last quarter, we pointed to a slight uptick in churn rates, which we believe was reflective of softening consumer sentiment and uncertainty around the macro environment. That trend continued through the second quarter, while we also saw an increase in customer acquisition costs and fewer gross user ads. We believe these factors and consumer interest in accessing therapy through insurance coverage are impacting the cash pay business. We believe that validates our insurance acceptance initiative with Uplift meaningfully accelerating our effort.
We continue to believe the unification of the customer acquisition funnel between cash pay and insurance coverage will allow us to more effectively leverage BetterHelp's advertising and marketing budget and lead to a lower acquisition cost per user over time. While not enough to offset the headwinds in the US cash pay business, international users were up by a high single-digit percentage over 2024. With more attractive customer acquisition costs, we plan to continue reallocating advertising spend to those markets. While still early, our localized launches continue to see good month-over-month growth in users, and we are evaluating opportunities for additional localized market launches over the balance of 2025.
Insurance revenue totaled $2.4 million for the quarter, which was in line with expectations and attributable to Uplift. As we continue to build out the operating infrastructure to support the future scaling of our BetterHelp insurance business, BetterHelp adjusted EBITDA was $11.9 million in the second quarter. Adjusted EBITDA margin of 4.9% was in the upper half of our guidance range of 2.5% to 5.25%. The margin declines on a year-over-year basis were mainly due to lower revenue and incremental investments to advance the insurance initiative.
Turning to guidance, we now expect 2025 consolidated revenue of $2.501 billion to $2.548 billion, with the midpoint increasing slightly versus our prior range, with an increase in integrated care outpacing a lower BetterHelp outlook. Adjusted EBITDA is expected to be in the range of $263 million to $294 million. The midpoint of this range is slightly below the previous outlook, impacted by similar segment dynamics and now incorporating the anticipated impact of tariffs, which I will speak about momentarily. Full-year free cash flow guidance of $170 million to $200 million remains unchanged.
We now expect 2025 stock-based compensation expense in the range of $95 million to $105 million, approximately $10 million below our prior outlook, and a continued area of focus for us. For the third quarter, we expect consolidated revenue in the range of $614 million to $636 million and adjusted EBITDA in the range of $56 million to $70 million. Drilling down into the segment, starting with integrated care, we are raising and narrowing our full-year 2025 revenue guidance, which we now expect to be up 1.75% to 3.25% year over year versus our prior guidance of flat to up 3%.
The increase of 100 basis points at the midpoint reflects our strong first-half performance relative to guidance, coupled with updated assumptions on foreign exchange. We continue to expect Catapult to contribute approximately 200 basis points to full-year revenue growth. We are narrowing our full-year 2025 adjusted EBITDA margin guidance to 14.5% to 15.25% versus our prior range of 14.3% to 15.3%, which is up slightly at the midpoint. As previously discussed, this includes a roughly 40 basis point headwind from the Catapult acquisition. Excluding Catapult dilution, adjusted EBITDA margin would be up slightly year over year at the midpoint of the guidance range. Our guidance of 101 million to 103 million US integrated care members remains unchanged.
Last quarter, we provided a preliminary view on the potential impact of tariffs. The initial estimate we provided was based on proposed rates, including a 145% China tariff and the impact of our mitigation efforts. Based on the latest information, we now estimate an unfavorable adjusted EBITDA impact in 2025 of approximately $3 million, which is now included in our guidance ranges. This reflects a partial year of impact based on the timing of new rates and inventory on hand. We continue to evaluate additional levers to mitigate the impact of tariffs now and into the future. This includes assessing alternative sourcing arrangements to diversify our supply chain, which we think is a prudent long-term action.
For the third quarter, we expect integrated care segment revenue growth to be down 0.5% to up 2.25% and adjusted EBITDA margin in the range of 14% to 15.5%. Recall that 2024 had included a favorable resolution of a prior period billing adjustment, which will drive a roughly 115 basis point headwind to revenue growth and roughly 95 basis point headwind to adjusted EBITDA margin in 2025. Importantly, we assume a return to sequential growth in chronic care program enrollment in the third quarter, driven in part by continued growth in our weight management program, which was augmented by the addition of one of our largest customers at the start of 2025.
