TDOC - Earnings call transcript Q4 2024

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Operator

Good afternoon, and thank you all for attending the Teladoc Health Q4 2024 Earnings Call. My name is Brika, and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.

I would now like to pass the conference over to your host, Michael Minchak, Vice President Investor Relations at Teladoc Health. proceed. may you you, Thank

Michael Minchak

and Thank teladochealth.com you, we Year the closed, Relations press Today, Fourth available presentation on the good a press afternoon. Investor release This issued results. Full of XXXX after accompanying release slide Quarter are the market section financial and the website. announcing and our

Financial Chuck Officer; and Executive this to Officer. On Chief call discuss Divita, the Murthy, results Chief are Mala

remarks our this followed will call, prepared we and During be discuss a outlook, session. also question-and-answer by our will

this can Please note non-GAAP between note release press statements Health's to believe in Teladoc discussing that and to please defined Securities that the posted for the be Health Private performance. is made we website. will certain or statements forward-looking actual those implied that Also, materially could thereof comparable non-GAAP forward-looking to are expressed that Teladoc Act these financial are our such as this found during other be on from will certain most results factors by in evaluating relationship we measures measures uncertainties XXXX, and the call. that statements the Reform call the Litigation on measures Details cause be differ of on GAAP important reconciliations risks, subject

filings the all of SEC, For additional available information, release our please refer to website. our with press and which cautionary statement in our our on are

turn the to over like now would Chuck. I call to

Charles Divita

moment. initial XXXX our Thanks, our and more priorities. in comment Mike. continue a Mala on XXXX and to make We a strategic progress on to reported solid finish results guidance will

forward focus. some to business on As and areas we updates look I also would like out provide close year the the of and

scale, role pressures macro and play in months of operate in range of our Care To to challenges, such amongst health several we've complex market past and providers to cost prevalence, organization factors this customers health streamline We priorities, be initiatives. care have aligned deepen navigate we supporting Enabled given products regard, significant our These environment through as and positioned by focus impacted care are market, actions and strengthen and the savings challenges, important capacity know, important uniquely in mental respective several and our and additional believe advance in dynamic needs others. opportunities over an and cost with taken health medical chains which our are on disease continues Virtually created to invest. inflation, driven you this to services. constructive can and well pursue As regulatory matters, we the that a the ability experience

With on we're priorities. enhance building respect to strategic important to competitive growth Care, pursue X efforts these and and position factors our on focused Integrated other

to First and is million membership in X%, U.S. X usage and over engagement added care In of visit going of new an customers. at forward. as see additional for We And of support this towards implemented and the market net continues members customers element move recently value underlying as by the arrangements. the visit oriented we growth technology services. grew volumes to differentiation and our the key services metric proposition point a we our our and XXXX, in important

seeing of XXXX our expect acquire programs, saw perspective, addition added and for nice to enrollment including important continued including client interest to strongest we a this also the expansions we which the including enrollment we opportunities with space. solution some key had through employer and TRICARE see Care recently We respect and the agreement Of announced Catapult space customers is XXXX largest also note, Health. on More the government channel season in one bookings our a X% XXXX, the well, management in of further to year. the selling in grew ramp close out our some Chronic Chronic to wins as Care the since in moment. year, year our in in to that by of weight market. From We've management, over innovate

that Mala seeing these on As have which the are quarter will as various cover. channels, expect we reflected of call, well, uncertainties we will third broader that both we mentioned the in plan challenges. to in some across the XXXX our during channel remain managing opportunities focused are through the health pressures given ranges we of guidance in and With said,

we that season report proud implementation January on customers. a I'm earlier to and was of how delivered challenges, This XXX pleased new collaborated team very a given over our critical for with successful had and the I'm X. clients launched priority

Another deepening and our important care patient on priority is impact outcomes.

model preventative Net complement ability integrate to our we're also we're Catapult, For ] impressive greater the example, testing, XX, strategies addition a chronic as care, and of point-of-care capabilities that including of Score impact the I forward We're about nurse the and excited also with opportunities of Promoter we patients jointly well care on through including and in customers. And an technology for Catapult's conditions. needs focus partners efficiently on as mentioned to lead ecosystem soon to with driving leveraging with support approach external other we'll see to our screening longitudinal [ focused solution set. be to provides bringing earlier, to suite products market an engagement capability of us new looking initial to Kania further our

pathway Catapult and scale And Catapult's eligible for to are base. be based also on primary health that needs distribution intend enrollment patients care we for Management our we'll and our preferences. perspective, entry such services, other patient for as and a creating customer seamless growth services revenue offer to points our a Chronic Care for mental services into From our leverage additional

don't Many an indicate more primary established with challenges and share nearly relationship. conditions. care the half anxiety roughly chronic that Catapult of one by context, have and As people engaged depression have they or X/X

align ultimately in clinical and can to and other products to Our value customers. needs. participate we these services Through with capabilities looking extend and create care further we're these well very initiatives, for our the

