Teladoc Health, Inc.

Hello and welcome to the Teladoc Health third quarter 2022 earnings conference call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star one on your telephone keypad. If you'd like to withdraw your question, you may now press star two. I'll hand over to your host, Patrick Feely, head of investor relations. Patrick, please go ahead.

Thank you and good afternoon. Today, after the market closed, we issued a press release announcing our third quarter 2022 financial results. This press release and the accompanying slide presentation are available in the investor relations section of the TeladocHealth.com website. On this call to discuss the results are Jason Gorovic, Chief Executive Officer, and Mala Murthy, Chief Financial Officer. During this call, we will also provide our fourth quarter and full year 2022 outlook, and our prepared remarks will be followed by a question and answer session. Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating Teladoc Health's performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Also, please note that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause the actual results for Teladoc Health to differ materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement and our press release and our filings with the SEC, all of which are available on our website. I would now like to turn the call over to Jason.

Thank you, Patrick. Good afternoon and thanks for joining us. After the close today, Teladoc Health reported strong third quarter results driven by solid execution across the business. Revenue grew 17% over the prior year to $611 million, above the midpoint of our guidance range, and adjusted EBITDA of $51 million exceeded the high end of our expectations. While the broader operating environment remains challenging across the economy, during the quarter we made meaningful progress against our strategy, including four areas I want to briefly highlight. First, driving better outcomes and lower costs for our chronic care populations. Second, continued momentum in our primary 360 product with clients and members. Third, closing meaningful new deals. And fourth, delivering strong performance at BetterHelp. Starting with chronic care, we're encouraged to see a growing trend of clients looking for partners who can deliver proven cost savings and outcomes. Earlier this month, we held our client advisory panel with leaders from 30 health plans, large employers, and health systems in attendance. It was universally clear that value-based care is high on the priority list for these organizations, with strong interest in programs that manage chronic conditions and drive engagement with populations via virtual primary care relationships. Value-based arrangements are becoming even more important in the current macroeconomic environment, and as I look at the chronic care pipeline, we're seeing a notable increase in deals with such features. We view this trend as very favorable for us, since our proven outcomes present a tremendous value proposition for our clients, and we're well positioned in the market to capitalize on that dynamic. An example of our ability to drive outcomes and savings is evidenced by the results of one of our recent pilots. In early 2021, we launched a chronic care shared savings pilot with fully insured members at a large Blue Cross Blue Shield plan. Our team just concluded a study with this partner's actuarial team who determined that we have exceeded our medical cost savings target by 60%. Not only do we drive better outcomes for our members and drive more savings for our client, but we are able to realize a small shared savings bonus. We believe the outcome of this pilot and others like it validate our ability to move further toward value-based contracting over time. Ultimately, we believe the ability to leverage broad integrated virtual and digital care models to drive measurable savings uniquely positions us to capitalize on market demand for these arrangements. Turning to Primary 360, at the start of the year, we told you we would provide additional insight later in the year. And so today, we'll provide you with a first look at some of the encouraging results we've seen thus far. Primary 360 members are reporting high satisfaction, with NPS scores currently in the 70s, a strong vote of confidence. Members who have engaged with Primary 360 this year are connecting with care teams at a rate greater than once every three months, a result of the significant value we are delivering. We're also finding that members with chronic conditions are significantly more likely to engage with Primary 360. This year, we're seeing those members as four times as likely to meet with their Primary 360 care team. Meanwhile, one in every three of our Primary 360 members is using two or more of our services, demonstrating Primary 360's role not just as virtual primary care, but also as a front door to multi-specialty care. So while we're at the beginning stages of bringing integrated virtual primary care to the market, the strong member and client response to the service gives us a lot of confidence in the long-term opportunity. As I turn to commercial momentum, we've discussed throughout the first half of the year, our pipeline has developed more slowly than we expected coming into the year. Year-to-date bookings, which represents the estimated incremental annual revenue contribution from deals signed during the year, is roughly equivalent to the same period in the prior year. We are, however, encouraged by a number of new significant deals that we expect to contribute to our growth for the next few years. First, you may have seen HCSE's press release last month announcing our partnership to make Primary 360, along with our general medical, mental health, and nutrition services, available to self-insured employer groups. This follows on the heels of our agreement last year to bring our full suite of chronic care products to HCSE employer clients. The launch of this partnership is validation of our integrated whole person care strategy and another example of our ability to land and expand across products. And that deal represents just one example of the momentum we're seeing with large health plans looking to partner with us to offer our products and services to their employer clients. In addition to Primary 360, we're also seeing this momentum in chronic care, with multiple large health plans looking to partner. We expect these agreements will contribute to our pipeline over a multi-year period. Finally, while we typically close many new employer deals in any given quarter, I wanted to highlight one in particular, as I think it underscores the value proposition of our broad integrated service offering. We're replacing three different competitors all at once across chronic care, telemedicine, and our My Strength mental health solutions at one of the largest providers of care to correctional facilities and other government-run institutions. We believe the market is shifting away from disparate point solutions and toward integrated offerings, a trend that we believe strongly favors Teladoc Health. Turning to BetterHelp, the team continued to drive impressive top-line growth, particularly in this time of increased macroeconomic uncertainty, while addressing the tremendous unmet need for global mental health services. While yield on advertising spend remains below where we expected it to be at the beginning of the year, we've seen it stabilize as anticipated. BetterHelp remains on track to deliver strong revenue and margin contribution. We expect to continue building upon BetterHelp's significant leadership position in the direct-to-consumer mental health market while driving both growth and margin. With that, I'll turn the call over to Mala for a review of the third quarter and our forward guidance.