There was a time when Teladoc Health (TDOC 1.74%) was a high-flying market darling. Helped by its positioning as an early mover in telehealth and a surge in online visits due to the COVID-19 pandemic, shares soared to euphoric levels. Unfortunately, today the stock faces the exact opposite sentiment. Parts of the company's business continue to struggle, and investors have punished the stock. In fact, the stock sits about 98% below its February 2021 high.
On the latest earnings call, CEO Charles Divita described 2025 as a "repositioning year" as the company pushes product changes and tries to improve its value proposition. Part of this effort will include addressing significant weaknesses in its online therapy business, BetterHelp.
But has the stock fallen too far? Unfortunately, the company's current challenges may still outweigh its stock price.
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BetterHelp is dragging on results
Teladoc's revenue declined 2% year over year in the third quarter of 2025, landing at about $626 million.
Segment performance puts this decline into context. Third-quarter integrated care revenue (Teladoc's virtual healthcare business) rose 2% year over year to about $390 million. But BetterHelp revenue fell 8% to approximately $237 million.
Looking beyond integrated care's revenue trends to its underlying membership metrics reveals some promising trends in the segment. Teladoc's U.S. integrated care membership ended the third quarter at 102.5 million, up 9% year over year. And its chronic care program, which also falls into Teladoc's integrated care segment, saw enrollment reach 1.17 million -- down 1% year over year but up more than 4% sequentially.
But Teladoc still needs BetterHelp to cooperate. Management is trying to move the service toward insurance acceptance as opposed to its previous emphasis on cash-paying customers.
Management indicated that it is seeing signs of this repositioning of BetterHelp starting to pay off.
Key metrics for its BetterHelp business, including conversion rates, number of sessions, and user growth, are all "trending in line with what we were expecting," said Teladoc chief financial officer Mala Murthy in the company's third-quarter earnings call.
But Murthy also noted that its U.S. direct-to-consumer cash-pay business "continues to be challenged" -- particularly from heavy competition by other players in the space who have strong offerings through insurance. But this helps validate Teladoc's pivot, Murthy explained.
That pivot may help over time. But the near-term drag is clear. BetterHelp's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was just 1.6% in the third quarter, and average paying users fell 4% year over year to 382,000.
NYSE: TDOC
Key Data Points
A low stock price doesn't automatically make shares a buy
With the stock trading at around $7, Teladoc trades at 0.5 times sales as of this writing. On the surface, that might initially seem attractive -- especially for a company that still generates meaningful cash flow.
Teladoc reported $67.9 million of free cash flow in the third quarter. Additionally, the company also ended the quarter with $726 million in cash and cash equivalents. Looking ahead, management guided for full-year 2025 free cash flow of $170 million to $185 million.
Yet the income statement is still struggling. Teladoc posted a third-quarter net loss of $49.5 million. To be fair, the quarter included a $12.6 million non-cash goodwill impairment charge tied to its integrated care segment. Still, even if you were to add this one-time item back in, the adjusted loss remains worse than the company's net loss of $33.3 million in the year-ago quarter.
Guidance also looks weak. The company forecast fourth-quarter revenue to be between $622 million and 652 million. This compares to revenue of about $640 million in the fourth quarter of 2024 and $661 million in the fourth quarter of 2023. Further, the company expects to report a net loss per share in Q4 of $0.25 to $0.10.
Strong free cash flow or not, this business is still struggling to find a sustainable model to create shareholder value. For this reason, I'm going to personally stay on the sidelines for now.
