Teladoc Health, Inc.

Good afternoon, thank you for attending today's Teladoc Health Q4 2025 earnings conference call. My name is Tamia and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to your host, Michael Minchak, Head of Investor Relations. Please proceed.

Press release announcing our fourth quarter 2025 financial results. This press release and the accompanying slide presentation are available in the investor relations section of the TeladocHealth.com website. On the call to discuss the results will be Chuck DeVita, Chief Executive 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 our 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 our actual results 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. Our financial performance reflects a solid finish to 2025, as well as progress we've made across our strategic priorities. Fourth quarter results were generally in line with our previously discussed expectations, including consolidated revenue and adjusted EBITDA. both modestly above the midpoint of our guidance ranges. Consolidated revenue was $642 million, slightly higher than the prior year period, and adjusted EBITDA was $84 million, representing a 13 percent margin for the quarter. Net loss per share was 14 cents, which included amortization of intangible assets of 52 cents per share pre-tax and stock-based compensation of 9 cents per share pre-tax. for the full year, consolidated revenue of $2.53 billion was 1.5% lower than the prior year, and adjusted EBITDA was $281 million, representing an 11.1% margin. Net loss per share of $1.14 included the following pre-tax amounts, amortization of intangible assets of $1.99 per share, stock-based compensation expense of 46 cents per share, a non-cash goodwill impairment charge of $0.41 per share, and restructuring costs of $0.11 per share. These items were partially offset by discrete tax benefits totaling $0.20 per share. Full year free cash flow was $167 million, and we ended 2025 with $781 million in cash and cash equivalents on the balance sheet after retiring $550 million in convertible debt at maturity in June. Net debt to trailing four-quarter adjusted EBITDA was under 0.8 times at year end. Turning to segment results, fourth quarter integrated care revenue of $409 million grew 4.7% over the prior year's quarter and came in near the upper end of our guidance range, benefiting from both performance-based revenue and U.S. virtual care visit volume related to a strong flu season. The acquisitions of Catapult Health and Telecare contributed approximately 260 basis points to year-over-year growth, and international delivered double-digit constant currency revenue growth. Chronic care program enrollment was 1.19 million at quarter end, increasing 2% sequentially versus the third quarter. US integrated care membership finished the quarter at 101.8 million members. Fourth quarter integrated care adjusted EBITDA was $65 million, up 23% over the prior year period. and representing a 16% margin for the quarter. For the full year, integrated care segment revenue increased 3.3% to $1.58 billion, with acquisitions contributing approximately 210 basis points to segment revenue growth. U.S. virtual care visit revenue grew double digits year over year, more than offset by lower subscription revenue due to the shift towards visit-based arrangements we've spoken about previously. International revenue through mid-teens on a constant currency basis for the full year. Adjusted EBITDA increased 2.7% over 2024 to $239 million, representing a 15.1% margin, about 10 basis points lower than 2024. Excluding the impact of M&A, adjusted EBITDA margin would have been up approximately 20 basis points year over year. Shifting to better health, fourth quarter revenue was $233 million, 6.7% lower than fourth quarter of 2024. Average paying users for the quarter declined 6% year-over-year to 375,000, with a low double-digit increase in non-US users partially offsetting a low double-digit decline in US users. Segment results also included approximately $7 million in insurance-based revenue in line with our expectation. In the fourth quarter, BetterHelp adjusted EBITDA increased to $18 million, up from $4 million in the third quarter. The adjusted EBITDA margin was 7.9% compared to 1.6% in the third quarter and was driven primarily by seasonal pullback in ad spend due in part to higher ad prices during the holiday season. For the full year, BetterHelp revenue was $950 million, a decline of 9% from the prior year. This included insurance revenue of $13 million in line with our expectation of $12 million to $14 million. Adjusted EBITDA of $42 million represented a margin of 4.4% compared to 7.5% in the prior year period. This year-over-year decline was driven by lower overall revenue and investments to scale the insurance offering, partially offset by a 7% reduction in advertising and marketing spend compared to the prior year. With that overview of our results, I would like to shift the focus to 2026, our priorities, and where we see opportunities going forward. First, a critical area of focus for us is advancing our position in the US markets served within our integrated care segment. While we have a well-established leadership position, we see opportunities to broaden our impact on patient care and client value, and in turn, business growth and performance. We're going after this opportunity through product and capability innovation and the strength of our care model across virtual care, chronic condition management, and mental health. For example, we recently launched our enhanced 24-7 care offering, the next generation of our flagship virtual care service. By leaning into the shift from subscriptions to visit-driven value, this new offering creates broader engagement points by expanding the range of conditions we can address, supporting our care providers with real-time access to specialists, and placing more information at the point of care to address care gaps and other needs. We're also advancing innovations in our chronic care programs to support and improve the health of people living with chronic conditions. The human toll and the cost of chronic illness are major issues facing the healthcare system, and we intend to deepen our role in this area. In 2026, we're leveraging our extensive data in new AI-enabled stratification capabilities together with additional targeted clinical interventions to address the needs of rising and high-risk members, including coordination with primary and specialty care, when appropriate, and manage care more holistically. These AI models align and efficiently activate care teams for personalized action. In addition, we are rolling out new connected devices, in-home testing, and other features to support our comprehensive approach. And we intend to build on these advancements in our product development pipeline going forward. And as part of our care model, we can also extend our various services for new and impactful use cases to support our clients. For example, as part of a broader implementation, a large blue plan is utilizing Catapult Health's virtual checkup program to engage Medicare Advantage members to ensure they complete their annual wellness visit. An example of how we can further leverage the potential of our virtual care assets and capabilities, meet people where they are, and connect them with the care and support they need. As a virtual native clinically focused organization, technology is central to delivering integrated patient care at scale, and the investments over the past year further support our innovation agenda. These include enhancements to our PRISM care delivery platform to surface actionable and personalized information across our care teams and efficiently deploy AI tools to support their important work. And seeing the significant opportunities to leverage AI more extensively in our business we made important investments over the last year in our new Pulse data and AI platform. Pulse brings together and unifies our extensive data, provides context, applies intelligence, and most importantly, connects AI-driven insights to activation and orchestration in support of patient care. All of these and other innovations are aimed squarely at driving engagement, clinical outcomes, and client value in direct support of our growth opportunities in integrated care. In 2026, we also remain highly focused on leveraging our scaled position in virtual mental health services and have several initiatives underway to advance our position. This