Teladoc Health (TDOC) Q1 2025 Earnings Call April 30, 2025 04:30 PM ET Company Participants Michael Minchak - Vice President, Investor RelationCharles Divita - CEOMala Murthy - CFODavid Roman - Managing DirectorAlan Chen - VP - Equity ResearchCharles Rhyee - Managing Director Conference Call Participants Jessica Tassan - Senior Equity Research AnalystDaniel Grosslight - Senior Research AnalystEduardo Ron - Analyst Operator Good afternoon. Thank you for attending today's Teladoc Health First Quarter twenty t ...

1Q-25 Quarterly Results Cautionary Note 2 • This presentation contains, and the officers of Teladoc Health, Inc. (the "Company" or "Teladoc Health") may make, "forward-looking" statements that are based on management's beliefs and assumptions and on information currently available to management. These forward-looking statements include, without limitation, information concerning possible or assumed future results of operations, including descriptions of the Company's business plan and strategies. These stat ...

Financial Data and Key Metrics Changes - First quarter consolidated revenue was $629.4 million, down 3% year over year, but at the high end of the guidance range [20] - Adjusted EBITDA was $58.1 million, representing a margin of 9.2% [20] - Consolidated net loss per share was $0.53, compared to a net loss per share of $0.49 in the same quarter of the previous year [20][21] - Free cash flow was a net outflow of $16 million, an improvement of $11 million compared to the prior year [22] Business Line Data and Key Metrics Changes - Integrated Care segment revenue was $389.5 million, an increase of 3.3% year over year, exceeding the top end of guidance [22] - BetterHelp segment revenue was $239.9 million, down 11% year over year, but above the midpoint of guidance [26] - U.S. Integrated Care segment membership reached 102.5 million, up 12% year over year [24] - Virtual visit volume in the U.S. increased by 7%, while Chronic Care enrollment rose by 3% [24] Market Data and Key Metrics Changes - The international business of Integrated Care showed revenue growth in the mid-teens on a constant currency basis [13][24] - BetterHelp served over 1 million unique users globally in 2024, with 40% being new to therapy [8] Company Strategy and Development Direction - The acquisition of Uplift aims to enhance the BetterHelp segment's position in virtual mental health services [6][7] - The company is focused on expanding its international markets and enhancing product offerings, including new pricing models [11] - The strategy includes leveraging BetterHelp's consumer expertise to provide more options for mental health care [7] Management's Comments on Operating Environment and Future Outlook - The healthcare industry faces challenges from medical cost trends and mental health issues, but these dynamics also present opportunities [16] - The broader economic environment is being monitored closely, with signs of weakening business and consumer sentiment [18] - The company remains on track with its 2025 revenue outlook and is optimistic about future growth potential despite macro uncertainties [19] Other Important Information - The company has a strong cash position with nearly $1.2 billion in cash and cash equivalents [38] - The acquisition of Uplift was valued at $30 million in cash, with potential additional earn-out consideration [32] Q&A Session Summary Question: Impact of shorter duration contracts on BetterHelp - Management noted that the weekly offering has led to stronger conversion rates but also higher churn, resulting in a net positive effect [41][44] Question: Evaluation of BetterHelp network's payer coverage - Management clarified that the focus was on technical capabilities and that they paused payer contracts to avoid mixed signals during the Uplift acquisition [47][49] Question: Trends in BetterHelp member growth and revenue per member - Management explained that while revenue per member has declined, the significant increase in membership provides opportunities for upselling additional services [56][58] Question: BetterHelp margin improvement expectations - Management indicated that the second half of the year would see revenue growth driven by international efforts and insurance initiatives, with a planned pullback in ad spend [75][77] Question: Customer acquisition cost trends - Management reported stable customer acquisition costs, with favorable trends due to improved conversion rates from the weekly offering [85][86] Question: Cost-saving opportunities in technology and G&A - Management emphasized ongoing efforts to streamline costs, with a focus on technology and development spending being down year over year [92][95]