Another I to important recently team our XXXX, and and hear to with year in some and And markets clients and markets. Integrated strong opportunity well. with I team revenue meet business. is drove from the another highly as building had expanding growth key delivering how services. are they our priority respective international strong Care sustainable their their our continuing positions and International was in efforts expand mid-teens impressed

services scarcity in health of providers. provide with the in and and the several partnering France, virtual organizational market. in places of example, Canada, needs we're system the to differentiation For in psychiatry the with to solutions are collaboration serve with provinces. our And combining are and system of across public devices we These great hospital software proprietary health virtual examples services

Finally, a priority increased health virtual services position. of scale mental access through our to

Mental offering access in in In addition to of Health our nearly therapy in an Care, BetterHelp, scaled we and tools, XXXX. visits level, in we X million revenues to in Health Over BXB generated Mental at mental U.S. XX% a has psychiatry the digital and $XXX also base approximately XX% offer XXXX, coaching, BXB XXXX. from offering our where health services. a enterprise million have Integrated We completed membership increase

offerings across We synergies to our going Health will forward. Mental continue assess

specifically. and with January be expectations Net continues across and The remain people in largest said, dozens Moving financial focused serving that having XXXX a highly BetterHelp resonates XXXX. the We its operate X above to way now challenging business in the to surpassed of unmet in but on And to consumer an of which over historical impacted of a countries. evidenced stabilizing continues Score million as for kind results XX. need Promoter segment by the in to growth a posture. business its that consumers served long-term we With a returning environment, XXXX, high milestone performance our

And we to aim priorities. X through this do key

and is engagement. levels user base first The of growing

sequential BetterHelp users million served yet growth paying the We third stability XXXX, unique by the were and we for. broad paying quarter see average have in are level diverse of X versus therapist in the quarter we not users, over encouraged network. but striving supported fourth During to reached a

on conversion a This our weekly rates, user advancing in improve Initial and monitor third retention model. quarter results the the as accessibility and have XXXX net was and continue key includes a We'll such affordability value expanded subsequently pricing were proposition priority enhancements. model ways as through and of we test launched available. now positive, new such measures features to on to also growth. We pilot performance a and to widely

a includes for models markets over XXXX, spot new and BetterHelp other approximately recent of new to and pursuing of segment including France international content language through in features again course country was therapists. expansion also for in furthering XXXX. and bright This XX% accounting a We're international revenues. with respect And launch Europe the in additional localized offerings,

discussions Finally, begun. are capabilities place, ability continues now an initial in consumers health BetterHelp's Operational health with coverage initiative select to have their progress. access provide plans with to to mental and benefits network

ways our broader we'll As also explore during consistent shared strategy. contribution to our area, with additional continue previously, we don't mental material to XXXX in this expect any accelerate and progress, health

on sustainable In which closing, organization growth. the the long-term priorities, XXXX is strategic how aligning we finished and by way our I'm gratified focused around are delivering

appropriate with our and is While strong urgency across performance competent work are a operating business. we more driving there ahead,

With Mala. over that, it I'll turn to

Mala Murthy

of in and revenue Thank XXXX was represented intangibles margin. $X.XX per XX.X% goodwill pretax $X.X with adjusted per on consolidated adjusted Consolidated compensation of year and EBITDA stock-based per results $X.X XXXX Net margin. equivalents included loss a million Full and revenue previously pretax. share Fourth discussed in million $X.XX decreased an $XX flow cash afternoon, XXXX $XXX was noncash generally good year $X.XX represented sheet. line million XX.X% quarter $XXX balance share $XXX cash versus cash million and everyone. of impairment Net were acquired billion a and expectations. our $X.XX. per EBITDA Full we nearly billion X% of you, expense while Chuck with of of of loss $X.XX of pretax, free the was closed charge share amortization per share share

a quarter International. of end the points with members our We prior revenue $XXX upper above million, Chronic X% Integrated guidance million, period. guidance Integrated versus EBITDA year representing Care members, the and X.X results. fourth Turning Care versus and year-over-year added XX.X% at X.X Care visits, near just XX $XX enrollment quarter margin. to quarter year ended Care Chronic was third million the we investments and in X% was XX.X over the Care period Virtual advance by of U.S. range midpoint was basis quarter program up in Integrated X% million by Fourth prior adjusted year year-over-year. priorities, range, key versus our million driven to the increased growing down discussed Fourth margin. EBITDA upside our quarter, period. that drove Care the quarter Recall end, adjusted the prior to a based on which the fourth This incremental to headwind segment