Regarding the second half cadence, our updated guidance implies a sequential step-up in revenue in the fourth quarter, driven largely by typical seasonality related to infectious disease business as well as contribution from new business implementations. It also implies a sequential increase in adjusted EBITDA dollars driven by the revenue increase coupled with disciplined cost control. Moving to BetterHelp, we are narrowing our revenue guidance range with a revised midpoint reflecting ongoing headwinds in our US cash pay business. Although still in the early stages, we are encouraged by the progress of our insurance initiative, which we view as a critical driver for restoring long-term growth in the BetterHelp business.
We now expect a year-over-year revenue decline of 6.8% to 9.2% in 2025, compared to our prior outlook of a 3.75% to 9.75% decrease. Our guidance continues to reflect approximately $10 million in insurance revenue for 2025, net of any mix shift from the existing cash pay business. We expect a more meaningful revenue contribution in 2026 as we continue to methodically scale operations and expand our therapist network over the next six to twelve months while steadily enabling access across additional states. We now expect a BetterHelp adjusted EBITDA margin of 4% to 5.5% for the full year, with the midpoint down 75 basis points versus our prior guidance.
The revision primarily reflects the flow-through impact of a lower revenue outlook, partially offset by incremental G&A reduction as we continue to prioritize investments that support the growth of our insurance initiative. We remain focused on balancing top-line growth with bottom-line discipline. While we will not pursue inefficient customer acquisition, we are committed to maintaining strong traffic to BetterHelp in preparation for the broader insurance rollout. For the third quarter, we are guiding to BetterHelp segment revenue down 5% to 9.75% year over year and an adjusted EBITDA margin of 1% to 3.75%, reflecting the early investment phase of scaling our insurance initiative. Lastly, our balance sheet remains strong.
We retired $551 million in convertible senior notes that came due in the second quarter with cash on hand. The $1 billion convertible note maturing in June 2027 is our only remaining debt outstanding. We remain comfortable with our leverage, as net debt to trailing adjusted EBITDA stood at 1.1 times at quarter end. We continue to believe our strong cash balance, cash flow generation, and business position provide us with optionality in the future. Separately, in mid-July, we entered into a new $300 million revolving credit facility, which enhances our financial and operational flexibility. At the current time, there is nothing drawn on the facility, and we have no immediate plans to use it.
Our capital allocation priorities remain unchanged. First, we look to maintain a strong balance sheet and an appropriate net leverage profile. Second, we will invest in the business to support our strategy through both organic and inorganic initiatives. Third, we will evaluate share repurchases as a potential use of cash. With that, let me turn the call back to Chuck.
Chuck Divita: Thanks, Mala. We continue to believe that virtual care could be a performance multiplier within the healthcare ecosystem, helping to address key challenges, and that Teladoc Health is well-positioned to play a key role in doing so. Just last week, we hosted our annual Teladoc Health Forum event in Nashville, which brought together healthcare thought leaders, virtual care advocates, and innovators from across the globe to share their experiences, exchange perspectives, and discuss strategies, offering insights into the further advancement of virtual care. Spending time with many of our clients and partners in attendance, I was encouraged with the level of interest in deepening our partnerships and further collaborating to help them achieve their goals now and into the future.
With that, we'll open it up for your questions. Operator?
Operator: Of course. We will now begin the question and answer session. We kindly ask that all participants limit themselves to one question. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star 1. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. Our first question comes from the line of David Roman with Goldman Sachs. Your line is now open.
David Roman: Okay. Thank you. Good afternoon, everybody. A lot of moving parts here, so I'll try to make sure I'm limited here to one question. I guess you've talked about over the past year, Chuck, the transition away from a subscription model to a pay-per-visit or pay-per-use model. That does, to some extent, obfuscate the underlying performance of the business. I know you went through a few metrics on the call, but maybe you could unpack a little bit what's going on there and where we are in that transition. Either if you can give us a sense of is that a 2025 event? Does that extend into '26? And how you're thinking about measuring success in that initiative.
