Teladoc Health, Inc.

Hello all and welcome to Teladoc House Second Quarter 2024 Earnings Call. My name is Lydia and I'll be your operator today. After the prepared remarks, there'll be an opportunity to ask questions. If you'd like to ask a question during the Q&A, you can do so by pressing star followed by one on your telephone keypad. I'll now hand you over to Michael Minchak, Head of Investor Relations at Teladoc House to begin. Please go ahead.

Thank you and good afternoon. Today, after the market closed, we issued a press release announcing our second quarter 2024 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 Chuck DeVita, Chief Executive Officer, and Mala Murthy, Chief Financial Officer. During this call, we will also discuss our 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 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 Chuck.

Thanks, Mike, and good afternoon, everyone. Let me start by saying how excited I am to have joined Teladoc Health and to lead the organization going forward. The company has many strengths to build upon, and to drive higher levels of execution and performance. I'll comment on the quarter's results, but also want to share some early perspectives since joining the company in June. I've had the opportunity to engage with employees across the organization and visit with many customers and stakeholders, including recently attending our annual forum event, which brought together healthcare leaders, virtual care advocates, and innovators. These discussions have further reinforced my optimism about the future. I've been impressed by the depth of talent and resiliency of our employees and a level of commitment to serving our customers, members, and patients. I'm also gratified to see such a strong focus on patient safety, clinical quality, and health equity, as well as an organizational understanding of the importance of more holistically supporting the physical and mental health needs of people. Not only are these important aspects from a care perspective, but also represent key points of differentiation in the marketplace to build upon. From a technology perspective, we have important capabilities that will be essential to driving the business going forward, including our member-to-provider matching engines, our ability to effectively manage millions of patients and provider interactions, and the investments we've made in the areas of data science and artificial intelligence. Together with other capabilities that we're working towards, this will position us well to meet the evolving needs of our customers and the healthcare system. And it further underscores the need to ensure we're achieving the expected impact of these investments, which is an area I expect us to further strengthen in short order. We also have skilled business and leading brands that are well recognized in the marketplace. Over 92 million people in the U.S. have access to one or more of our products today, and we intend to increase our ability to serve additional needs over time. I'm also excited about our success and market potential internationally. including the strong results and momentum that our international teams are delivering. All of that said, this is a company that is not yet delivering on its fullest potential. Since joining the company seven weeks ago, I've been evaluating together with the team all aspects of our business, our strategic direction and priorities, our product offerings in terms of current performance and market potential, the outlook for our business units, and where we can drive improved performance and long-term shareholder value. and we will be acting on opportunities accordingly. From an operating perspective, I see an ability to strengthen execution, streamline the organization, and further raise the bar on performance. For example, the challenges noted earlier in the year had a real impact on our business at that time, but can also continue to influence results after resolution. This is what I mean by raising the bar on performance, and we're working with focus and urgency to ensure that we execute with a higher level of precision going forward. In terms of streamlining the organization, actions are already underway, including making changes to ensure we are organized to best serve our markets, clarifying and reinforcing accountabilities and deliverables, and scrutinizing our cost structure with an eye towards greater cost efficiency as we deliver for both customers and shareholders now and into the future. With respect to cost savings initiatives that we've already shared previously, The company is on target for achieving both 2024 and 2025 commitments, which Mala will comment on further. Through these and other actions, we intend to strengthen decision-making, accelerate the pace of innovation and speed to market, and unlock greater value over time. This has been and continues to be a key area of focus since joining the company, and I look forward to providing further updates going forward. I'll turn to our second quarter results and provide some brief comments before handing over to Mala for more detail. In total, we reported consolidated revenues in the second quarter within the company's previous guidance range, along with overall adjusted EBITDA above the range. Our integrated care business achieved solid business and financial results, including on both a top line and adjusted EBITDA basis. In the U.S., integrated care members have grown by nearly 3 million people since the beginning of the year, including 600,000 on a sequential quarter basis. International business continued to grow and create further expansion opportunities. I'm also pleased to see additional ways that our teams are working together across our various businesses to create new areas of differentiation for Teladoc Health. From a commercial perspective, three quarters of our bookings in the second quarter came from cross-selling into our existing book of business, continuing the momentum we've seen over the past several quarters, with the remainder coming from new clients. Our chronic care bundled solutions are generating solid interest from new and existing clients, and we remain focused on increasing our product penetration to serve more people. Shifting to better help, we're proud of the work the team is doing to support the mental health and wellbeing of people. The business is serving well over 1 million unique individuals on an annual basis and has a net promoter score of over 70. While it is resonating with consumers who are paying out of pocket for the services today, the operating environment remains challenging and elevated customer acquisition costs continue to impact both top and bottom line results. We see BetterHelp as a business in transition, one with a market-leading position but needing to find additional ways to reach more people who can benefit from the service, while also balancing scale, growth, and financial performance. Several initiatives are being pursued to positively impact results going forward, ranging from furthering international expansion, pursuing insurance coverage access in the U.S., and continued product enhancements. We'll provide a further update on the actions we're taking for the business in the third quarter call, but also believe it's appropriate at this point to modify our guidance approach as we navigate through these changes and challenges. Mala will comment more on BetterHelp in a moment. In closing, let me say that we are operating with a strong sense of urgency and have intensified our efforts on both the opportunities ahead of us and in strengthening execution and performance. Through our leadership position in the marketplace, our talented and committed employees, and our value proposition, we expect to deliver for our customers and drive the long-term potential and success of the organization. With that, I'll turn the call over to Mala to review our second quarter results and our outlook.