Revenue Performance - First Quarter 2025 revenue decreased 3% year-over-year to $629.4 million from $646.1 million in First Quarter 2024[7] - Integrated Care segment revenue increased 3% year-over-year to $389.5 million, with an adjusted EBITDA margin of 12.9%[7] - BetterHelp segment revenue decreased 11% year-over-year to $239.9 million, with an adjusted EBITDA margin of 3.2%[7] - Total revenue for the three months ended March 31, 2025, was $629,369,000, a decrease of 3% compared to $646,131,000 in 2024[26] - U.S. revenue decreased by 4% to $524,970,000 from $547,600,000, while international revenue increased by 6% to $104,399,000 from $98,531,000[26] Net Loss and Earnings - Net loss for First Quarter 2025 was $93.0 million, or $0.53 per share, compared to a net loss of $81.9 million, or $0.49 per share in the prior year[9] - Net loss for the three months ended March 31, 2025, was $93,012,000, compared to a net loss of $81,889,000 in 2024[32] - Consolidated Adjusted EBITDA for the three months ended March 31, 2025, was $58,093 million, down from $63,140 million in 2024[42] Adjusted EBITDA - Adjusted EBITDA for First Quarter 2025 was $58.1 million, down 8% from $63.1 million in First Quarter 2024[12] - BetterHelp segment reported an Adjusted EBITDA of $7,714 million for the three months ended March 31, 2025, compared to $15,466 million in 2024[42] - The company expects a full-year Adjusted EBITDA outlook of $263 - $304 million for 2025[42] Cash Flow and Capital Expenditures - Free cash flow for 2025 is projected to be between $170 million and $200 million[16] - Free Cash Flow for the three months ended March 31, 2025, was $(15,666) million, compared to $(26,592) million in 2024[43] - Capital expenditures for the three months ended March 31, 2025, were $(31,585) million, with a full-year outlook of $(139) - $(129) million[43] Member Growth and Metrics - The company anticipates U.S. Integrated Care Members to be between 101 million and 103 million for the full year 2025[16] - U.S. Integrated Care members increased by 12% to 102.5 million from 91.8 million year-over-year[28] - Average monthly revenue per U.S. Integrated Care member decreased by 8% to $1.27 from $1.38[28] - Average monthly revenue per U.S. Integrated Care member is calculated based on total revenue generated from the Integrated Care segment divided by the average number of U.S. Integrated Care Members[45] Acquisition and Future Outlook - The company announced the acquisition of UpLift Health Technologies for $30.0 million, with potential additional earnout consideration of up to $15.0 million[13] - For the second quarter of 2025, revenue is expected to be in the range of $614 million to $633 million[16] - For the full year 2025, the company expects revenue in the range of $2,468 million to $2,576 million and adjusted EBITDA between $263 million and $304 million[16] Financial Position - Cash and cash equivalents at the end of the period were $1,193,332,000, down from $1,298,327,000 at the beginning of the period[34] - Total assets decreased to $3,444,445,000 from $3,516,524,000, while total liabilities slightly decreased to $2,017,415,000 from $2,025,445,000[34] Restructuring and Impairment - The company incurred restructuring costs of $4,347 million for the three months ended March 31, 2025[42] - Goodwill impairment for the three months ended March 31, 2025, was $59,138 million, indicating potential challenges in asset valuation[42]

Core Insights - Teladoc Health reported a consolidated revenue of $629.4 million for Q1 2025, a decrease of 3% compared to $646.1 million in Q1 2024 [5][6] - The company experienced a net loss of $93.0 million, or $0.53 per share, which is an increase in loss compared to $81.9 million, or $0.49 per share, in the previous year [7][26] - Adjusted EBITDA for Q1 2025 was $58.1 million, down 8% from $63.1 million in Q1 2024 [11][47] Financial Performance - Revenue breakdown: Access fees revenue decreased by 6% to $525.7 million, while other revenue grew by 16% to $103.6 million [6][28] - U.S. revenue decreased by 4% to $525.0 million, while international revenue increased by 6% to $104.4 million [6][28] - Integrated Care segment revenue increased by 3% to $389.5 million, while BetterHelp segment revenue decreased by 11% to $239.9 million [6][32] Loss and Expenses - The net loss included a non-cash goodwill impairment charge of $59.1 million, which contributed significantly to the overall loss [7][9] - Total costs and expenses for Q1 2025 were $749.98 million, compared to $733.25 million in Q1 2024 [26] - Stock-based compensation expense decreased to $25.2 million from $42.3 million in the previous year [27] Cash Flow and Capital Expenditures - Cash flow from operations was $15.9 million, an increase from $8.9 million in Q1 2024 [12] - Capital expenditures were $31.6 million, down from $35.5 million in the previous year [12] Strategic Developments - Teladoc announced the acquisition of UpLift Health Technologies for $30 million, aimed at enhancing its BetterHelp segment [13] - The acquisition is expected to expand access to virtual mental health services for consumers [13] Future Outlook - For the full year 2025, the company expects revenue between $2.468 billion and $2.576 billion, with adjusted EBITDA projected between $263 million and $304 million [16] - The second quarter 2025 outlook includes expected revenue of $614 million to $633 million and adjusted EBITDA of $56 million to $70 million [18]