Chuck Divita: Yeah. I appreciate the question. You know, this transition's been going on for a few years now in earnest because, you know, post-pandemic, obviously, with the broad adoption and maturity of the market, and that's continued. In 2025, we now are at a point where more than 50%, a majority of our revenues in virtual care are coming from visit-based arrangements versus subscription-based. So there's more room to go there, probably, but we've sort of reached a place where it's a majority. And it varies a little bit by product line. In mental health, we're now at about 70% that are visit-based.
So you'll start to see over time more of that underlying growth in visits, which is a good thing, and translate into revenue growth. But we still got a little bit of headwind from that subscription move.
David Roman: Great. Thank you very much.
Operator: Thank you for your question. Our next question comes from the line of Richard Close with Canaccord Genuity. Your line is now open.
Richard Close: Yes. Thanks for the question. Congratulations on the progress. Maybe on BetterHelp and insurance. First, can you discuss how you see the margin difference between cash pay and insurance, I guess, longer term? And then second, you know, your launch, I think you said launch insurance in one state, a soft launch. How are you thinking about the rollout going forward? Is that just a state-by-state basis?
Mala Murthy: So thank you, Richard, for the question. Look, on the margins for insurance, if you think about the legacy cash pay business in BetterHelp, we have always said that the gross margins for that are, you know, in the range of overall Teladoc Health margins. Right? It's always been around the high June, early seventies type of gross margin. Relative to that, you know, as we have thought about insurance, we recognize that it is going to be lower than those levels.
You know, it's a little bit early for us to comment on exactly where it is going to reach equilibrium in the longer term, but, you know, there are enough public out there that will tell you that it is a lot lower than those levels. Having said that, what we are, you know, what we are focused on is the fact that we have 4 million plus consumers coming at the top of the funnel, if you will. So, you know, the advertising spend that we have, the scale of it attracts that scale of consumers seeking therapy.
And we believe that offering the choice of insurance acceptance side by side with cash pay, which is what is live on our platform now in one state as we talked about, is going to allow for greater conversion than we have with just cash pay. So that is the investment thesis we have that we will to make progress on as we scale this initiative. Chuck?
Chuck Divita: Yeah. And I'll talk a bit about the rollout. So I guess, think of it this way, supply and demand. We know the demand out there. One, the unmet mental health need, the adoption of the virtual modality in terms of therapy, and just the size and scale of BetterHelp. So what we want to do is make sure we are, you know, preserving that user experience BetterHelp is known for. As we turn this on, obviously, the scale is pretty massive. So the demand side will be there as we turn that on.
The supply side, we also want to make sure that we have the right level of therapists credentialed in the network to meet the demand in the way that we want. Behind the scenes, we are continuing to build that network out beyond the single state so that as we ramp further, we'll be able to turn on multiple markets over time. So I wouldn't necessarily think about it state by state per se. We're going to reach a point where we'll be able to activate multiple markets. We do want to take it methodical here at the start to make sure all the capabilities that we built in place are working.
The good news is they've worked quite well, and we're at a position now where we're behind the scenes building the supply side.
Operator: Thank you for your question, Richard. Our next question comes from the line of Lisa Gill with JPMorgan. Your line is now open.
Lisa Gill: Thanks very much. Good afternoon. Chuck, I wanted to go back to where you ended the call today. You talked about virtual healthcare can be a performance multiplier to help address key challenges in the evolving healthcare landscape. Clearly, following managed care, we see that right now from a cost perspective. As a former managed care executive, what do you think are some of the biggest opportunities for Teladoc to help to really drive the cost or bend the cost curve going forward? And maybe if you could just spend a minute sharing some of the takeaways from last week. And is it talking more to providers? Is it talking to employers? Is it talking to the managed care organizations?
What do you see are some of the biggest opportunities?