includes the launch of Wellbound, our new employee assistance program offering that combines strengths across integrated care and BetterHelp, as well as rapidly scaling BetterHelp's insurance coverage offering. We are making considerable progress and we are now live in 20 states plus Washington, D.C., and have more than 4,500 credentialed and enrolled providers at this point. Additional network arrangements have also been secured, bringing covered lives to more than 120 million. Early trends are encouraging, including strong growth in insurance sessions, which now exceed 1,200 sessions on average per day, an annualized revenue run rate of over $40 million, which further informs our approach to 2026 for both the consumer cash pay and emerging insurance market, and reflected in the guidance that I'll cover later. We will continue a methodical expansion throughout the year, further scaling provider capacity and payer network coverage while prioritizing and ensuring strong user experience. And with BetterHelp's broad reach and brand recognition, there are millions of potential users that start the registration process at BetterHelp each year. In addition to improving conversion by expanding payment options with insurance, We also remain focused on growing our acquisition funnel through greater awareness. As an example, we are excited that BetterHelp has been named the exclusive online therapy provider for AARP, which advocates for 125 million Americans, 50 plus and older, with an expected launch over the next 60 days. In addition, BetterHelp has partnered with Walmart to join their Better Care Services Initiative, which launched earlier in the year. BetterHelp's international expansion also continues to be an important growth driver. Non-U.S. revenue represented nearly 24% of total segment revenue in 2025, with continued growth in our English-speaking offering and further boosted by localized launches in France, Germany, the Netherlands, Spain, and Austria. With solid performance in these localized markets, we expect to expand the model into additional countries in 2026. We are actively executing the turnaround of BetterHelp through these initiatives, and look forward to demonstrating the underlying potential of the business as we progress through 2026. Our third priority is driving value creation and integrated care through our international offerings, which combine a global reach with a strong understanding of the unique characteristics of each individual market. This includes deepening and expanding longstanding partnerships with existing clients, growth with public health systems, and expansion of hybrid care models that bring virtual services into physical care settings to meet local needs. including emergency services, primary care, and specialty care across several countries including Canada, France, and Australia. Finally, our fourth strategic priority is operational excellence. Over the past year, we've sharpened our strategic focus, driven cost and productivity initiatives, and accelerated innovation. We also achieved ISO 9001 certification for key U.S. integrated care processes, reflecting the level of operating rigor across the company. In 2026, we had one of the most successful implementation seasons in our history from a volume and performance standpoint, another important validation of the team's relentless and ongoing focus on execution. I also want to take this opportunity to further comment on the role of technology and artificial intelligence advancements in shaping the future of care at Teladoc Health. Firmly grounded in clinical care and patient safety, we are excited about the opportunity to responsibly apply AI to improve outcomes, simplify the experience for members and clinicians, and reduce friction across the healthcare journey. Care is at the heart of our innovation agenda, with our technology experts working alongside healthcare professionals to develop, evaluate, and align with evidence-based standards and support high-quality care experiences. Our responsible AI framework ensures that innovations undergo rigorous review to preserve safety, accuracy, and trust. With an extensive, diverse, and well-established client base of over 12,000 organizations, our partners and patients look to us to deliver quality experiences that perform and endure. We've been building the infrastructure, expertise, and partnerships for decades, and our models improve with every touchpoint, creating smarter systems at scale. As I mentioned earlier, Teladoc Health Pulse, our data and AI intelligence platform, serves as the backbone of our AI initiatives by unifying unique multidimensional data from patients, care providers, and partners. It provides context for the data and the ability to apply AI to this contextualized data to support a wide range of value accretive activations across the patient experience, clinical and care team support, and the operations of our business. In addition to the gains we've already made, we intend to further scale the benefits of Pulse through 2026, including in our product innovations and initiatives to drive greater efficiency and performance of our business. With that as a backdrop, let me provide a few examples of how AI enhances many of the moments that define high quality care for us. In our chronic condition and cardiometabolic programs, AI transforms connected device signals, member reported data, and other data sources into dynamic health insights. These insights help us personalize outreach, identify changes in health earlier, and support healthier decisions related to sleep, nutrition, activity, and stress. This improves engagement and overall health and helps prevent members from progressing to higher risk. In clinical settings, AI helps connect members to the right provider, supports clinicians with ambient generated documentation, and informs next best actions for our members. These tools enhance consistency, reduce administrative burden, and free clinicians to focus on questions and matters that require judgment and human connection. They do not replace clinical teams. They extend their reach and effectiveness. Pulse enables us to empower care teams with a more complete picture of a person's health and sharper insights that help them understand and predict patient needs, guide targeted interactions, and connect the right care at the right time. It is helping us move faster and smarter, transforming the way we work, and our ability to derive better health outcomes. And in our hospital and health systems offerings, our AI-enabled clarity solution uses computer vision and audio analysis to identify patient safety risks and signs of behavior escalation. This helps care teams intervene earlier, protect staff and patients, and expand capacity. These capabilities have become increasingly important as health systems balance safety needs with ongoing workforce constraints. In mental health, including BetterHelp, AI is improving intake and matching while also reducing therapist administrative workload, for example, by automating clinical documentation and enabling clinicians to spend more time on patient care and improving overall efficiency. At the same time, therapy remains grounded in a human relationship. Where AI assists, it is applied transparently, responsibly, and with a clear governance framework that prioritizes quality, privacy, and trust. We believe this is the path to stronger engagement, sustained ROI for our clients, and a better whole person experience for the people we serve. This approach positions Teladoc Health to continue leading the evolution of virtual care and to help our clients bring forward the next generation of AI-enabled healthcare in a safe, integrated, compliant, and clinically grounded way. Stepping back, the macro challenges across the healthcare industry remain significant, and our clients are focused on affordability and rising medical costs, the prevalence of chronic disease, unmet mental health needs, and other needs. And as a strong partner and leader in virtual care, we believe we're well positioned to drive outcomes, leverage advancements in technology, and deepen our impact. And the work we are doing across our strategic priorities further enhances that position. We enter 2026 on a stronger foundation and renewed underlying momentum driven by new innovations in integrated care products and capabilities, strong progress towards scaling better health insurance, growth in international markets, and continued focus on execution and business fundamentals. Moving