Teladoc Health's Q3 2025: Contradictions Emerge on Insurance Rollout, Subscription Model Shift, and Business Model Sustainability

Date of Call: October 29, 2025

Financials Results

• Revenue: $626M, down 2.2% YOY, above midpoint of guidance
• EPS: Net loss per share $0.28, includes $0.07 per share goodwill impairment pretax; amortization $0.48 pretax and stock‑based comp $0.10 pretax
• Operating Margin: Adjusted EBITDA margin 11.2%, at high end of guidance (Adjusted EBITDA $70M)

Guidance:

• 2025 consolidated revenue $2.510B to $2.539B; adjusted EBITDA $270M to $287M; free cash flow $170M to $185M.
• 2025 stock‑based compensation $85M to $95M (reduced ~$10M vs prior outlook); full‑year net loss per share midpoint unchanged.
• Q4 implied consolidated revenue $622M to $652M; adjusted EBITDA $73M to $90M.
• Integrated Care: 2025 revenue +2.4% to +3.5% YoY; adjusted EBITDA margin 15.0%–15.4%; Q4 revenue +1% to +5.2%.
• BetterHelp: 2025 revenue down 8% to 9.2%; insurance revenue $12M–$14M; BetterHelp adj. EBITDA margin 3.8%–4.6%; Q4 revenue down 3.8%–8.8%.

Business Commentary:

* Revenue and Earnings Performance: - Teladoc reported consolidated revenue of $626 million for Q3, above the midpoint of their guidance range, reflecting a 2.2% year-on-year decline. - The performance was driven by growth in the Integrated Care segment and expectations to meet or exceed the full-year guidance.

• Integrated Care Segment Growth:
• Integrated Care revenue was $390 million, up 1.5% over the prior year, despite a headwind from a prior period billing adjustment.

• Growth was supported by strong international business performance, contributions from acquired companies, and solid U.S. membership numbers.

• BetterHelp Segment Challenges and Insurance Initiatives:

• BetterHelp revenue decreased to $236.9 million, with a 4% year-on-year decline in average paying users to 382,000.

• The decline was due to weak consumer sentiment and strong competition, but the launch of insurance coverage offerings shows promise with $4 million in insurance revenue.

• Cost Management and Efficiency:

• Teladoc's adjusted EBITDA was $70 million, representing a 11.2% margin, with performance in the Integrated Care segment achieving a 17% margin.
• This was achieved through disciplined execution, cost discipline, and deferral of hiring, contributing to overall operational improvements.

Sentiment Analysis:

Overall Tone: Positive

• Management said consolidated revenue and adjusted EBITDA came in above midpoints; adjusted EBITDA margin was 11.2%; Integrated Care revenue up 1.5% and membership 102.5M (up 9% YoY); guidance ranges maintained/raised modestly for Integrated Care and full‑year outlook remained essentially unchanged.

Q&A:

• Question from Lisa Gill (JPMorgan Chase & Co, Research Division): How are you positioned for the 2026 selling season and are you changing contracting to participate more in the value you create?
  Response: Sales conversations are becoming more strategic; expecting more performance‑based contracts and new 2026 products to drive traction — strength in employer channels, ongoing pressure in health plans.

• Question from Jamie (Goldman Sachs) for David Roman: How should we think about BetterHelp margins as you shift visits from cash pay to insurance and the longer‑term profitability impact?
  Response: BetterHelp is three parts — U.S. cash pay, international cash, and insurance; insurance rollout is early (7 states, national by end‑2026), may weigh on near‑term margins but conversion and engagement metrics align with expectations and should improve CAC and growth over time.

• Question from Jessica Tassan (Piper Sandler & Co., Research Division): Do current BetterHelp margins reflect DTC ad CAC and can insurance reduce ad spend/CAC heading into 2026?
  Response: Yes — current margins are largely cash‑pay/DTC CAC; insurance is small today ($12M–$14M in 2025) and should enable CAC efficiencies as it scales, but BetterHelp will remain a mix of cash and insurance.

• Question from Daniel Grosslight (Citigroup Inc. Exchange Research): Any cross‑sales or measurable cross‑references between Catapult and Integrated Care?
  Response: Catapult drives a stand‑alone pipeline, integrated cross‑engagement (presenting Teladoc services to members), and bundled offerings that surface newly diagnosed, previously unrecognized members for further intervention.

• Question from Eduardo Ron (Truist Securities) for Jailendra Singh: What share of new sign‑ups choose insurance vs cash in launched states, and plans for the 2027 note (refinance vs cash)?
  Response: Too early to disclose state‑level conversion detail; Virginia metrics are consistent but need more seasoning; on 2027 financing, company has strong liquidity and will evaluate refinancing vs using cash based on market conditions and strategic priorities.

• Question from Ayush (Evercore ISI) for Elizabeth Anderson: How should we view 4Q spending cadence across sales and marketing and impact on 4Q/1Q growth cadence?
  Response: BetterHelp marketing will step down seasonally in Q4 (more than last year’s step); Integrated Care will modestly pull forward marketing into Q4 for key 2026 priorities; overall cadence similar to prior years.

• Question from Stanislav Berenshteyn (Wells Fargo Securities, LLC): What are you seeing on pricing trends for renewing PMPM subscriptions given mix shift to fee‑for‑service?
  Response: Renewal pricing is generally in line; the mix shift to fee‑for‑service is the primary driver of revenue mix changes rather than material PMPM price pressure today.

• Question from Scott Schoenhaus (KeyBanc Capital Markets Inc., Research Division): What are payer reimbursement discussions like and how do therapist credentialing headwinds turn into margin tailwinds?
  Response: Company won additional payers and incremental lives post‑UpLift (details withheld); upfront credentialing investments are expected but will be offset over time as revenue, sessions and LTV ramp, driving dollar profitability growth.

