Dive Brief:
- Teladoc Health expects insurance coverage availability for its direct-to-consumer mental health unit BetterHelp to be “largely national” by the end of next year, CFO Mala Murthy said on a third quarter earnings call Wednesday.
- Allowing consumers to use insurance on BetterHelp is an important initiative for the telehealth company to turn around financial performance at the unit, which has seen earnings and revenue decline in recent quarters.
- The insurance option has launched in seven states and Washington, D.C., executives said. The expansion is “likely a positive, but it will take some time for meaningful contributions to materialize,” Leerink Partners analyst Michael Cherny wrote in a Wednesday note.
Dive Insight:
Overall, Teladoc reported $626.4 million in revenue in the third quarter, down 2% year over year. The company posted a net loss of $49.5 million, compared with a loss of $33.3 million during the same quarter last year.
It was “a generally better quarter” for the virtual care giant, Cherny wrote. But near-term growth drivers are still uncertain as Teladoc continues a strategy shift, which includes prioritizing international expansion and better leveraging its mental health assets.
The company is also focused on improving performance at BetterHelp, once a solid performer for Teladoc. The segment’s adjusted earnings before interest, taxes, depreciation and amortization decreased 75% in the third quarter to $3.8 million, while revenue fell 8% to $236.9 million. Paying users declined 4% year over year.
Teladoc has moved to add new weekly pay options and expand insurance coverage for the offering, which executives say should help improve affordability and push potential customers to enroll.
The firm acquired virtual mental health firm UpLift earlier this year to speed Teladoc’s ability to accept insurance at BetterHelp.
Still, BetterHelp is majority cash pay at this time, said Murthy, who is leaving the virtual care firm for an opportunity outside healthcare next month. Virtual mental health also has plenty of competitors vying for market share — another challenge for BetterHelp.
“We are seeing heavy competition on that one from other participants in the market who offer insurance,” she said. “It validates and reinforces the pivots that we are making in BetterHelp in offering insurance as an option.”
In Teladoc’s integrated care unit, which includes business-to-business virtual care offerings, revenue increased 2% to $389.5 million in the third quarter. Adjusted EBITDA fell 3% to $66.1 million, but membership increased 9% year over year.
The virtual care firm also recorded a $12.6 million non-cash goodwill impairment charge in the third quarter, linked to the value of its integrated care unit when it acquired Australian telehealth company Telecare this summer.