now to 2026 guidance. We expect full year consolidated revenue to be in the range of $2.47 billion to $2.59 billion, approximately level with 2025 at the midpoint. Consolidated adjusted EBITDA is expected to be in the range of $266 million to $308 million, representing 2% year-over-year growth at the midpoint. Full year free cash flow is expected to be between $130 million to $170 million, and reflects a working capital build related to BetterHelp's significant growth in insurance in 2026, as well as lower net interest income on cash and cash equivalents due to the pay down of the 2025 converts and lower assumed interest rates on cash balances generally. We project four-year stock-based compensation expense to be below $60 million in 2026, representing a year-over-year decline of at least $20 million versus 2025 and down more than 70% versus 2023 levels, demonstrating significant progress over time and an important area of focus for us. For the first quarter, we expect consolidated revenue in a range of $598 million to $620 million and adjusted EBITDA in the range of $50 million to $62 million. For the integrated care segment, we expect full year 2026 revenue to grow in the range of 0.4% to 3.9% over 2025. The midpoint includes approximately 60 basis points of tailwind from our recent acquisitions. As we've spoken about previously, segment revenues continue to be impacted by the migration of U.S. virtual care subscriptions towards visit-oriented models, which are more reflective of the U.S. healthcare fee-for-service construct. However, with visit revenue now comprising more than half of U.S. virtual care revenue, we expect the impact of this shift on our top line to moderate going forward relative to prior years And as we move towards the later stages of this transition and over the long term, we expect to see visit revenue growth outpace the decline in subscription revenue, with virtual care being a net positive contributor to growth. We are guiding to a four-year adjusted EBITDA margin of 15.1% to 16.1% for integrated care, which represents an increase of approximately 45 basis points over 2025 at the midpoint. This increase reflects the net impact of gross margin changes resulting from subscription to visit-based revenue and mix related impacts, more than offset by lower operating expenses due to ongoing cost savings and efficiency related initiatives. Our guidance also currently reflects an expected $5 million to $7 million headwind from tariffs in 2026, up from a $3 million headwind in 2025, an area we will continue to monitor for further developments. We expect U.S. integrated care members to end the year in the range of 97 million to 100 million members, modestly down versus 2025 levels due to reductions in the enrollment at certain health plan clients related to government programs, including the impact of expiration of the enhanced subsidies on Affordable Care Act business. We are guiding to first quarter integrated care revenue down 1.2% to up 2.0% versus the prior year period. This includes 155 basis points of growth from the catapult and telecare acquisitions at the midpoint. Adjusted EBITDA margin is expected to be in the range of 12.5% to 14%, up approximately 30 basis points at the midpoint. Factors impacting the first quarter year-over-year comp reflect the prior year's quarter, including recognition of favorable performance on risk-based deals and chronic care. The year-over-year headwind from the previously discussed client contract loss in the second quarter of 2025. and lower expected infectious disease visit volume in the first quarter of 2026 compared to the prior year's quarter due to a timing variation in the flu season. From a cadence standpoint, we'd expect the first half versus second half revenue split in 2026 to be slightly more weighted to the second half relative to 2025 given these factors, although generally consistent with the average split over the past five years for integrated care. Moving to the better help segment, we are guiding 2026 revenue down 7% to down 0.5% versus 2025, reflecting a moderating rate of decline versus both 2025 and 2024 at the midpoint of our guidance. With the traction we expect in our insurance offering, we are focused on scaling it through the year and in turn, moderating the level of advertising and marketing expenditure we expect in 2026. Our guidance also reflects continued growth in non-US markets, as well as factors such as the macro backdrop demand levels, customer acquisition costs, and churn rates. With respect to insurance, we expect to generate revenue of $75 million to $90 million in 2026 with a steady sequential ramp and exiting the year at an annualized revenue run rate of more than $100 million. As I mentioned earlier, insurance sessions continue to grow at a strong pace, and we expect session growth to continue as we progress through the year, driven by several factors, including strong underlying demand for mental health services, together with BetterHelp's planned rollout of new states, increasing payer coverage, adding credentialed providers, and growing the insurance user base in existing states. We also launched insurance-covered psychiatry services in February, as well as new enhancements such as new scheduling features and instant therapist matching. We expect continued headwinds in U.S. direct-to-consumer cash pay, driven both by a challenging consumer backdrop and our intentional decision to further rationalize the level of ad spend given our progress in insurance, an opportunity to refocus investments on scaling this rollout. This outlook contemplates direct-to-consumer revenue in total being down 14% to down 9% year-over-year, inclusive of potential cannibalization from our U.S. insurance rollout. We expect to see double-digit growth in non-U.S. markets, with contribution from both the legacy English speaking offering as well as newer localized market launches. For the first quarter, we are guiding the BetterHelp segment revenue down 11.25% to down 7% year-over-year. This outlook contemplates insurance revenue of $10 million to $13 million in the first quarter, up from $7 million in the fourth quarter 2025, as well as the timing and impact of advertising and marketing spend actions. We are targeting sequential quarterly revenue improvement for the BetterHelp segment beginning with the second quarter and continuing through the balance of 2026. We are guiding to an adjusted EBITDA margin of 3% to 4.6% for the full year and 0.75% to 2.75% in the first quarter. Key factors impacting margin include revenue mix, reduced advertising and marketing spend, which we expect to be down by a mid to high single digit percent versus 2025, and investments to enable the successful scaling of the insurance offering. Similar to prior years, we expect to deliver the highest adjusted EBITDA margin in the fourth quarter. As we ramp and mature our insurance position over time, we expect to see improvements in lifetime value, customer acquisition costs, and operating leverage as we stabilize and grow the revenue base and offset changes in gross margin from this revenue mix. One final note with respect to guidance, the ranges we have provided at this time for free cash flow and net loss per share do not assume any specific changes in our current debt structure as our remaining convertible notes don't mature until June 2027. However, as we previously discussed, we continue to evaluate various options with respect to our long-term financing needs. Subject to market conditions and absent any other significant developments, our current expectation is that we will address the 2027 convertible notes in two phases. The first would be to pay off a substantial portion through a combination of existing balance sheet cash and new traditional term loan debt and do so potentially before year-end. And then second, we would retire the remaining balance at maturity with existing cash at that time. After addressing the 2027 converts, we expect our resulting gross debt position on a go-forward basis to be significantly below the current level and appropriately aligned with our financial profile and needs. we will provide further updates as necessary. In closing, as we move into 2026, we have clear priorities and the foundation to support our growth and performance initiatives. We are focused on execution and acceleration as we progress through the year and strengthening the underlying drivers of long-term performance and business value. With that, let us open it up for questions. Operator?