February. year, For we over a productivity double-digit mid-teens about benefited International driven Integrated to the XXXX. in had increase EBITDA of the versus initiatives. with our upper $X.X and Care adjusted increased as Visit half Revenue Care last in by and Virtual revenue, billion. revenue the growth full points growth XXXX in increased XX% range Integrated in as business year-over-year, by Care volume by basis Chronic margin provided EBITDA from Care. up grew U.S. revenue growth cost Landing initial segment X% well XXX guidance X% Adjusted

the model. quarter, quarter increase million third of a second third quarter. third year benefit third on in and quarter. call versus Shifting Fourth commentary reflecting of from weekly prior the X.X% paying to decline our EBITDA and This $XXX revenue modestly XXXX to users X.X% the fourth down BetterHelp. of was $XX by to the with quarter rate was in period, the $XX a the lower and step-up X,XXX first consistent X.X% adjusted compared to marking a much pricing from quarter BetterHelp sequential quarter continued increased the Fourth growth in smaller quarter over quarter users the adjusted margin third monthly sequential net million regarding by average Fourth International XXX,XXX driven million, versus adjusted quarter grew EBITDA EBITDA. since

$XX revenue was while year, X% of decline a EBITDA the versus For of prior BetterHelp full a of $X margin year, the represented billion, adjusted million X.X%.

guidance. to turning Now

$XXX the million. $X.XX expected range expect full $XXX to $X.XX of Consolidated range consolidated in year be revenue in million We XXXX to the adjusted billion of be to to EBITDA billion. is

We down to year at net cash $XXX XXXX, stock-based project $XXX XX% driven million mainly which midpoint full versus We XX% working capital XXXX, expense in $XX compensation expect of about represents XXXX free growth XX%, by flow $XXX to benefits. by and million year-over-year to versus $XXX levels. of million the million lower million of

the For and million, the revenue consolidated to first of $XX range the EBITDA range adjusted quarter, of in $XXX in to we $XXX expect million. million $XX million

segments. Looking at the

we Catapult on from This X% point exchange. growth at close includes assumes the February. the basis to year-over-year XX Care, XXX Integrated For and currency contribution as-reported growth which currency to about up expect be of revenue expected roughly end basis. Constant X.X% is flat to X.X% an foreign basis to constant a headwind from of acquisition, XXXX points

inclusive margin point points, of the acquisition be Catapult dilutive EBITDA plus adjusted margin We which minus we in basis from of headwind to EBITDA roughly XX.X%, are XXXX. to XX expect basis to adjusted a or XX guiding an

adjusted Excluding XXXX in line XXXX margin the with our EBITDA we XXXX And is EBITDA be outlook we roughly levels. margin year-over-year Catapult, said would our endeavor to for consistent preliminary adjusted guidance maintain at midpoint. where this flat with

Care neutral is margin. FX Integrated adjusted EBITDA to

that several and impacting factors quarter first quarterly There the are are cadence.

slightly greater First, expect years. a the we quarter first prior in revenue sequential decline versus

our lower seasonality factors is XXXX dynamics to Chronic part enrollment within point. a driven business, additional typical X While starting are by in Care contributing

our is The FX we earnings to call. discussed. previously And since which movements season, second due the the is October an first currency selling headwind had

new membered what expect growth is trends, on visit more to a extended drive now recent visit over continue as for visit implement TRICARE, the contractors typically ramp increased to the expect we strong at a program, based volumes. time while time, Next, takes we impacting quarter it to for

the Care of expected addition, business year. enrollment some the to key course XXXX, with our we over in Chronic have In expansions in grow

this benefit to by of a plans informed However, is client impact month, attrition from tempering this second portion the transition a during incremental business earlier an were we as our their quarter.

quarter contribution strongest typically Health a year. of beginning from fourth we quarter, expect full their second is the seasonally the Catapult of Finally, while the quarter in

these That factors second are weighted expected XXXX. a half split to back half, first slightly to to be together, XXXX. half relative lead revenue would Taken more in

second have we comping EBITDA adjusted Care more enrollment From XXXX. in significant and against some EBITDA an benefits impact half adjusted standpoint, TRICARE second while ramp also be in visits discrete will positive the expected Chronic on a and will in of the the third quarter

X.X% the guiding and the with in FX are Care an to to revenue A XX.XX% offset. period year and margin headwind Adjusted We be down expected points to up range basis. margin EBITDA adjusted Catapult is the XX largely Catapult X% about EBITDA tailwind FX from versus XX.XX% an prior to dilutive first year-over-year quarter to on Integrated of an basis impact. immaterial as-reported

Moving segment. BetterHelp to the

XXXX while on roughly currency down revenue decline to X% currently to are and versus costs known, the stage comfortable rate. uncertainties year, initiatives levels, we macro including demand of as wider reflects midpoint well traction from the churn acquisition as near point what's constant XX headwind. X% X.XX% of on exchange are on an foreign customer Based basis given backdrop, This to assumes a the We the as-reported a growth and a the XXXX X.XX% guiding basis range down basis. early