Core Viewpoint - Teladoc Health has acquired UpLift for $30 million in cash, with potential additional earnouts, to enhance its position in virtual mental health services [6]. Group 1: Acquisition Details - The acquisition of UpLift is aimed at strengthening Teladoc's leadership in virtual mental health, allowing BetterHelp users to access mental health service benefits [2][3]. - UpLift has coverage arrangements for over 100 million lives and a network of more than 1,500 mental health professionals [2]. - The transaction closed on April 30, 2025, and UpLift's 2024 revenue was approximately $15 million [6]. Group 2: Strategic Implications - BetterHelp, as the largest consumer-oriented virtual therapy business, will utilize its differentiated experience to enhance insurance coverage access for consumers through UpLift [3]. - The partnership is expected to drive topline revenue growth and expand the impact of mental health services [4]. - UpLift will continue to operate under its existing CEO, maintaining its responsibilities in provider network management and insurance administration [5]. Group 3: Company Overview - Teladoc Health is a leader in virtual care, leveraging over two decades of expertise to improve health outcomes across various stages of a person's health journey [7].

Core Insights - Teladoc Health Inc. will release its first quarter 2025 results on April 30, 2025, after market close [1] - A conference call to discuss the results will take place at 4:30 p.m. ET on the same day [1] Conference Call Details - U.S. participants can access the conference call by dialing 1-833-470-1428 with access code 309585 [2] - International participants can find global dial-in numbers through a provided link [2] - A live audio webcast will be available online for the conference call [2] Replay Information - A replay of the call will be available via webcast shortly after the call's completion and will remain accessible for approximately 90 days [3] Company Overview - Teladoc Health aims to empower individuals to live healthier lives by transforming the healthcare experience [4] - The company is recognized as a leader in virtual care, utilizing proprietary health signals and personalized interactions to improve health outcomes [4] - With over two decades of expertise, Teladoc Health addresses the increasing virtual care needs of consumers and healthcare professionals [4]

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Core Viewpoint - The article discusses the impact of President Trump's tariffs on equity markets and highlights the importance of avoiding companies that appear undervalued but have underlying issues that make them unattractive investments. Company Analysis: Teladoc Health - Teladoc Health, a telemedicine company, has seen a significant decline in revenue growth since the pandemic, with BetterHelp's revenue dropping by 10% year over year and a 6% decrease in paying users [3][5] - Despite high growth margins, Teladoc remains unprofitable and struggles to control expenses, particularly in marketing, as it aims to establish itself in the telemedicine industry [4][6] - International revenue grew by 10% year over year to $105.1 million, but total revenue fell by 3% to $640.5 million, raising concerns about the sustainability of profitability amid rising expenses [5] - The company is exploring initiatives like third-party coverage for BetterHelp and artificial intelligence projects, but the lack of a clear path to profitability makes it a risky investment [6] Company Analysis: Tandem Diabetes Care - Tandem Diabetes Care specializes in innovative insulin pumps, such as the t:slim X2, but has faced challenges including reduced patient purchases and strong competition from larger companies like Medtronic [7][8] - The company has not been consistently profitable, and its stock has performed poorly, with a 54% decline in shares this year [8] - Trump's tariffs pose a significant risk to Tandem, as the company relies on international manufacturing, which could increase expenses and negatively impact margins and revenue due to potential inflation or recession [9][10]

Core Insights - Teladoc Health has launched a next-generation Cardiometabolic Health Program aimed at improving population health and preventing diabetes, hypertension, and obesity [1][2] Group 1: Program Features and Goals - The new program focuses on essential measures of cardiometabolic health, including diet, physical activity, sleep, stress management, weight, blood lipids, blood glucose, blood pressure, and nicotine exposure [2][3] - Only 12% of U.S. adults currently have optimal cardiometabolic health, indicating a significant need for intervention [3] - The program aims to drive healthier behaviors and improve health outcomes through tools, coaching, and support [3] Group 2: Proven Results and Confidence - Analysis of over 210,000 members in Teladoc's diabetes management program revealed that 58% achieved remission-level A1c, while 88% of participants in the hypertension program improved or maintained their blood pressure after one year [3] - Teladoc Health places 100% of program fees at risk, demonstrating confidence in the program's ability to improve cardiometabolic health [3] Group 3: Integrated Care Strategy - The Cardiometabolic Health Program is part of Teladoc's integrated care segment strategy, which includes enhancements in chronic care management and at-home testing capabilities [4] - Recent collaborations and partnerships have been established to help more individuals discover and enroll in eligible programs [4] Group 4: Additional Support and Resources - The program offers features such as access to registered dietitians, proactive outreach from health coaches, at-home testing for key cardiometabolic measures, and integration with Teladoc's 24/7 Care and primary care providers [7]