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. In the interest of time, please limit yourself to one question only. The first question comes from David Roman with Goldman Sachs. You may proceed.

Thank you, Chuck, and good afternoon, everybody. I wanted just to maybe see if you can help us wrap a lot of the moving parts together here. I think it's now been a year and a half with you in the seat as CEO. As you reflect on the guidance here for 2026, it does include another year of relatively challenging organic revenue growth and year-over-year trends and adjusted EBITDA. So where do you think we are in sort of the journey of stabilizing the business, and what is it going to take to get back to more consistent year over year revenue growth? And is there a path to even growing this business that call it a low to mid single digit rate?

Yeah, thanks for the question. I think first on integrated care, which I think is primarily what you're asking about, you know, as I mentioned in my prepared remarks and as you know, we've talked about previously, this headwind from subscriptions to visits has continued to be a factor. We've had strong underlying growth in visit revenues. But not enough to offset that headwind that's come in subscription revenue. We do see that now that we have over 50% of the virtual care revenues coming from visits, we do see that moderating and ultimately visit growth being a driver of growth. And that's been a factor out there that we've spoken about. In chronic care, we continue to see opportunities in terms of both the bundle products that we have out there and the level of recruitables. But more importantly, what we've been building over the last year in terms of the clinical foundations, I mentioned the data and AI capabilities and our ability to really drive stronger ROI across populations for our clients. And in turn, that's going to drive growth for us. So, you know, we entered 2025 with a very similar product portfolio that we had in 2024. And now with these enhancements and the foundations that we've been building, we think there's a bigger opportunity for us to go after. So, yes, I do believe there's growth potential in the business. I do acknowledge the headwind that we've had from the subscription to visit mix changes. That's been well talked about outside. And the underlying growth in visits, I think, will be a factor for us going forward. In BetterHelp, it's really about the insurance scaling. We were excited to enter the market mid last year. We've been scaling it pretty materially over that time period. And as I mentioned also in prepared remarks and in the guidance, we're going to see some significant growth in 2026 from that. So I think getting better help turned around and really leaning into the market opportunity and integrated care, particularly in the U.S., coupled with the growth we're seeing internationally, I think is how I would answer that.