X.XX% guiding to X.XX%. We EBITDA an are margin to adjusted of

flat an EBITDA versus Excluding basis the roughly points, FX XX be adjusted would XXXX. margin headwind of to midpoint generally

point headwind. to an that a For a assumes decline revenue to first FX quarter, basis. XX BetterHelp as-reported basis XX.X% on currency down we segment on XX.XX% basis X.XX% the year-over-year and constant are X% the guiding This

current We the with the the headwind led at cost, expect year-over-year to EBITDA to margin levels has point a basis the X% related adjusted roughly we quarter. rates X.XX% from expect foreign XX customer of exchange acquisition remain in of to over it improvement conversion in to and balance an first offer a year. Higher weekly

churn weekly While offer net the positive. a to higher, expect we remain is

markets assuming although our our Europe, increase as market. are We to and out each in localized we learn in being additional approach as we and revenue an offering in roll are refine users also we methodical

modest ease beginning of the through improvement as revenue result we balance factors, on targeting these progress through relatively revenue And the quarter targeting with a year-over-year sequential as and the we quarter are As year-over-year continuing of we year. fourth basis. second are comps to be a XXXX, BetterHelp flat

productivity on update and an savings provide now initiatives. I'll our cost

on We appropriate previously success. position to are taking and for our execute and program exceeding actions an committed in fund This are business to company the additional to those of continue helping focused remain long-term against the We managing performance targets discussed investments modestly. level is to accordingly.

further costs continue our opportunities As expense. and focus and compensation lowering optimizing evaluate stock-based to we G&A will on development well as technology as efficiencies, for be

the year with high our generating financial cash free of is our on us flexibility. believe flow a cash solid balance Finally, degree we which provides closed sheet $X.X we business in and billion

to first key foremost, This As demonstrating a and an community invest and area sheet. ] of is it relates allocation our intend maintain to innovation. client interest, capital ability ensuring strong in balance a priorities, we to [

convertible bonds continue with We cash. expect June to due retire XXXX in to our

long-term have we to ahead options June look and We believe financing as we XXXX the evaluating are maturity. our

the and inorganic in Second, an we basis. to strategy, both on will focus support business on investing our organic

further capabilities, a share cash. our we our third, of As and we leverage remain on excess platform, large And our customer strategy. executing base further can expand buybacks distribution land-and-expand scale use potential

back will I call to the Chuck. that, turn With

Charles Divita

confident execution ahead. out, laid factors, although on Thanks, and I priorities commitments up, in actions We progress year us more improved near-term macro other headwinds we're the there we our are deliver and the is all term. against to wrap to am likely some that we performance coming make will stakeholders. continuing Mala. are strong on work sharing to we more foundation for the the provide have look forward a Despite over taking from longer that this To strategic focused key months. to delivering

it we up open will for With that, Operator? questions.

Operator

Thank you, Chuck.

We will question-and-answer now Instructions]. the begin session. [Operator

with comes question from Lisa first Your Gill JPMorgan.

Lisa Gill

Integrated talking your if a visits. have want growth you how based when at What years, the seeing you're on changed, the but that midpoint, you you back for that X% on about has it all, focused season like you're in as some about made last good And in flu of the I talk historically, later to growth couple about customer far more members looks about the go trends? of much you were guidance as flu seen adding started net the in and to contracting Can than we've at being giving. are talked Teladoc. And Chuck, contracts comment been utilization XXXX?

just So more utilization recently on overall you've what curious trend? like the seen

Charles Divita

if Mala, certainly, jump then and to want comments you some make I'll in.

things models ourselves. ago organizations few that a many I sort to a to it because buyer lot years space, ] in think as So new was would such this and [ was as of of PMCM I the say new there

a a so that know, provided a the that on there's you health system the of And of level primarily of works But basis. a predominance visit as basis and care on still utilization there. out rest predictability

system rest like. over now has interest time of you've and more So visit in towards matured, the virtual looks delivery moving more that seen the space more

is volumes And just a use It's engagement points. we trend the we And have we why signal been activate you and volumes we engagement those visit while. that's think those have. also So I for importance ultimately, but that we in particular engagement of highlight a we increases of steadily. important. more should holistically. of pretty for that's that's that's see which we I are have how think it's those important do because so that more level points can visits the as of add part expect, driver that on revenue, And the seen of going that visit as visit our event, strategy their And members than that's new a because also mentioned, a not we a

last to responded we massively the comment. to about volumes which When that all I year. holiday Mala you pretty would are than I One think could season, patients say scale, of before the asking this very thing proud I that our or match do of when larger remarkable. team and way the was surges the it [indiscernible] we at you that and providers is think think, SLAs making that others, about sure with throughout experienced,

on matters. maybe, want you if season flu more comment Mala, But other and to the

Mala Murthy

Yes.

So your I would trends. Lisa, broader addressing on question just say,

spoke been across is have with certainly there it is be on isn't a clear, over we As you, shift of seeing this shift our mass JPMorgan as at time. about a To we crystal clients. all

structure the access plenty certainly, are the migration seeing of amount interest we and of arrangements. have some plausibility We in clients traditional who but towards still fee are of fee

has as this characterize the for been I'd And happening shift a time.