Chuck Divita: Yeah. Thanks for the question. I think, you know, first of all, if you go back to where sort of virtual care took off, you know, it was just like I said in my prepared remarks around access and convenience. And that's still an issue. You know? Access to care, whether it's primary care, specialist care, it varies pretty significantly. So I think access will continue to be a place where virtual care can support the ecosystem. I think where the next sort of generation of that is, and the reality of this, you know, each individual, all of us are unique. We have our own healthcare situation and needs and expectations. And healthcare is also local.
And so I think over time, the reason why we've been investing in the technology we are and the approach we have is because we think we have an ability to partner with the local delivery systems more and more over time to advance our customers' strategies. So we have a number of things underway to do that. And I think extending that longitudinal care capability to help complement the system sometimes will be on point for those services, and other times, we'll be playing a complementary role. And I do think that's where we're going to evolve over time. I think with respect to the forum, it was a great event. I mean, there was a lot of excitement.
We shared a lot about the progress we're making. I would say, uniformly, a lot of the things that you study in healthcare are live and well. They're very concerned about the affordability issues, cost increases, provider capacity shortages, and sort of the dynamics that are at play. Certainly, in the health plan world, a lot of uncertainty with respect to some of the changes that are underway. And I think there was a, I would say, a good level of interest in this strategic direction we're taking and how we're approaching this issue.
So I think the level of partnership is going to be even deeper going forward, and I think we're going to build on it in the coming months.
Operator: Thank you for your question, Lisa. Our next question comes from the line of Jessica Tassan with Piper Sandler. Your line is now open.
Jessica Tassan: Hi, guys. Thank you so much for the detail. I was hoping maybe you could talk about 2026 for your chronic care solutions in particular. You know, are we in the selling season for the chronic care solutions? And then just could you describe any kind of competitive efforts that you've noticed so far, retreats maybe that are expected to impact retention? Competitive takeaways and pricing next year? Thank you.
Chuck Divita: Yeah. I'll just make some general comments here. I think, first of all, a lot of the things that we've said in prior quarters continue to be the case. You know, our employer channel continues to, I would say, largely be in line with our expectations at this point in the year. We do have continued pressure on the health plan channel for all the reasons that we've given. And I think we've had, you know, a good level of interest across all of our solutions, chronic care included. We've added some accounts, including in, you know, health plans with respect to Medicare Advantage. Mala mentioned that we added last year coming into this year in weight management.
So there's good activity. There's good interest. I will say there's some pause and some hesitation in terms of big moves by some of the players as they sort through their strategies. Where we're focused really back to the product innovation point is how do we expand the level of services? And I think with this new cardiometabolic health program that we're rolling out to meet a variety of needs. If you think about a patient, you know, we sort of carve people up into these conditions. Well, it's a whole person.
And so they're going to move through the journey of maybe it's a weight issue, some other kinds of acuity that happens during the cycle of that person's life. And so this program really is trying to be there in a more holistic way for those people, and I think the features and enhancements that we put in place will be attractive to our customers. I think where we're headed, though, is really leveraging what is, I think, one of our greatest strengths, which is our clinical capabilities. You know, as a provider, we have primary care, we have specialist care, we have care teams.
I think when you're dealing with people with, you know, hypertension and diabetes and obesity and those kinds of things, the ability to support them clinically and if they're not on the right path, I think, is where we can add value to the patient as well as to our client.
Mala Murthy: You know, Jessica, what I would also add is, you know, it's not a surprise. The chronic care market is a highly competitive market. It is a fast-moving, fast-changing market. We know that. You know, we are absolutely already, you know, with a cardiometabolic product that we have that Chuck mentioned, adding to the clinical capabilities that Chuck mentioned. That certainly gives us confidence in growing momentum in the chronic care business over time. The other thing I would also say is if you think about our 102 million plus member base and what that represents in terms of cross-selling opportunities.
If you think about the scale of recruitable with chronic disease and need for chronic management that we already have, that I would say is sort of the side that we already have for us to be able to continue to grow and penetrate. We've talked about the fact that our penetration levels are still relatively low in the membership base we have. So if you combine the innovation that we are bringing in from the product side together with the scale of opportunity in terms of the recruitables and the member base we have, those are the assets that we are going to use combined with our engagement capability and enrollment capability.