Got it. Thank you so much for the detail.

Thank you. The next question comes from Richard Close with Canaccord. You may proceed.

Yeah. Maybe just a follow-up to that, Chuck, in terms of, you know, chronic care enrollment. You know, I'm just curious in terms of how cross-sell is going, if you can just talk about the, you know, the trends there through the most recent selling season. And are the new products that you're talking about, are they gaining traction or just the level of demand interests currently in the new offerings?

Yeah, well, first of all, our ability to manage across conditions is a selling factor and our ability to do that, you know, without multiple integrations in one offering. And that's, we've had some really good success with that in terms of bundling products and crossing populations. We're seeing continued good interest in our weight programs and our bundled products. So all of that. I think going forward, in addition to the things that I mentioned in my earlier response, it's really about going after the population health more strongly and more broadly. And we are uniquely positioned with the clinical model that we have and that we've been building pretty materially over the last year to be able to go after those populations, provide a range of services, really identify where things are falling through the cracks, and develop the right levels of clinical interventions for high risk and rising risk populations. Those are the things that drive the medical costs and they're also things that drive the human costs. So our operating model and our value proposition and in turn our product portfolio is going to lean into that. And that's really where we're going to see the longer term growth for this company. Clearly we're out there competing on a day to day basis with the product portfolio we have and the competitive environment we have. But ultimately, our ability to lean into this clinical model that we've built is what's going to drive stronger growth going forward.

Thank you. The following comes from Daniel Grosslight with Citi. You may proceed.

Hi, Chuck. Thanks for taking the question. I really have one just about the the ramp in BetterHelp EBITDA this year. The guide implies a bit of a steeper ramp than prior years. The first quarter EBITDA and BetterHelp is around 11% of full year. In the past, it's been closer to high teens. Can you just walk us through the cadence of BetterHelp adjusted EBITDA margin improvement this year? What's driving that steeper ramp and the levers that get you to the bottom and top of that full year guidance range? Thanks.

Yeah, you know, there's some moving parts in BetterHelp. Obviously, the level of advertising spend, the most material mover there. And we also have, you know, some investments we're making, obviously, to scale insurance, really the fundamental drivers of the EBITDA margin. And of course, as you've seen in the past, we do expect the fourth quarter EBITDA margin to be the strongest as we pull back ad spend, you know, with respect to the holiday season. But Mike, I don't know if you want to comment further on the ramp.

Yeah, I would just say, you know, obviously, you know, with the investments that we're making to scale the insurance, you know, that's obviously one of the factors that's impacting the first half of the year. So that's, I think, another factor.

And the levers that get you to the bottom and top end of the range.

Thank you. The next question comes from Sarah James with Cantor.

If we're still live on the line here.

Hey, I don't know if you heard that last question, but I thought it was great. The levers that get you to the high end versus the low end of your 2026 guidance.

I apologize. Can you repeat the question? It broke up a little bit on our end. I apologize if you could restate that.

Yeah, no problem. Can you walk us through the primary assumptions that differentiate the high end versus the low end of your 2026 guidance range?

Are you talking about at a segment level?

I'd love if you could do the whole company, touching on both segments.

Okay. Yeah. So I think, first of all, I'll make some comments and then Mike can weigh in. We see the guidance ranges in BetterHelp. being wider because of the changes we're making there, both in terms of the variability in the consumer market, as well as the ramp in insurance. So that's really a driver of the variability you see on the low and the high. In integrated care, it's a little bit tighter, but obviously as our business moves more and more to visit-based arrangements, there's some variability there, as well as the ramp of chronic care enrollment, those kinds of factors and what we see with respect to, you know, some seasonality in our visits. So that's the predominant variation around the range. But Mike, anything else you want to add to that?

No, I think that covers all.

Okay.

Thank you. Thank you. The next question comes from Jillian Dressing with Truist. You may proceed.

Thank you, and thanks for taking my questions. And maybe it is a little early to talk about it, but with the 2026 selling season effectively closed, what is the early feedback from 2027 RFP discussions? Are health plans still in the state of that strategic uncertainty, or is there a clear trend towards unbundling virtual care and chronic care from broader insurance packages? Trying to understand if that health plan headwind you have been talking about might start to ease it a little bit more in the next few quarters and years.