We we to it are continue over as innings in continue middle the time in say this. to expect gradually

point to As it to at trends of the and talked important, the every making utilization really about flu relates season pillars sort strategic why count are visit made, this is we Chuck right, that JPMorgan to to in prepared drive the we business. driving Chuck with every right, we that, more, the value have investments added has remarks and value exactly have made talked do about in more capabilities visit.

accrete a the but utilization as us increased focus as stable generally revenue. from driving an both Our have of well other is that point for way remained investment standpoint, we which that trends absolutely is enrollment,

of go momentum single-digit year, year felt of a the to also volumes revenue would but would terms this part in revenue year. growth last quarter, as I'd our the comment We we of of visit we of I flu and volume. but That growth. translated just from mix continue visit that that the the a visit revenue And kind first as the the following. growth. benefit In through revenue. both expect not perspective to rest about in visit talked I flu, on say visit high more, actually overall X%

Operator

comes from Sandler. Tassan Your Jessica Piper with question next

Jessica Tassan

detail. offerings just payer efforts qualitative I what of give question Thanks had guess the I expand a a bit on BetterHelp -- the us coverage. to can you again just little for around detail the what or gaining access exist segment? a incremental or capabilities an Integrated in network. then bringing within just would BetterHelp behavioral health Care payer And what be today, network employer by

kind nature describe qualitatively between those X the offerings. If and of difference just you could

Charles Divita

Yes, happy the on scaled to. of mentioned, And side, on it's Integrated there been base XX% nicely. side, installed BXB Care a health growing mental have we the About our and position services, I is and has you BXB coaching, we And I access to psychiatry, our which in have as aggregate digital tools, have of around we million revenues. range mentioned, services. $XXX on have a as

that's So scaling well.

widely I in and lot from to been a has continues think Mental care health have this the we see that setting when of you most of continuing. trends secular step actually post virtual issue, the pandemic one that, the around back adopted and

you when that really so volume. to And contracting, but getting resonate thing not amounts requirements those do a think is actually you consumer need brand network a massive use to your I brand actually get services. a is one and other that's and people and only utilization. into there's forth. and network what that strong brings. BetterHelp They the well-known be the they brand have of have And pieces. network a meeting One It's X

the get pandemic, a post you've network volumes to but the and because so seen able membership. of players you were have some arrangements struggling to activate lot to into so get And are forth

and brand also the both the getting ability and think market network but I your the are need. a meet important, having so to services And

I network. with people And within ability XX where I mean it think seeing that's an diverse providers, XX% interest hours, the match a in for are patients Airbus BetterHelp. to

table, So to takes lot the get notwithstanding a brings that there's into that that challenges it space. the to

Operator

Your next Sachs line. comes Goldman David Roman from with question on the

David Roman

the you Maybe beyond to are you, as us weekly some segment? we good going evolving of a And break consider can factors basis of and that you dynamics the down on how by you direction help sustainable the the business bit then guidance, the the business a think, Thank is look at could the sort are of walk XXXX, little compared as But to operational maybe model. pay in on the I some what side, just in you BetterHelp you you XXXX through of afternoon, key then and everybody. year-over-year plane as model, look a business evolution the land how forward? understand factors

Mala Murthy

Yes.

in those order Chuck me address Let chime in, please. and questions

let as with year-over-year follows: one, think I basis, think guided we that in of on the Care, components growth basis. a X.X% Integrated Integrated I currency X.X% constant that So digits revenue and about the currency drivers within me a a The way constant about growth double have as for start to Care, on number on low essentially revenue are international growing the up basis.

So that's one.

have Catapult things that that to Second, growth. transaction about in shortly. the of months U.S., we Number close certain are informing we XX are one, that assumed if I think our BXB there business, expect

number is that one. So

TRICARE talk showing to is, momentum. revenue we just The talked are second expect visit And as we about, growth nice year through as an as said, seeing about should we back the extended ramp That momentum see we I the did year. about we just talked to of I half add as the expect TRICARE. ramp TRICARE for to that in well. visit momentum

as So through enrollment Care that is Number year. number ramp two. always, three, Chronic the

season and Chuck the and is seeing in that included and talked prepared And we we the contribute through will the that from as remarks. so happens within Chronic in So are year, of through that traction slower enrollment the challenges year. his the [indiscernible] Care weight about that about a because start dynamics we talked QX But certainly, selling October in in management.

we in said incorporating first, of of I in I say, revenue are are: would would all say were exchange about standpoint. impact -- overall foreign headwinds guidance second, prepared from our the client is our we a remarks, offsetting the informed these the the then we earlier. couple And of as talked have we about growth that dynamics a loss

the growth our are essentially are those overall different takes and revenue momentum. that informing So puts