And we are investing in that as well.
Operator: Thank you for your question. Our next question comes from the line of Daniel Grosslight with Citi. Your line is now open.
Daniel Grosslight: Hi, thanks. Hi, thanks for taking the question. Mala, you mentioned that you expect a meaningful revenue contribution from BetterHelp Insurance coverage in 2026. I was hoping you could provide a bit more color on that and the cadence we should expect throughout next year. Similarly, if there's any significant investments you need to make to kind of scale that in '26 and the cadence of those investments? Thanks.
Mala Murthy: Yes. So what I would say, Daniel, let me sort of start with your second question first. Because we need to invest to be able to scale the insurance revenues. So we already are making investments, right? Remember when we announced the Uplift acquisition back in April, we actually had taken down our adjusted EBITDA. And the reason we did that was because of the investments we needed to make. Those investments are essentially in, think of it in two ways. One is just scaling up the number of people we need, the talent we need to be able to run this business within the BetterHelp segment. It's not an initiative any longer. It's a business.
And the second is absolutely scaling up the operational capabilities, the back-end capabilities, billing, coding, all of that. So those are the kinds of investments we are making. We've already started on making those investments, and we are going to make investments in the back half of this year between Q3 and Q4. And I expect we will continue to do more of it at probably a more modest level into the first half of next year. In terms of your second question on how this will pace, I would say, well, look.
We have said from the outset back in April we expect the revenue for insurance to scale and fully ramp up over the six to twelve month period, right? And we have told you this year, we expect insurance to be about $10 million in revenue. I think we need to see how this paces through this year, Daniel, and get more proof points. You know, as we said, we have launched in one state. Early signs of progress are good. You know, we are hitting and checking off on all the metrics that we expect to see at about this point. But we need to see more proof points.
And what I would say is expect us to give a progress update in October and in February. You know, every time we talk to you on earnings calls, we will give you progress updates on how things are going and how the scaling is going to take in through 2026.
Operator: Thank you for your question, Daniel. Our next question comes from the line of Jailendra Singh with Pearles. Your line is now open.
Jailendra Singh: Thank you and thanks for taking my questions. Chuck, I appreciate you spending some time on recapping the progress the company has made, all the initiatives you have put in place, and actions you've taken over the past one year. But where we stand now, do you believe that you have all the pieces in place to get the company back on revenue and EBITDA growth and put acceleration in the coming years? And I completely understand all the integration and business financials still ahead of us. But just curious about your view if you still think there's some work needed for organic and inorganic product expansion or any restructuring?
Chuck Divita: Yeah. I appreciate the question. I'm not sure I would say we're ever going to be done in a highly competitive, dynamic, complex market, particularly in the US, in terms of advancing the vision, the strategy. So I wouldn't want to set that expectation. I think we've made considerable progress, you know, from the technology we put in place. We now have the ability to surface information across each one of our care engagements, whether it's Catapult, our Genmed visits, our coaches, our mental health providers. We can action and surface information there for the next best action. So there's a lot of things that I think we put in place.
Clinically, we come from a strong position with all the history the company has. However, there's additional capabilities we're going to put in place to be able to, you know, continue to develop new intervention models for these individuals with chronic conditions. I think you're going to see us continue to invest organically as well as if we think there are places that could accelerate our progress. We're going to look for those opportunities just like we did with Catapult. That was a really nice strategic complementary acquisition. It's resonating with our clients. They understand why we did it. One, because of their own capabilities, which is, you know, quite effective.
But the opportunity to use that as another point of engagement for people that aren't engaged in their healthcare and to get them aware of their healthcare conditions and get them plugged into whether it's Teladoc services or get them a care plan. So I think there are going to be continued investments that we're going to make to be able to have a sustainable growth path in the US and attack some of those bigger challenges that the healthcare system has. We're well-positioned to do it, but we aren't finished yet.
