The new CEO of Teladoc Health Inc. wants to secure insurance-company coverage for the company’s BetterHelp direct-to-consumer behavioral health services as part of his plan to improve profitability.
Speaking to analysts after the virtual care provider’s second-quarter earnings report, Chuck Divita also said he’s looking to build on the international expansion efforts of BetterHelp by targeting a handful of non-English-speaking markets in addition to the United Kingdom, Canada and Australia. The broader goal is to more tightly weave BetterHelp, which accounts for about 40 percent of Teladoc’s top line, together with the rest of the company.
“You’ve got a consumer business that has resonated well and we have need for engagement in our B2B business,” Divita, who took over in June, said on a July 31 conference call. “We have a scaled B2B business that can benefit from other parts of the organization as well. So, what I’m looking for is each individual business to meet the market needs and realize its own potential, but as part of the broader company, where are those opportunities to unlock new value and differentiate.”
Divita and his team have work to do when it comes to BetterHelp finances: The unit’s revenues slipped 9 percent in the second quarter versus the same time in 2023 and its adjusted EBITDA fell by more than a quarter to $25.5 million. The company’s broad Integrated Care group—which has grown its total membership by more than six million people over the past year to 92.4 million—grew 5 percent in the quarter and posted adjusted EBITDA of $64.0 million, a 69 percent jump from Q2 of last year.
As a whole, New York-based Teladoc reported a second-quarter net loss of $838 million, which primarily due to a $790 million impairment charge the company booked because of the slide in the company’s shares—they’re down more than 70 percent in two years—as well as lower projected cash flows at BetterHelp. Total adjusted EBITDA came in at $89.5 million, up from $72.2 million in the same period of last year, while revenue slipped 2 percent to $642 million.
One of the main struggles at BetterHelp of late has been the rising cost of acquiring customers, which the business does primarily through social media advertising. That dynamic and Teladoc’s need to watch its marketing spending have combined to slow the addition of new customers and led Divita and Mala Murthy to suspend guidance for the business. On the conference call, CFO Mala Murthy said limited visibility about ad spending and an overall weaker macro environment created a “range of outcomes […] just too large for us to provide guidance.”
The marketing spending issues also play into Teladoc leaders’ plan to push BetterHelp into the insurance plan space, where Teladoc has established relationships.
“We have talked about our client retention rate being over 90 percent,” Murthy said. “This is an opportunity for us to actually use that […] in a smart efficient way with the BetterHelp product.”
Shares of Teladoc (Ticker: TDOC) were changing hands around $8.85 in midday trading Aug. 1, down 6 percent from their previous close before Divita and his team reported results. Over the past six months, they have given up more than half of their value, a slide that has cut Teladoc’s market capitalization to about $1.5 billion.