Integrated ramps, in in year we adjusted Care. From EBITDA an Care, go typically as the through adjusted we I revenue say EBITDA ramp Chronic margins as especially would will see standpoint,

mind, it adjusted sort adjusted by in and absent we QX keep I in spoken say EBITDA comping in of about is, only thing are seasonally that, But is reasons XQ different Now quarters. and visit would that XQ. those have of EBITDA are XXXX, other we stronger impacted through margins from for margins the QX volumes benefit for year. The advancing

keep it's on just something that. So to in mind

landscape we are to have BetterHelp, what talked consistently But a cost keep is, What through we can It monitoring be to guidance. XX we and customer have reason is that months assuming go One, we this turning very have looking are externally we things. guidance because relatively say, I learned our for last that stable stabilization the we that relatively the wide in volatile Now have would to BetterHelp stays we and the provided acquisition change mean? can the quickly. means a about year. as X in few does for internally it years

trends driver. sort customer of is acquisition are an important that So

about and growth our to The growth important an growth localizing we international international are as efforts said, this our we within our second we about product is -- and contributor revenue experience. making, have is have year. talked our And talked [indiscernible] growth. international platform That

that other plans. do with monitor countries. we have, which in we but localize for to have countries, experience well going public localized to a be We thus in have example, far. We don't days We how And yet, want plans early need does. launched to France,

the This remain in to efforts platform I continue platform is BetterHelp. and board We to say across would and core talked What NPS. experience a So growth improve the high in just also important about continuing international and and with is we've a to initiative need product U.S. the user nurture it. it an and for invest

making And so sure important good continues us. an core that and is is be for driver good. It the to experience

you, coverage. So things efforts I driving would of all benefit on making those we are is say to it

a do expect we said XXXX. not material driver revenue always have We in to growth be it

ramp We we expect as material up in in future years be the to years. it

segments. different your dynamics little a longer the of question a on to that's So the bit across answer

David Roman

all here. in I the detail. appreciate [indiscernible]

Operator

now Thank Sean you. Dodge We RBC. have with

Sean Dodge

than it's it Yes. per sequentially. user you the function as a of international? the on revenue the in it that stabilize of maybe average mentioned? the doesn't is to have see BetterHelp. weekly paying Maybe that declined just rollout the just number encouraging you like mentioned, price or staying churn Is the to Mala looks do user with Or but in growth Chuck, membership lower U.S. Is offering elevated mentioned.

per trying expect is maybe should extent to user to revenue continue understand Just and not? the or down that why we

Mala Murthy

I'll Yes. this. handle Maybe

of So it's things. a driven by couple

weekly the really pricing is. now, is First, be on monthly the that's essentially very what X, different just a right in no that, divided is clear, weekly versus our pricing it to our monthly by

are the conversion. you in our tell based I we on that better traction will Now seeing offer weekly with

per revenue said, in right. basis experiment monthly. look different to that absolutely us is the We XXXX. to monthly you average But is are for being by change far, our Sean, not on going you pricing that with What is really any contracts on weekly weekly. that something into driven on different absolutely user for from is see And so a docket

talked I our to because fact do as have is [ revenue. overall say are fact this user markets, lower and where does our revenue international it's a ] international the we on to about we that that also our our the and in revenue offset We to you, per take revenue is contra price taxes headline an international matter would

international our factored thirdly, into is impact. been the has that will was something as see why revenue you international down. is user going this But that goals per that And or seeing growing, been you're Again, reason that economics. has ARPU the -- overall

Operator

you. Thank

ahead. with go Please Genuity. We Close have Richard Canaccord

Richard Close

was if on International could Maybe Mala, BetterHelp. a you remind that what follow-up year? us Chuck. the then last follow-up And for

If set? just are evolving about health it's you do can slow. with channel have plan your how product some anything there's that channel, this you there. it Does talk about to said year? you issues the Obviously, Or thinking

Charles Divita

Yes.

part last first. the me with Let start

health there's call are navigating through. things going at enhanced of in subsidies end ending Care will. with they're they're subsidies a in you've plan that. you're player Act, adept few everyone sophisticated got And all marketplace they on. These organizations, that I So the Obviously, familiar on the doing dynamics is XXXX. the if at the the think at the But a Affordable and

some through business, forth around inflationary ways some Medicaid a system. back you're expansion. heavy the trends indicated, that and got the commercial questions In you've going If their you've got working

So there's a variety of things through. that the health plans are working

they're continue work strategies strategies to have their that and whether plans, creates they do through with headwind or reasonable those of play other on how it's as business But strategies. it's level tightening to I that, in forward, think We going the think focusing of people terms health grown plans. We belt going health to business some expanded.

things our inflation, of say activate are this the of disease my the of more The points making tailwinds differently reason support cost we why our cost those remarks because will of highlighted secular programs the even those how prevalence. do do I impactful and haven't terms gone I And is terms in in of lot away. Chronic that's strategies, and the a those why care prepared investments medical around we all though, unfortunately, make we how in so engagement forth. Care we're Management

for of I we I that that, and in to our us we've our navigate always is mean, think products, -- said got the near-term think continue through. like products I it's to sort innovate don't think to resonate do companies I that but market. this necessary us have So headwind reasonable -- a Having

