Teladoc Health, Inc.

earnings call. My name is Brika and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Michael McNair, Vice President Investor Relations at Elladoc Health. Thank you. You may proceed.

Thank you and good afternoon. Today, after the market closed, we issued a press release announcing our full year and fourth 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.

We reported a solid finish to 2024 and continue to make progress on our strategic priorities. Mala will comment more on our results and initial 2025 guidance in a moment. As we close out the year and look forward, I would also like to provide some updates on the business and areas of focus. As you know, we operate in a complex and dynamic healthcare market, which continues to be impacted by macro factors such as medical cost inflation, disease prevalence, mental health challenges, pressures on healthcare providers, and regulatory matters amongst others. We believe virtually enabled care can play an important and constructive role in supporting the needs of our customers in this regard, and that we are uniquely positioned given our scale, experience, and range of products and services. To strengthen our ability to pursue opportunities in this environment and navigate through respective challenges, we've taken several actions over the past several months to streamline the organization, deepen market focus, and advance important initiatives. These changes are well aligned with our priorities, have driven significant cost savings and created additional capacity to invest. With respect to integrated care, we're building on these and other efforts to enhance our competitive position and pursue important growth factors focused on four strategic priorities. First is net growth in customers and membership and the engagement and usage of our services. In 2024, we added over 4 million members in the U.S. and grew underlying visit volumes by 6%. a key metric as the market continues to move towards visit-oriented arrangements. And we recently implemented new technology at the point of care to support additional services for our customers. We see this as an important element of our value proposition and differentiation going forward. We also grew chronic care management enrollment by 4% in 2024, and we see opportunities to further innovate in this space as well, including through our recently announced agreement to acquire Catapult Health. More on that in a moment. From a selling season perspective, we saw some nice wins to close out the year, including the strongest year of booking since 2020 in our employer channel and the important addition of TRICARE in the government space. We've also had some key client expansions with respect to chronic care programs, including weight management, which is seeing continued interest in the market. Of note, one of our largest customers added our solution for 2025, and we expect their enrollment to ramp over the year. As we mentioned in the third quarter call, we are seeing pressures in the health plan channel, given some of the broader challenges. With that said, we expect to have opportunities during 2025 across our various channels, and we will remain focused on managing through these uncertainties as well, both of which are reflected in the guidance ranges that Mala will cover. I'm pleased to report that we had a very successful implementation season with over 800 new clients launched on January 1st. This was a critical priority given earlier challenges and I'm proud of how the team collaborated and delivered for our customers. Another important priority is deepening our impact on patient care and outcomes. For example, in addition to the point of care technology I mentioned earlier, we're also excited about a new capability we'll be bringing to market soon that provides the ability for external ecosystem partners to efficiently integrate with us to support longitudinal care needs and other strategies of our customers. We're also focused on driving greater impact through our suite of products, and we're looking forward to jointly leveraging the capabilities of Catapult, including an initial focus on patients with chronic conditions. And with Catapult's approach to preventative care, including convenient testing, screening, and nurse-led engagement model, as well as an impressive net promoter score of 80, we see opportunities to further complement our solution set. From a revenue growth perspective, we intend to leverage our scale distribution to offer Catapult services into our customer base. And for Catapult's patients that are also eligible for our other services, we'll be creating a seamless enrollment pathway for chronic care management and additional entry points for services such as mental health and primary care based on patient needs and preferences. As context, roughly half of the people engaged by Catapult have one or more chronic conditions. Many indicate challenges with depression and anxiety. And nearly one-third share that they don't have an established primary care relationship. Our products and services align very well with these needs. Through these and other initiatives, we're looking to extend our clinical care capabilities and ultimately to further participate in the value we can create for customers. Another important priority is expanding our international integrated care business. I recently had the opportunity to meet with our international team and hear from some key clients as well. I was highly impressed with our team and how they are building strong and sustainable positions in their respective markets. And their efforts drove another strong year in 2024, delivering mid-teens revenue growth and continuing to expand markets and services. For example, in France, we're partnering with the public health system to provide virtual psychiatry services in places with a scarcity of providers. And in Canada, we are combining virtual services with the proprietary devices and software of our hospital and health system solutions to serve needs across several provinces. These are great examples of organizational collaboration and differentiation in the market. Finally, a priority of increasing access to virtual mental health services through our scaled position. In addition to BetterHelp, we also have a scaled B2B mental health offering in integrated care, where we offer digital tools, coaching, therapy, and psychiatry services. We completed nearly 1 million visits in 2024, a 10% increase from 2023. Over 60% of our membership base in the US has access to our mental health offering. And at an enterprise level, B2B mental health generated approximately $150 million in revenues in 2024. We will continue to assess synergies across our mental health offerings going forward. Moving now to the BetterHelp segment specifically. The business continues to be the largest of its kind. serving an unmet need in a way that resonates with consumers as evidenced by its high consumer net promoter score above 70. And in January of 2025, we surpassed a historical milestone by having served over 5 million people across dozens of countries. With that said, the business continues to operate in a challenging environment, which impacted financial performance in 2024 and our expectations for 2025. We remain highly focused on stabilizing results, and returning to a long-term growth posture. And we aim to do this through four key priorities. The first is growing the user base and levels of engagement. During 2024, BetterHelp served over a million unique paying users, supported by a broad and diverse therapist network. We were encouraged to see sequential growth in average paying users in the fourth quarter versus the third quarter, but we have not yet reached the level of stability we are striving for. We also have a priority on advancing our value proposition through new features and enhancements. This includes ways to improve affordability and accessibility, such as a pilot we launched in the third quarter of 2024 to test a weekly pricing model. Initial results were positive, and the model was subsequently expanded and now widely available. We'll continue to monitor performance on key measures, such as conversion rates, retention, and net user growth. We're also pursuing new features and other offerings, including furthering international expansion through new localized country models with respect to language, content, and therapists. This includes a recent launch in France and additional markets in Europe over the course of 2025. And international was again a bright spot for BetterHelp in 2024, accounting for approximately 20% of segment revenues. Finally, BetterHelp's initiative to provide consumers with an ability to access their mental health benefits coverage continues to progress. Operational capabilities are now in place, and initial network discussions with select health plans have begun. As shared previously, we don't expect any material contribution during 2025 in this area, and we'll also continue to explore additional ways to accelerate our progress consistent with our broader mental health strategy. In closing, I'm gratified by the way we finished 2024 and how the organization is aligning around our strategic priorities, which are focused on delivering long-term sustainable growth. While there's more work ahead, we are operating with appropriate urgency and a strong commitment to driving performance across our business. With that, I'll turn it over to Marla.