Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Teladoc Health Inc (TDOC, Financial) reported consolidated revenues within the company's previous guidance range, with overall adjusted EBITDA above the range.
- Integrated Care business achieved solid business and financial results, with nearly 3 million new members since the beginning of the year.
- International business continued to grow, creating further expansion opportunities.
- BetterHelp serves over 1 million unique individuals annually and has a Net Promoter Score of over 70.
- Teladoc Health Inc (TDOC) is on target to achieve cost savings initiatives for both 2024 and 2025.
Negative Points
- Second quarter consolidated revenue of $642 million decreased 2% year-over-year.
- Consolidated net loss per share in the second quarter was $4.92, significantly higher than the net loss per share of $0.40 in the second quarter of 2023.
- BetterHelp segment revenue was down 9% year-over-year and slightly below the guidance range.
- Customer acquisition costs for BetterHelp have increased, impacting both top and bottom line results.
- Teladoc Health Inc (TDOC) has withdrawn full-year guidance for BetterHelp segment revenue and adjusted EBITDA due to limited visibility on customer acquisition costs.
Q & A Highlights
Q: Chuck, I want to start with a comment that was in the press release, and that was unlocking greater value across the entire company. As I listened to your comments and Mala's comments around BetterHelp, should I think that BetterHelp is maybe not strategically a component of the company going forward and potentially this would be in better hands of somebody else owning this? And if that's not the way we should think about it, what are some of the other things we should be thinking about in that comment of this greater opportunity across the company?
A: Yes. Thank you for the question. I think with respect to BetterHelp, it's important to note that the company has really built a great capability. It's the largest of its kind, serving well over 1 million people, great results with consumers who are paying out of pocket. So all of that is terrific. I think the operating challenges Mala has touched on and you're well aware of, I think at this point, BetterHelp is an important part of the company. We're primarily focused right now on managing through this transition period, advancing the deliverables that Mala touched on in terms of international expansion, insurance market, other enhancements and balancing the scale and financial strength of the company and financial performance. With that said, like any business, we're going to continue to evaluate what we're doing, where we're operating in a way that creates long-term shareholder value. When I'm talking about unlocking value, when you look across our businesses, there's opportunities -- there already are some synergies being realized today, but there are opportunities to do more. You've got a consumer business that has resonated well, and we have need for engagement in our B2B business. We have a scale B2B business that can benefit from other parts of the organization as well. So what I'm looking for is each individual business to meet the market needs and realize its own potential, but as part of the broader company, where those opportunities to unlock new value and differentiate. And I think there's a number of areas that we're going to explore.
Q: Chuck, Mala, you both talked to pursuing insurance coverage for BetterHelp in your prepared remarks. So I'd like for you to talk a little bit more about that. What are the steps that you'll need to take to make an insurance reimburse products versus your current out-of-pocket construct? How is that going to compare to my strength? And what are the approximate time lines for taking these steps?
A: Yes, I'll start and then Mala can add to this. From my perspective, this is what I see is the next logical step for BetterHelp. We've got a lot of eyes on the product. But as people work through the process, a significant number, a significant percentage of those consumers that don't choose to move forward, site high out-of-pocket costs as well as having insurance coverage. So we want to be able to those consumers to offer the ability to access their coverage where we can. In terms of time line, we're working on deliverables right now to have at least, what we call, the technical capabilities by year-end to be able to offer that. Obviously, with insurance contracting and so forth, it will be rolling out over the course of 2025. As you note, there are some additional requirements, additional credentialing. There's other requirements, operational contracting, et cetera. The way we're approaching that, I think, is a very thoughtful way where areas where we want to control the experience, which are key to the experience, we are handling those. But we're also leveraging third-party partners for areas that we don't see as core to that experience. That increases the speed to market, reduces the investments we need to make to bring it live. So we see that as a manageable upfront investment in terms of building out the capability. But we do see this as a logical progression. But again, I would underscore, it's primarily focused on meeting that consumer need that we're -- we have their eyes on the product now, but they want to be able to access their insurance coverage.
Mala Murthy: Yes. And Stephanie, what I'd add to what Chuck said is, if you take a step back and think about our efforts for offering insurance, look, BetterHelp mission has always been to make mental health care more accessible to everyone. And affordability is the main reason users as they go through sort of the path to enroll with BetterHelp don't convert. And it's honestly the #1 cause for customer churn. If you think about the macros that we are dealing with, if you think about softening consumer spend, inflation, et cetera, we have an opportunity to actually expand our TAM quite significantly if we were to sort of expand beyond cash pay. So that's sort of the -- we are being very thoughtful on how we approach this. We are looking thoughtfully into the modalities, each step of what we do to implement and execute this with precision, with trigger and to make sure that from an investment standpoint, we are getting the appropriate return on investments that we will make in this space.
Q: Congrats, Chuck, on starting in the role. I wanted to get maybe your perspective just having come from a health plan, how would you kind of rank the Teladoc Chronic Care platform today among competitors in the market? And what are kind of the biggest issues or like low-hanging fruit that you think you can address? And then a quick follow-up would be of the people who have access to a Teladoc Chronic Care solution, how many are actually eligible for enrollment, so have the condition that can be resolved or ameliorated by the Chronic Care platform? [indiscernible] was just diabetes 12%, but I'm curious what that number is today?
A: Yes. I'll take a stab at it, and then Mala can comment further. From a market perspective, from a former customer perspective, I think the company's Chronic Care products are effective, and we were a purchaser of that in my prior role. I like the way that the company approaches a more comprehensive model as opposed to targeting just a specific situation that they're really being thoughtful in terms of what else that member needs. As you know, with chronic conditions, a lot of cases, it's more than one condition in play. And like most things with people, it's bigger than just one matter that they're wrestling with. So I like the comprehensive approach that the company takes and that resonated with me. In terms of where I see our position relative to others, I would highlight that. I would say that we have more opportunities to create services that can benefit those patients. And I think the journey the company has been on in terms of where it's headed with its weight and obesity management is a good example of that. I think, ultimately, you've got a sophisticated buyer, if you will, out there and they're looking for demonstrated value. They're looking for measurements against that. I think we've done a nice job with both our Chronic Care models in terms of ROI and our new cardiometabolic health value model that was validated by Milliman. So I guess I would say that I think we've got a nice approach. It's resonating in the market. It's comprehensive, and it is demonstrating
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