Yeah, I appreciate the question. I would say the, it's mixed in the sense that the macro environment that we've spoken about and has been facing, and I know you're well aware of in facing the health plans, you know, those things just continue to sort themselves out. And clearly with the, what happens with the expiration of the enhanced subsidies, ultimately in their books of business, some of the things that are going on at a federal level, you know, those things are out there. I would say when I say it's mixed, we're having much stronger renewed conversations with health plans, and I would characterize more strategic conversations with health plans specifically about how our suite of services and envision and what we're building can really uniquely help them in the things that are challenging them the most. And I mentioned in my prepared remarks what we've done with Catapult as an example for a large blue plan in terms of their Medicare Advantage population. You know, we need those populations to get their annual wellness visits. It's important to their health, and it's also important to the economics of the health plan. So I think there's a stronger and a renewed interest to really dig in and evaluate how our unique solutions can help them. Another example with our enhanced 24-7 care offering. You know, it's not your normal 24-7 care. There's a number of features there that are beneficial to all of our clients, but certainly beneficial to health plans. in terms of the ability to avoid unnecessary specialist referrals, the ability to navigate patients to the next best action, to close care gaps, to address a broader range of services. So those are really resonating in those conversations, and I think they're going to give us a lot of opportunities to lean in with our unique set of solutions.

All right. Thanks, Chuck.

Thank you. The following question comes from Jessica Tasson with Piper Sandler. You may proceed.

If if you know just given some of the early experience with with the insurance paid better help Members could you just describe kind of how those Members are behaving. You know how long are they remaining on the cash pay better help when when are they converting to insurance paid and then just as they move into insurance, you know what what is their utilization and retention look like thanks.

Yeah, well, I'll make some directional comments. Obviously, you know, it's still a bit early, right, to draw any definitive conclusions on that. But everything we're seeing for, you know, that we're looking to accomplish, we're seeing it in the trends in terms of, you know, conversion, usage, the number of sessions, the interest level in using their insurance. All of those things are, you know, consistent with our expectations. And obviously in our more mature markets, which is still very, very early, but in our more mature markets, we're really seeing that play out, you know, pretty consistently. And as I mentioned earlier, you know, the growth in sessions has been pretty significant since we started this. And it's not just, you know, in terms of acquired users with insurance, but it's the utilization of services of those acquired users. So all of those things are directionally supportive of what we were looking to accomplish. Obviously, we want to see it play out longer, We like what we're seeing so far, and that's why we've really been focused on scaling insurance and really, you know, yielding the benefits of the funnel and the platform that we have.

Thank you. The next question comes from Sean Dodge with BMO Capital. You may proceed.

Yeah, thanks. Good afternoon. Maybe just staying on BetterHelp. Chuck, you mentioned the success you've had recently driving growth by scaling it internationally. I know international pricing is a little different than here in the U.S., but so are customer acquisition costs. So I guess just anything you can share on the margin profile of BetterHelp in the U.S. versus BetterHelp International. Is the mix shift that's happening there, is that responsible for some of this BetterHelp margin pressure you're guiding to, or is that Is kind of the mixed impact you're talking about on BetterHelp margins, is that more from the insurance side?

Yeah, it's probably the insurance side, but there is a different profile internationally, although we get to the bottom line margins that we're looking to accomplish there. So there's a little bit of that. And now, as you know, and I mentioned, you know, international has been growing nicely, and it's now over 24% of the revenues of BetterHelp in the consumer. And with these localized models, as well as our English speaking offerings, seeing nice growth there. If you think about in a lot of those international markets, you know, there's an access issue. And I think with our consumer experience and the ability to resonate locally, you know, there's a lot of interest, you know, mental health is not just a US issue. So I think that that's going on as well as obviously the growth in insurance, you know, does have a different margin profile. But we do believe over time it's going to have a, you know, different economic construct when you think about customer acquisition cost, lifetime value, efficiency of our ad spend. And I think that's predominantly what you're seeing in the margin profile.

Okay, great. Thanks again for the detail.

Thank you. The following comes from Elizabeth Anderson with Evercore. You may proceed.

Hey, guys. This is Ayush on for Elizabeth. Thanks for taking my question. You noted previously that competition from insurance-enabled providers has sort of pressured the U.S. cash pay business. As you expand your own insurance footprint, are you guys seeing that competitive dynamic begin to kind of moderate in those markets? And then in the states where insurance has been live the longest, are you seeing any meaningful differences in engagement patterns compared to cash pay users?

Yeah, yeah, appreciate the questions. There's a number of things going on in virtual mental health. First of all, I would say pre-pandemic, I would say there was not as much probably appreciation and recognition of the challenge that were out there. And I think post-pandemic, fortunately, we've seen the payers and everyone really understand and focus on mental health and take a number of actions to be able to expand access there. And also, virtual care, post-pandemic is one of the areas of virtual care that's sustained high levels because obviously you don't necessarily need to be in person for those kinds of sessions to occur. So all that's been going on. The underlying unmet need is still there. The demand is there. And so I think that's a factor in our growth and the session growth that we're seeing. And you see that with other parties as well. So I think even though we were a bit Later joining the insurance market, we do believe there's going to be strong underlying demand. And, of course, with BetterHelp's position and funnel and experience, we should be able to see that going there. In terms of the behaviors, as I mentioned earlier, you know, it's a little bit hard to draw definitive conclusions. But we are seeing good data in terms of when we show insurance, people selecting to use insurance, the number of sessions that we're seeing. So I think the patterns are, you know, at this point consistent with what we expected. And I think that underlying demand for, you know, mental health services, you know, is going to continue to bode well for our insurance uptake.