Mala, do the to BetterHelp? you cover want

Mala Murthy

Yes.

and up of XX% So mid-teens in from was international in that's for the revenues segment's BetterHelp XXXX. XXX

Operator

you. Thank

We have a line Citi the Daniel now. with on Grosslight

Daniel Grosslight

And you've to little year, control speak just utilization are how traction impacting dollars? PBMs weight a can costs Can with to you management work employers in fastest? GLP-X put year. growth GLPs rebate employers like also trepidation at to We've sounds the Chronic As respect nice from this growing it for programs loss had there Care to rank this we about heard which the program, with for think you and necessarily risk. adding rebates help some without as could you that

Charles Divita

things. seeing the mind then interest now can for bundled is we and a we we're Yes, What that Certainly, a for members. those a where couple have is growth and and in activate traction we of the on us. a price source set our offer management most source variety of things right of of weight services

lot GLP-Xs, challenge you've the -- is with employers there to the are figure strategy. and mentioned of trying a think well, I it, their out first of all,

going sort think are out to in employers with well. And those significant approaching PBMs think I monolithic leaning And rebate So this just that are if not speaking, a through. view how of their to And work think how as are to generally I there, that. that there's issue. GLP-Xs I as the are there we're working dollars. to have PBMs of address But something they're that's

in the of are employer not their think my should sort ability I I'm the rebate their best not dollars. and the dollars. terms hostage employees PBMs employer rebates. of for think question is, if They're I programs mind are those in design And an and rebates be their held to that the dependents have and

that. not employers plan person, PBMs. former But individual employers, and to to up how health from the that's want Now the perspective, rebates they the are a my as approach

Operator

Truist. have Jailendra now Singh We with

Jailendra Singh

comment drivers plan? transition actually to Can second membership, in Any confidence more in offerings Was follow like there And that And client retaining Singh Jailendra planning a still is provide you up be your terms it you with portion it you change? on their a in I from about in offerings? how color helpful. other feel were confidence color behind they wanted This to quarter. health your client business any just around -- what Truist. of of just on would for the you on other them work offerings, that looks but us could help using. do

Charles Divita

that comment I've It will Look, specific here. factors in terms in say going already made the are on the the I comments But to plan clients channel. of in in regard. of Yes. not was health lot that a macro play I'm

are some that. just making terms of a in continue sign I particular the this under and of pressures the ways certain decisions do times in We of and some business in some plans that entity are to with like health it's think

to what back I'll go I said. again, But

plans, have of significant business and We solutions better now the conversations plans. continue their we're how they're can health in strategies We've expanded ways. to that having in, for really looking services with and we're support types variety new participating we with of our that health a

been of in feel for I customers. very making value terms more the got comfortable we strong can that we've a including So how we've offering, that investments create

Operator

now have with a We from George you. Deutsche Bank. Thank question Hill

George Hill

there's the look at My full you significant targets. come that hit BetterHelp. question it guidance, is EBITDA business cuts like looks of your to But to year on cost if have discretionary out the will

to -- bit, I as you guess comes kind I I hear of like, come more gross business like -- where I base? come I would love discretionary So see you in just down talk just talk or little line costs hear pressure like the there out cost would love more down margin should about And costs the we about is to of the -- business? is on as more there that a guess,

Mala Murthy

in the really the about business. the margin expense that is acquisitions first on items about and advertising that a infrastructure important It for businesses, that and context before, I a the of fixed P&L. we have is this and OpEx variable that we largely driver around would relatively And view, lean. said BetterHelp on on user that spend important business is would and efficiency an I because key line, George. EBITDA as What that margin if I yield give runs business. Yes. are bottom from of the a This say, It's adjusted think point marketing think

what looking are be talked is now want for if it we we in balancing top about do, -- And that certainly I a through about means is hockey as the that we years while, go will thing stick with we growth. to to ] line line going have One it I not been the bottom to growth And as as paced. has think say even be A&M year, certain past. as are [

is expectations invest our going line EBITDA and we of is with impact That in BetterHelp we growth wanted an international You year. adjusted was in that to users are for us, QX where in an markets. because acquiring area users. in actually of largely area saw this that be QX new to

in in fourth investments So quarter we the BetterHelp the business. made those

EBITDA margin is a to in though, be expect I'll to relatively this are marketing BetterHelp key and largely how certainly and business. remind to on prudent said, going the But even business, advertising But variable in That margin to adjusted the a continue in that it I and BetterHelp is say overall judicious so. and in you, going spend we XXXX. factor going be will we will beyond be XXXX

George Hill

guidance any EBITDA I have quick just if the and guidance between a Okay. moving there? is the to the big flow gap And [indiscernible]. cash follow-up pieces could Are there

