Dive Brief:
- Teladoc Health lowered its revenue expectations for the full year on Wednesday after mental health unit BetterHelp struggled to keep up with demand for its new insurance offering.
- Teladoc now expects to bring in revenue of $2.36 billion to $2.45 billion this year, down 5% from its earlier guidance at the midpoint largely due to the challenges at BetterHelp, CEO Chuck Divita said during a second-quarter earnings call.
- Consumer demand for insurance coverage in the mental health unit accelerated faster than expected — and beyond BetterHelp’s capacity — eating into its cash pay business. “Cash pay revenue declined faster than anticipated, while insurance revenue could not increase at a level sufficient to offset the cash pay decline,” Divita said.
Dive Insight:
Accepting health insurance in the direct-to-consumer mental health segment is a priority for Teladoc. The unit’s cash pay business has long been under pressure, and Teladoc executives argue accepting insurance should improve affordability and push more patients to enroll.
The telehealth company has now expanded BetterHelp’s insurance option to all 50 states, plus Washington, D.C., Divita said on the earnings call. Plus, the unit now has more than 8,000 mental health professionals credentialed to accept insurance, up from about 6,000 providers last quarter.
But BetterHelp was still strained by the increased demand in the second quarter. About 70% of potential users reported they preferred to use insurance, a statistic that jumped as high as 80% in some markets, Divita said.
Though BetterHelp onboarded thousands of providers, its capacity still relies on clinician availability for the specific state and payer, as well as clinical need, appointment time and length, according to the CEO.
“Higher demand, therefore, exceeded the capacity available to convert this into a greater number of paying users, completed sessions and revenue,” Divita said.
BetterHelp’s topline decreased by 12% year over year to $212.6 million in the second quarter. The unit’s adjusted earnings before interest, taxes, depreciation and amortization sank to $471,000 from $11.9 million in the same period last year.
To ameliorate the challenges, Teladoc is focused on expanding BetterHelp’s insurance capacity, including through provider recruitment and retention initiatives. The unit will also cut back on advertising spending and reduce focus on non-U.S. markets in the short term, Divita said.
Still, the quarter marked an “unfortunate setback” for the mental health unit, Michael Cherny, an analyst at Leerink Partners, wrote in a Wednesday note. Teladoc also maintained its full year insurance revenue guidance at BetterHelp instead of raising it, suggesting the capacity problem isn’t likely to be fixed this year, he added.
Meanwhile, in Teladoc’s integrated care segment, which includes its business-to-business virtual care offerings, revenue increased 1% year over year to $394.3 million. Adjusted EBITDA reached $65.2 million, up from $57.5 million during the same period last year, driven by better revenue and cost management, Divita said.
Overall, Teladoc’s revenue fell 4% to $606.9 million in the second quarter. Net loss totaled $38.9 million, compared with $32.7 million during the second quarter in 2025.