I think the other thing I would say, and I'll end with this, with BetterHelp, you know, as we've seen from the last many number of quarters, that's been a business that's been very challenging on the consumer front. Notwithstanding all of its strengths. So making a move like Uplift and being able to demonstrate progress on insurance, we do believe that transition over time is going to position BetterHelp to return to a growth trajectory. So I think both integrated care and BetterHelp, we've made some really good progress, and I think we're going to build on it.
Operator: Thank you for your question. Our next question comes from the line of Elizabeth Anderson with Evercore. Your line is now open.
Elizabeth Anderson: Hi, guys. Good afternoon. Thanks so much for the question. One of the highlights of the quarter, it looks like, for me at least, is the strong international growth as part of the broader strategy. Can you talk about, given that you have a variety of opportunities across your portfolio as you highlighted at BetterHelp, etcetera, how do you think about that? Is there any sort of change in terms of the emphasis you're putting on that business given the lower acquisition costs that, Mala, you mentioned? Or do you see that as sort of continuing along the path that you sort of previously described for us? Thanks.
Mala Murthy: Yeah. So when we think about our international business, we need to think about it both on the integrated care side as well as on the BetterHelp side. So on the integrated care side, Elizabeth, what I see this business performing at is very reliably, you know, in the mid-teens. This quarter, it was in the mid-teens on a constant currency basis, actually higher high teens on a reported basis because of foreign exchange tailwinds. And, you know, this is a business that is looking at and working with clients around the world. You know, Canada, UK, Europe, Australia, you know, those are the countries that we have a strong B2B international business presence in.
We have clients who have been with us for a long time, for many years, and we have a robust relationship with them. And then the last thing I'd point out is what Chuck said in his prepared remarks, we are making real progress in working with the public health systems in Canada. We are expanding province by province, for example, in Canada. They were part of our client event last week. And, you know, we talked to, they talked about how pleased they are with the partnership with us, and let's say, Newfoundland as an example. New Labrador is another province where we have expanded. So that's sort of the work we are doing on the integrated care side.
On the BetterHelp side, the way I would think about international is, so there are two subparts to it. The first is we have now been in what I would call English-speaking countries internationally for a few years in BetterHelp. Think about those as the UK, Canada. What we are now doing starting really this year is expanding into other countries with a localized platform and product experience. You know, this is still, I would say, relatively new, and we are seeing good signs of progress, one of which is, you know, we've said in our prepared remarks, the growth in users in the quarter was high single-digit.
So I say this because this is, we will continue to build on this localization initiative we have in international for BetterHelp. I expect us to roll out into additional countries. We are also learning candidly from launching these localized experiences. You know, it does require us to think about the experience with consumers, the therapists, etcetera. So it's, we are taking learnings as we have launched in these countries and building it into the next wave, if you will, of countries that we are planning to launch into.
Chuck Divita: One more point on the integrated care part of international, and I appreciate you raising that. It's a, I think, an often underappreciated part of Teladoc. We have an amazing team. They are structured to really understand the unique local market needs and opportunities. And they are very creative at coming up with solutions that make sense for that market. An example is that I think is really, really a great proof point. We're there using our hospital and health system technology, our devices. If you go to our website, you can see the pictures of those devices. They're using those in creative ways with those public health systems.
And I was very gratified when they take those devices, and they are helping keep emergency departments open in rural communities. We're talking about life and death stuff, keeping access available to populations in remote areas. So we're very proud of the work that's happening internationally, and there's a lot of learnings that we're, you know, looking to import to the US and vice versa. It's an important part of the company.
Operator: Thank you for your question. Our next question comes from the line of Sarah James with Cantor. Your line is now open.
Sarah James: Thank you. You said earlier that you expected BetterHelp to exit the year flat with the prior year. Can you talk a little bit more about what changed relative to your prior expectations and will BetterHelp return to growth mode in 2026?
Mala Murthy: Yeah. I think it's a really good question, Sarah. And let me sort of give you a little bit of a longer answer on that to set the overall context. So as we have always said, when we talk about BetterHelp, especially our guidance, our revenue guidance range incorporates a range of expectations. Right? It's based on many factors, our ability to drive user growth, looking at what the macro backdrop looks like, consumer sentiment. We had talked in the April earnings call about potentially softening consumer sentiment. Customer acquisition cost, churn rates, etcetera. In the second quarter, we did see incremental pressure in our US cash business from lower retention, so higher churn, and fewer gross user additions. Okay?