Thank you.

Thank you. The next question comes from George Hill with Deutsche Bank. You may proceed.

Good evening, Chuck, and thanks for taking the questions. I'll say one quick one and one kind of more developed one. The first one is, does the AARP relationship have any significant economic drag to it? Just because I know AARP tends to extract pretty significant price concessions to work with them to have that relationship. And then on the topic of moderating the BetterHelp marketing spend, my understanding is the correlation of the revenue to that business with the marketing spend has historically been pretty high. So I guess, how do we think about the risk of pulling back on the marketing spend and better help and the idea that that leads to accelerating revenue erosion? Thank you.

Yeah, I appreciate the question. In terms of AARP, I won't get into the details on it, but what we're doing with AARP, we have reflected in the guidance that we have out there. And we're excited about it. The ability to be the exclusive mental health provider to an organization like AARP and bringing that really to leading brands between AARP and BetterHelp to address mental health and really we see it as an opportunity to grow the awareness of adoption within that population and obviously new opportunities in terms of the funnel. The cash pay component of that, people will be able to avail themselves to a discount in the first month of the cash pay and also insurance. There won't be a discount there, but standard benefits and cost sharing will apply there, but people will be able to access their insurance as we scale that. And we're also able to, in addition to offering the normal services we have, we're going to have virtual mental health webinars, workshops led by our licensed clinicians with topics that really resonate with that population. And they also get three months free of better sleep to help them with sleep and relaxation and stress. So we're excited about AARP. You know, we haven't necessarily, you know, we're not quite sure what the ultimate, you know, demand generation is going to be there, but we've built into our guidance, you know, what we're expecting with respect to AARP, including our arrangement with them. What was your second question again? Oh, the ad spend question.

I'm sorry, Chuck. It was just on the, yeah, ad spend, the risk ad spend, yeah.

Yeah, yeah, appreciate that. Sorry. You know, there is a high correlation between advertising spend and the direct-to-consumer pay model and we'll continue to see that correlation. We believe we have an opportunity to make that ad spend more efficient. First of all, we have international growth opportunities that are out there and they have a bit of a different expenditure pattern on what it takes to secure that membership. And we also see that there's a number of initiatives to sort of improve the conversion of members. So get more efficiency out of the ad spend. We've broadened our channels, what levers we pull. You know, there will be a significant correlation to your point. It is going to be down in 20 versus 2025, and 2025 was down versus 2024. But we feel like we've got the right mix of focusing the resources on scaling insurance while also making sure we're activating the top of the funnel.

Thank you.

Thank you. The next question comes from Brian Talquilit with Jefferies. You may proceed.

Hey, good afternoon, guys. And sorry to pound the table more and better help. But just as I think about, you know, the push into the insurance side of the business, how are you thinking about the KPIs to manage to and what's that going to look like when we think of percentage of sessions, reimburse, payer plan coverage, breath, and reimbursing rates, and now selection, performance, things like that. Just how do we think about those KPIs as we try to think through our models?

Yeah, I'll make some comments and then Mike can jump in. So, clearly it's, you know, we're looking at things like conversion, right, user acquisition. We're looking at the number of sessions that a user, that a person needs. And we expect that since the, one of the barriers, if you will, is cost. And with kind of removing that barrier or moderating that barrier, It's going to be more about therapy decisions as opposed to economic decisions. So we expect to see that. We do expect to not have to maybe expend as much money to reacquire users when people need therapy, so the customer acquisition component of it. We do expect to see some, obviously, gross margin differences in that book of business going forward, but also lower costs to acquire those members and be able to achieve the margins we are. We're also looking at therapist capacity. how many sessions, how many therapists are on the platform, how many sessions they're able to pursue. I mean, that's one of the benefits of Better Health. And with this, you know, massive therapist network, and we're able to, with the demand we have, you know, fill up their calendars. And as you know, these virtual therapists, you know, they've got to secure patients for their own business model. So our ability to kind of bring that demand and match it up with the therapists is going to be key. And then obviously there will be some operating expenses as we administer insurance. And to your point, contracted rates with payers for the services we have. And we think we're bringing a lot of value to the table and we should be able to secure the rates we need. So it's those kinds of KPIs. It's not unique in the sense that we have a pretty considerable B2B business in virtual care in our integrated care business. So we have a good understanding of what those levers look like.

Thank you.

Thank you. The following comes from Alan Lutz with Bank of America. You may proceed.

Good afternoon, and thanks for taking the questions. Chuck, I want to ask another question on the better health assumptions for 2026. You had $13 million of revenue in 2025 from insurance. How should we think about the visibility into that $75 million to $90 million? Is that just based on you're in a specific region of the country and that you know equates to that 13 million and then the size of the addressable market that you're moving into over the course of 2026 correlates pretty directly to that 75 to 90 million or are there other variables we should think about there thank you yeah you know in terms of 2025 recall that you know the the acquisition of uplift uh brought a certain level of revenues and book of business with them we were able to acquire

you know, a solid base of, uh, payer contracts, some capabilities, and of course some talent. And then, uh, as a result of the integration, be able to start launching markets with BetterHelp, uh, starting obviously with Virginia. So the, the revenues in 2025, we're, you know, we're largely uplift, uh, insurance revenues. And so what we're seeing now is a significant ramping of BetterHelp's, uh, revenues. And that's why, you know, in my prepared remarks, I wanted to to share that we're up over 1200 sessions on average per day. And again, starting from zero with BetterHelp not too long ago. And that's been a nice growth week over week over week. And even on that basis at an annualized run rate of over $40 million. So as we roll out new markets, as we have more sessions, more users on the platform for longer, we're seeing that play out in the data. And that's what gives us confidence in the ramp, not only based on state rollout, but also based on utilization and access and awareness. And of course, we're always continuing to add payer contracts as well. And that's really what you're going to see, the sequential ramp through the year. And while we shared on the last point in the prepared remarks about the exit rate, it's being around $100 million run rate.

