Release Date: October 30, 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 third quarter integrated care revenue of $384 million, which increased by 2.5% over the prior year period and exceeded the top end of their guidance range.
- The company saw strong growth in visit revenue driven by increased membership, contributing to robust visit volume growth.
- International integrated care operations continue to show strong momentum with revenue growth in the high teens on a constant currency basis.
- Teladoc Health Inc (TDOC) ended the quarter with over $1.2 billion in cash and cash equivalents, providing significant financial flexibility.
- The company is making strategic investments to enhance product innovation and improve execution, which are already showing positive impacts in terms of efficiency and effectiveness.
Negative Points
- Third quarter consolidated revenue of $641 million decreased by 3% year-over-year.
- BetterHelp segment revenue was down 10% versus the prior year, with average paying users declining by 13% year-over-year.
- The company is facing challenges in the health plan space, with bookings tracking lower than the previous year, reflecting a challenging market backdrop.
- Adjusted EBITDA margin for BetterHelp decreased to 5.9%, down from 9.6% in the second quarter, driven by lower revenue and additional ad spend.
- Teladoc Health Inc (TDOC) is not reinstating formal guidance for consolidated revenue, adjusted EBITDA, net loss per share, or free cash flow for the fourth quarter or full year 2024, indicating uncertainty in future performance.
Q & A Highlights
Q: Can you provide more details on the BetterHelp fee-for-service transition and payer contracting?
A: Michael Minchak, Head of Investor Relations, emphasized the focus on maintaining BetterHelp as a consumer-oriented business model. The initiative to allow consumers to access their benefit coverage is progressing, with internal capabilities on target and discussions with select health plans underway. A measured approach is being taken to ensure methodical investments and rollout.
Q: How is Teladoc navigating the competitive landscape in virtual care, especially with clients pushing back on PMPM fees?
A: Charles Divita, CEO, noted that virtual visit services are widely adopted, and Teladoc's scale and ability to match people with providers within required timeframes are difficult to match, which is recognized in the market. This competitive advantage is reflected in their growing membership.
Q: What are the expectations for the 2025 selling season, considering current trends in retention and bookings?
A: Charles Divita, CEO, and Mala Murthy, CFO, acknowledged that while retention rates are slightly down, the team is actively pursuing opportunities to close the year strong. The health plan space is experiencing headwinds due to market adjustments, but Teladoc is leveraging its membership growth to drive visit volumes and cross-sell additional products.
Q: How is the competitive landscape developing for BetterHelp in terms of payer coverage, and what is the SG&A burden in a payer-sponsored arrangement?
A: Charles Divita, CEO, reiterated that BetterHelp will remain primarily a consumer-driven model. The focus is on exploring ways for consumers to access benefit coverage while leveraging existing payer relationships. Mala Murthy, CFO, added that advertising spend is used to bring consumers in, and offering coverage options could leverage marketing spend more effectively.
Q: How will Teladoc measure the success of investments made to reposition the business for growth in 2025?
A: Mala Murthy, CFO, explained that the company is aligning capital allocation with strategic priorities and balancing investments with expected returns. Success will be measured through both financial and operating metrics, such as revenue growth and chronic care management conversion rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