And that is what led to the lower user count that we reported, about 9,000 lower sequentially. And, you know, as we've analyzed what's contributed to that, we believe that this is actually being driven by more consumers using insurance for their mental health needs, mental health therapy, and an increase in advertising by other virtual mental health companies that offer insurance coverage. So we now assume that these trends are going to remain consistent for the balance of the year, and, you know, that is what is incorporated in the guidance range that we have now provided. So as such, we've revised our outlook, which we've obviously now talked about.
We have narrowed it and brought the sort of midpoint down, if you will. And it now assumes year-over-year revenue growth towards the lower end of our previous guidance revenue guidance. And if you think about what that also means, based on the third quarter guidance and the updated 2025 guidance, what it means is that the implied high end of the fourth quarter guidance range does not contemplate a return to flat year-over-year growth in the fourth quarter. Okay? Just to be sort of spelling it out very clearly. Now adding to that is the fact that we have insurance where we are seeing encouraging early signs.
But we have talked about the fact that it needs time to scale. We continue to expect $10 million of insurance revenue this year, as we have talked about, and we are pleased with, you know, the scaling of that overall initiative. So all of this put together, what I would say is as I think about next year, you know, we need to see how these different things pan out, how insurance scales in 2026 and provides the necessary offset for the cash pay business, especially in the US. That's a little bit of a longer view of how we are seeing the puts and takes in the BetterHelp business.
Operator: Our next question comes from the line of Charles Rhyee with Cowen. Your line is now open.
Charles Rhyee: Yeah. Thanks, babe. Yes. Thanks. Thanks for taking the question. Chuck, maybe I want to ask Lisa's question maybe a little bit in the reverse. Obviously, during COVID, the use of virtual care skyrocketed in part because that was the only option. We also recognize the great demand for behavioral health services as well, and BetterHelp filled an important need during that period of time. You know, since then, we've seen the use of virtual care drop, you know, fairly dramatically. You mentioned, you know, obviously, you talked about sort of the opportunities of where virtual care can be used. You know, I know it's another question. I think you talked about sort of penetration rates remain relatively low.
You know, I think, Chuck, you also talked about healthcare being very local, and it's very individual for people as well. What are the big challenges that you see in, you know, I guess the question really is, what has been really the limiting factor then in getting sort of that penetration up? Is it really at the provider level in changing how they deliver care? And is that maybe more of a systemic thing in just how the workflows are designed? Or is it at the payer level where you, you know, how benefits are designed and set up? Or is it really just a consumer level of just people wanting to be in person with someone?
Just trying to understand that, you know, innovation, and I guess the question really is more, what's in your control versus what is it more that you have to wait for the market to, you know, come around to some extent? Thanks.
Chuck Divita: Yeah. I appreciate the question. So a couple of things. I think you're going to see over time continued recognition that there's not enough primary care in the United States. And I think virtual, there's at least a more openness to virtual primary care, and I think that you'll see that continue on. I think the bigger part of your question, though, is, and this is kind of how we're thinking about it. If you recall back when I joined, I started highlighting this. You know, we have millions and millions of engagement points each year for the various visits that we do. Those were previously seen as visits. I see them as engagement points.
So that's why we put this technology in place that allows us to start activating different strategies to create value for clients in that way. So maybe it's that same visit, but I can also address a care gap closure. Maybe I can also help that individual get navigated to the next best action. Maybe I can resolve things more holistically than I do today, with respect to bringing specialists to the table and provider consults. So there are ways that we can make these engagement points more impactful, more valuable to clients. And I think the virtual care system up until now has been set up to do. It's been very transactional in many ways.
And I think trying to create a little bit more of a longitudinal opportunity is really where we're going to be able to drive more volume and more impact.
Operator: Thank you for your question. That will close our question and answer session for today. That concludes today's call. Thank you for your participation, and enjoy the rest of your day.