• Question from Brian Tanquilut (Jefferies LLC, Research Division): As utilization‑based revenue grows in Integrated Care, are payers discussing rate or utilization management?
  Response: Payers see value in virtual visits; expanding capabilities (24/7 care, specialist consults, care navigation) increase activation opportunities and create avenues to participate in value‑based outcomes.

• Question from Jack Senft (UBS) for Kevin Caliendo: What is the supply‑demand balance for therapists in the insurance offering and how many clinicians must you add?
  Response: They only launch states when therapist capacity is adequate; currently meeting demand and matching >90% of users within 48 hours; scaling plan focuses on credentialing to keep pace with demand.

• Question from Jeffrey Garro (Stephens Inc., Research Division): Q3 chronic care enrollment rebound — how did it compare to expectations and ramp potential?
  Response: Sequential enrollment growth met expectations; large addressable recruitable population plus new devices, features and intervention models should drive further enrollment and ROI within existing client relationships.

• Question from David Larsen (BTIG, LLC, Research Division): Continuity of care in BetterHelp (1‑year retention) and overlap with Integrated Care members?
  Response: Insurance should improve continuity and retention; Wellbound will integrate BetterHelp and Integrated Care to cover overlapping members and enable referrals across mental and physical health services.

Contradiction Point 1

Implications of BetterHelp Insurance Rollout on Margins

It highlights differing expectations on the impact of BetterHelp's insurance rollout on its margins and profitability, which are critical for financial forecasting and investor expectations.

How is the insurance transition impacting BetterHelp's margins and long-term profitability? - Jamie (Citigroup Inc. Exchange Research)

2025Q3: Insurance margins are expected to be lower than cash pay margins, aligned with public proxies. The investment thesis is to leverage 4 million-plus consumers seeking therapy, allowing for greater conversion with insurance acceptance. - Mala Murthy(CFO)

What is the margin difference between cash pay and insurance for BetterHelp, and what is the rollout strategy for insurance? - Richard Collamer Close (Canaccord Genuity)

2025Q2: Insurance margins are expected to be lower than cash pay margins, aligned with public proxies. The investment thesis is to leverage 4 million-plus consumers seeking therapy, allowing for greater conversion with insurance acceptance. - Mala Murthy(CFO)

Contradiction Point 2

Impact of Subscription Model Shift on Revenue

It involves differing perspectives on the impact of the transition from a subscription model to a pay-per-visit model on revenue, which is crucial for revenue projections and market strategy.

How are the discussions for the 2026 selling season progressing, and how are you engaging clients in value creation through contracts? - Lisa Gill (JPMorgan Chase & Co.)

2025Q3: The transition to a pay-per-visit model has been ongoing for a few years due to post-pandemic market maturity. Currently, over 50% of virtual care revenues are from visit-based arrangements. - Charles Divita(CEO)

Where are we in the transition from a subscription model to a pay-per-visit model? - David Harrison Roman (Goldman Sachs)

2025Q2: The transition to a pay-per-visit model has been ongoing for a few years due to post-pandemic market maturity. Currently, over 50% of virtual care revenues are from visit-based arrangements. - Charles Divita(CEO)

Contradiction Point 3

Insurance Impact on BetterHelp

It involves differing perspectives on the impact of insurance on BetterHelp's business model and financial performance, particularly regarding cost of acquisition efficiencies and the transition from direct-to-consumer cash pay to insurance offerings.

How is the shift to insurance affecting BetterHelp's margins, and what long-term profitability factors should be considered? - Jamie (Citigroup Inc. Exchange Research)

2025Q3: As insurance revenue ramps up, we will see efficiencies in cost of acquisition over time. - Mala Murthy(CFO)

What are the trends in BetterHelp's CAC, particularly domestically vs. internationally? - Eduardo Ron (Truist)

2025Q1: The trends are stable, with favorable conversion rates in the weekly subscription. No significant differences between U.S. and international. - Mala Murthy(CFO)

Contradiction Point 4

BetterHelp Pricing and Revenue Model

It involves the pricing and revenue model of BetterHelp, specifically regarding the impact of the weekly subscription offer on churn and revenue per member.

Do BetterHelp's margins reflect DTC advertising customer acquisition costs, and what opportunities will arise in 2026? - Jessica Tassan (Piper Sandler & Co.)

2025Q3: Ad spend in BetterHelp drives traffic. As we transition to insurance, conversions should improve, leading to efficiencies in cost of acquisition. - Mala Murthy(CFO)

How has the weekly subscription offering affected BetterHelp's churn? Why couldn't the core BetterHelp network secure payer coverage? - Jessica Tassan (Piper Sandler)

2025Q1: The weekly subscription offer at a lower price point increases conversion rates. While it also increases churn due to reminders, it remains net positive compared to the monthly offer. The LTV metric remains stable. - Mala Murthy(CFO)

Contradiction Point 5

BetterHelp Business Model Sustainability

It involves differing perspectives on the sustainability and growth strategy of BetterHelp, which is a critical component of the company's revenue and market positioning.

How is the insurance transition affecting BetterHelp's profit margins, and what long-term profitability dynamics should be considered? - Jamie (Citigroup Inc. Exchange Research)

2025Q3: As we transition to insurance, we will see efficiencies in cost of acquisition over time. - Mala Murthy(CFO)

How do 2025's operational factors compare to 2024, and what is the sustainable direction for BetterHelp's business model? - David Roman (Goldman Sachs)

2024Q4: For BetterHelp, stabilization and sequential growth are priorities. International expansion and platform improvements contribute to the model's sustainability. - Mala Murthy(CFO)