Great. Thank you.

Thank you. The following comes from Stan Berenstein with Wells Fargo. You may proceed.

Hi, and thanks for taking my questions. I guess I'll volunteer myself to ask an integrated care question here. So you ended the year with about 102 million members. You're guiding 2026, I think at the midpoint, down 3 million, give or take. Can you comment on the drivers here? How should we think about the timing? It seems at least some of this decrease is going to happen after Q1. And should we expect that dynamic to impact chronic care enrollment at all? Thank you.

Yeah, I think on the latter part, no, we don't expect that. We still have a massive membership base to cross sell into with chronic care. I think what we're seeing and what we tried to anticipate in our guidance on that particular number was really the dynamics in the marketplace. We've got strong retention, and so none of that is really related to client loss, it's really the enrollment we are expecting. And the reality of it is, with respect to the Affordable Care Act subsidies going away, the health plans don't quite yet know what the ending enrollment is, even though we're in 2026 already. We believe there was a lot of people that signed up that were expecting or assuming that those subsidies might continue and they might disenroll. So we're just trying to factor in what we're thinking there, obviously the Medicaid situation, And ultimately, though, you know, it's less important about the raw enrollment membership counts, although that's, you know, it's a factor. But as we move more towards visit oriented economics, it's really about visits and utilization. And what we see in some of these membership declines, we've assumed that the level of utilization in some of those areas aren't as penetrated as others. So we're not necessarily seeing that as a significant headwind at the end of the day from a revenue generation standpoint, but we did want to share our thinking on the roll number.

Appreciate the caller. Thank you.

The next question comes from Ryan McDonald with Needham & Co. You may proceed.

Thanks for taking my questions. I wanted to ask about incremental opportunities for better health, especially as you continue to scale the insurance initiative here. Obviously, CMS had announced the access program, you know, that's going to be launching later this year. Actually covers multiple areas that I think Teladoc could take advantage of in terms of not only mental health, but also in diabetes care. I'm just curious how you view this opportunity. given the recently announced reimbursement rates, and if it's an attractive opportunity for the business to invest towards in 2026?

Yeah, I would say, first of all, in BetterHelp, I think we are predominantly focused right now on mostly commercial business, and we've got a number of levers there. I mentioned earlier that we launched psychiatry in there. So there's a number of levers we have on the BetterHelp side. With respect to the Access program, it's something that we're continuing to evaluate. Certainly aligns with the value prop of our program. And it also, we frankly like seeing more attention to chronic illness and in particular, even some underserved populations and rural populations. So we're continuing to evaluate it. There's some implications of those programs in terms of the reimbursement levels and other things. So again, it's something that we're gonna continue to evaluate, But longer term, I do think it's really good that the country is focusing more on chronic care. And frankly, I think our programs play well into that.

Thank you. The next question comes from Jeff Garrow with Stevens. You may proceed.

Yeah, good afternoon. Thanks for taking my question. I'll ask another one on integrated care business development. But was hoping to give some comments breaking down demand between the health plan versus employer channels, you know, particularly given some of the challenges for the health plans and the exchange and MA markets and how that all will impact your go-to-market strategy into the next selling season. Thanks.

Yeah. Yeah, thank you. So, you know, we ended 2025 on a solid footing. We had, you know, really good demand of results in the employer channels, and we had, you know, good interest in the health plan channels, notwithstanding the challenges I've talked about. So we had some nice wins and some expansions and as well as, as well as some headwinds, uh, and, and, and all that, I think for purposes of, as we enter 2026, uh, a lot of the dynamics are still in play a lot of need and interest in the employer markets. But I think even more in the health plan channel, as I mentioned earlier, having more strategic conversations about how we can help them move the needle on their medical costs. And it varies in terms of the population. It varies in terms of lines of business, in terms of what the drivers are to their economics. But because of our position and the suite of services we have, and frankly, the investments and the innovations we've done over the last year, we're in a much stronger position to lean into those strategies. There are some health plans that have brick and mortar primary care strategies. We think we can complement those. There are others that are heavily focused in particular lines of business. And so we're really just leaning into where our opportunities are to serve those health plans, really move the needle on the populations that they're responsible for, and ultimately drive cost outcomes and ROI for them. So I think we're in a good position, notwithstanding some of those macro headlines that are still out there.

Thank you. The following comes from Scott Schoenhaus with KeyBank. You may proceed. Scott, please enter your line if unmuted. This concludes today's conference call. Thank you for your participation. You may now disconnect your line.