Dive Brief:
- Teladoc Health beat Wall Street expectations on revenue and earnings in the second quarter as the telehealth firm continued to revamp its strategy, which includes better leveraging its mental health assets and expanding internationally.
- The company recorded revenue of $631.9 million, decreasing 2% from the previous year, Teladoc said on Tuesday. The virtual care giant’s net loss was $32.7 million, compared with a loss of $837.7 million during the same period in 2024 when it recorded a hefty non-cash goodwill impairment charge.
- Teladoc’s results were “generally solid,” Michael Cherny, senior research analyst at Leerink Partners, said in a Tuesday note. But the company continues to grapple with headwinds at direct-to-consumer mental health segment BetterHelp, which reported slowing revenue and declining users.
Dive Insight:
Challenges at BetterHelp, once a financial boon for the business overall, have dogged the telehealth company for multiple quarters.
The segment’s revenue fell 9% to $240.2 million in the second quarter, while adjusted earnings before interest, taxes, depreciation and amortization fell 53% to $11.9 million. Paying users fell 5%.
Teladoc has embarked on several initiatives to improve the unit’s performance, like offering a weekly payment option and moving to accept insurance for its services. Executives have said accepting health plan coverage for mental healthcare is key to increasing affordability and pushing potential consumers to enroll.
The business has also seen increased churn in self-paying users this year, linked to softening consumer sentiment amid macroeconomic uncertainty, CFO Mala Murthy said on Teladoc’s Tuesday earnings call.
“We believe that this is actually being driven by more consumers using insurance for their mental health needs, for mental health therapy, and an increase in advertising by other virtual mental health companies that offer insurance coverage,” she said.
Teladoc has made some progress on accepting insurance coverage for BetterHelp. This spring, the telehealth firm acquired UpLift, another virtual mental health company, which already worked with payers like UnitedHealthcare, Aetna and Cigna.
And in late June, Teladoc began a “soft launch” of BetterHelp insurance in one state, which would lay the groundwork for expansion over the next several quarters, CEO Chuck Divita said on the earnings call.
“We are continuing to build that network out beyond the single state, so that as we ramp further, we’ll be able to turn on multiple markets over time,” he said. “We do want to take it methodically here at the start to make sure all the capabilities that we build are working.”
The move to accept insurance shows progress on Teladoc’s strategic changes, but “the full impact of these repositioning efforts is going to take some time to play out, and comes against a more challenging macro backdrop,” Cherny wrote.
In Teladoc’s integrated care unit, which includes business-to-business virtual care offerings, revenue revenue rose 4% to $391.5 million in the second quarter, while adjusted EBITDA decreased 10% to $57.5 million.
The unit’s overall membership increased 11% compared with the previous year to 102.4 million members. However, enrollment in chronic care management programs fell 5% due to a contract loss, Murthy said.
Teladoc also narrowed its revenue and earnings outlook for 2025. The virtual care giant now expects $2.5 billion to $2.55 billion in revenue this year, compared with its previous outlook of $2.47 billion to $2.58 billion.
