Teladoc Health, Inc.

Hello and welcome to the Teladoc Health Q1 23 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 followed by one on your telephone keypad. If you'd like to withdraw your question, you may press star followed by two. I'll now hand over to your host, Patrick Feely, Head of Investor Relations to begin. Please go ahead.

Thank you and good afternoon. Today, after the market closed, we issued a press release announcing our first quarter 2023 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 discuss our second quarter and full year 2023 outlook, and our prepared remarks will be followed by a question and answer session. Please note that we'll 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 in 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. I'm pleased to report a strong start to the year across the business. meeting or exceeding all our key financial and operating guidance in the first quarter. Today, we're raising the low end of our revenue and adjusted EBITDA guidance, a reflection of the quarter's strong results, and we'll speak to some of the key progress we've made in the first few months of the year. First, let's start with a brief recap of the quarter. Consolidated revenue in Q1 grew by 11% year over year to $629 million. which was above the high end of our guidance range. Our consolidated adjusted EBITDA was $52.8 million, also exceeding the high end of our guidance. Our BetterHelp segment continued to see strong demand in the first quarter as the quality, convenience, and affordability offered by our direct-to-consumer mental health service resonates in the marketplace. Segment revenue grew 21% year-over-year in Q1. driven by new member growth and outperforming our expectations. Customer acquisition trends have remained stable year-to-date, resulting in solid margin pull-through in what is typically our seasonally weakest quarter. Mala will discuss guidance in more detail shortly, but we feel confident in our expectation for a strong and consistent sequential margin improvement in our BetterHelp business throughout the course of 2023. In the integrated care segment, revenue grew 5% to $350 million, again, at the high end of our expectations. Integrated care growth was relatively balanced across our B2B portfolio, and we're pleased to see continued strong interest in our whole person care suite of products. In particular, chronic care enrollment is off to a solid start to the year, with new member recruitment ramping up ahead of schedule. This also helped drive its strong segment margin expansion in the quarter. Year-to-date trends have increased our level of confidence in the outlook for the rest of the year in both the BetterHelp and integrated care segments. During the quarter, we've remained focused on expanding our leadership position in whole person virtual care, including advancing Primary 360, our virtual primary care offering. And I'm pleased with the significant progress we've made. Allow me to highlight three key examples. First, we began rolling out our new integrated app during the quarter. This has been a considerable effort, and I'm pleased that we're already seeing significant positive results for migrated populations, including higher engagement and multi-product utilization. While it's still very early, we're optimistic about the potential impact of this fully integrated experience in helping our members better manage their health across our whole person suite of programs, from primary care to chronic care. As the healthcare landscape continues to evolve, we remain committed to investing in innovation and leveraging technology to better drive outcomes for our members. The early results demonstrating engagement with our new app are a testament to our ongoing efforts to improve the quality and accessibility of care for our members. Next, we announced the results of a new clinical study proving the benefits of whole person chronic care. The study shows that individuals who are initially enrolled in one of our standalone diabetes, hypertension, or weight management programs experienced a significant improvement in those underlying conditions when they added one or more of our other chronic care programs. These data points represent another reminder of why we're investing in our whole person offering. And they come at a time when the marketplace is increasingly focused on demonstrated outcomes. For employers and health plans, these results validate the benefit of expanded access from standalone chronic condition programs to whole person programs. Finally, last week we took another step forward in our efforts to provide integrated whole person care solutions to our clients and members with the introduction of our new provider-based care programs for weight management and prediabetes. Distinct from our existing digital programs, enrollees will have access to personalized care plans developed in collaboration with a Teladoc physician who will leverage our broad-based tools and capabilities such as nutrition counseling, mental health care, behavioral science, health coaching, and prescription drug management. These programs will help members with complications related to uncontrolled chronic conditions get back on track, improving outcomes and reducing downstream costs. This includes the ability for physicians to prescribe medications such as GLP-1s when clinically appropriate. We believe that access to key new developments is important for members. However, providing access to medication alone is not enough when it comes to patient outcomes and safety. It's also critical that these therapies are provided as part of a broader care model that includes a longitudinal provider relationship and a customized care plan built in conjunction with a care team to help manage the patient through their health journey. Teladoc Health's provider-based programs build on the success of our existing digital weight management and prediabetes programs and will be offered to clients in our employer and health plan channels starting later this year. These programs follow the launch of integrated provider-based digital programs in mental health, diabetes, and hypertension. With the addition of these programs for weight management and prediabetes, we're now offering integrated virtual and digital programs across all our key chronic condition programs, ensuring that our members receive the comprehensive support that addresses the full scope of their needs. We understand the importance of delivering high-quality care while reducing costs for our clients, and we're proud to be at the forefront of innovation in this space. Our provider-based care programs are a testament to our commitment to improving the health of our members and exploring new ways to leverage technology and innovation to achieve better outcomes. Let me end by saying that the importance of a strong financial position has never been more evident than over the past few months. The disruption in the banking system, combined with a strained funding environment, has created a lot of uncertainty in the venture-backed digital healthcare space. resulting in many companies facing significant financial constraints. In contrast, at Teladoc Health, we're continuing to invest in innovation while providing high-quality healthcare solutions, all while generating positive free cash flow. Over the last 12 months, we've generated over $230 million in operating cash flow and nearly $50 million in free cash flow. We have nearly $900 million of cash on the balance sheet and expect to deliver over $100 million of free cash flow in 2023. Financial strength is emerging as another important advantage as clients are seeking quality in times of uncertainty. In conclusion, we remain focused on expanding our competitive advantage while creating efficiencies in the business to drive margins and generate value. We're confident that our strategy and execution will enable us to advance our leadership position while delivering strong results. With that, I'll turn the call over to Mala for a review of the first quarter and our forward guidance.