Mala Murthy

Yes. It's a good question.

the XXXX -- X actual the in is Besides you following. -- There our takes cash-based in internally terms compensation, in what benefit are compensation. internal adjusted in our about at flow what we growth, then drive growth some we between up cash EBITDA segments terms the certainly also terms look X the perspective, the if the XXXX relative delivering. in difference of think of And picking those pieces. year-over-year So from it a are are look of to at important compensation We it results. to

consequence our on And that look, overall for is our that a has results based and on compensation. XXXX,

improvement, is we and collections, DSOs, are et focusing second on capital cetera. working driving The

essentially see cash those flow you that see. two resulting dynamic in you the So things

Operator

next Charles Cowen. the question now TD have We from Rhyee with

Charles Rhyee

TRICARE does spend that just think more to on into that of the terms to marketing TRICARE conversion of investments or moderating about BetterHelp you've little customer investments think, this earlier the falling. sort made? acquisition Maybe And least been of Yes. market at we bit dollars a function, of the how has the already comment and of you requirements talk how of a made right, in versus directly you that's cost sort members like the that kind certainly, or membership either side. what paying Because of asking and about plan offering specifically sort require the into population, should I

you we questions. of about kind are that through the it's sort Just doing really of kind of how trying in think to of -- different sorry, generally the what think TRICARE conversion? you It's X implying And business? better avenues are as really sort

Charles Divita

wouldn't out necessarily I TRICARE. single Yes.

strategies I think Teladoc campaigns, reach visits we think around have and that has the we've we And activating that the brand with obviously, marketing of covered. our pretty terms in consistent. got our are

particular specific a account, that So approach I volume. don't will want a [indiscernible] to on say about it's visit tactics I but talk broad-based generating pretty and

Charles Rhyee

we If from basis, could revenue a just similar contracts I on old existing to one is like-for-like about follow-up. the your type think if old And contract model you access new quick add the of that visit similar versus profitability and model?

Mala Murthy

typically, that's I nuanced would question. a the model. model to when conversations in our So the say following, slightly visit transitioning from we the traditional these have with clients

so looking gross the be neutral expand. typically, the have right may -- it part is over will the to outset when pricing margin are from transition. these conversations, we context at be of of in It land point time. of such But that and structure the We expand the it

factors will other happen But most to what that essentially or is talk revenue-accretive population Charles, be depend does us it will gross gross the really or on basis. essentially allow into we now selling product will instances, be profit that neutral So accretive. dollar case-by-case will about we margin in a

Operator

Cherny have now Michael We Partners. with Leerink

Michael Cherny

a of a but bit numerous I be have through you dollars revenue go back to I opportunity what cost just on generate whether of exiting it's you know we think year guidance don't side? balancing idea can profitable the or contribution versus versus discretionary how the the long-term about it for should long-term profit may profit cuts. through cost dollars it, Mala the the I And growth mentioned if you dynamics, for times, on Maybe know to George's growth.

what should forward? look So the like going philosophical model

Mala Murthy

a great It's Yes. question.

it start that? with it for address for what here's question say. me both BetterHelp is than broader I segments. I'm So would BetterHelp. assuming let I'll or is your And

the variable the matters in business business year BetterHelp BetterHelp, would for for us look, business being stabilization to a go it able progression sequential like down revenue comes all and what say, see to the through margin I as So really in growth. because we is the

every to lower that and improvement need we through the we so as decline lower year. quarter And with and roll

to think BetterHelp. for we So the are what is that looking as see term we longer about

say going cetera. I will different different have model when economics, and et I margins, the that that has comments made that be is to benefit different about coverage certainly Now think we unit

material, when that we so that in becomes XXXX. And it will isn't which address

about that things. On is always operating about is the One because growth X segment leverage. it the Integrated have it is revenue is the Integrated really driving Care what Care has said we one is side,

profit remarks, the way all making right? more earn and enrollment. It driving that are certainly down dollars So is our revenue the certainly the because share mentioned strategic a growth is greater dollar in sit drive. things, greater greater we impactful prepared wallet. more that utilization with of and It drive, more driving revenue And member engagement visit and is leverage you every allows drive the by us to his their clients value Chuck in growth priorities and to it spend gross and growth profit and gross you the looking

growth. So going top that that, line things drive like to is greater

OpEx shown say, would productivity in to then G&A. well. items, and to continue we have in in productivity around I that our drive sold, really will as continue to cost stock-based some comp, technology and discipline and nice We goods our specifically, of will continue And expect we development drive and I

some on of that our us discipline on line growth combination hopefully, and how driving top a you cost gives profit. structure. on we think it's progressing maintaining driving So But about color and

Operator

that Thank for you rest confirm conference session. that can all conclude your today's here. confirm question-and-answer And I day. call does of can please the and conclude I enjoy today's joining, does

call. You from disconnect may now the

Teladoc Health (TDOC) 26 Feb 252024 Q4 Earnings call transcript