Earnings Call Transcript
Teladoc Health, Inc. (TDOC)
Earnings Call Transcript - TDOC Q3 2025
Operator, Moderator
Good afternoon, everyone, and thank you for joining today's Teladoc Health Q3 '25 Earnings Conference Call. My name is Regan, and I will be your moderator today. I would now like to pass the conference over to our host, Mike Minchak, Head of Investor Relations for Teladoc. Please proceed.
Michael Minchak, Head of Investor Relations
Thank you, and good afternoon. Today, after the market closed, we issued a press release announcing our third 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 this call to discuss the results are Chuck Divita, 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 our performance. Details on the relationship between these non-GAAP measures and the most comparable GAAP measures and reconciliations thereof can be found in the press release that's 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.
Charles Divita, CEO
Thanks, Mike. Consistent with our preliminary results released last week, our third quarter consolidated revenue and adjusted EBITDA both came in above the midpoint of our respective guidance ranges. This performance reflects our continued focus on execution. Mala will provide more details on our financial results later in the call, including segment level information and our updated full year outlook. But first, I would like to provide an update on the business and our strategic priorities. With respect to integrated care, we continue to build on our U.S. market leadership position with an emphasis on performance, innovation and client impact. Today, over 100 million people have access to one or more of our services, a testament to the scale and value of our platform. With this reach and vantage point, we are advancing initiatives that expand our service offerings, further connect and orchestrate care and deliver differentiated outcomes for patients and clients. For example, through enhancements to our Prism care delivery platform this year, we now have a much greater opportunity to surface important information directly at the point of care. This offering enables our providers and care teams to address gaps in care, manage specialists and other referrals and activate relevant programs based on the members' eligibility and needs. Further, our ability to embed provider-to-provider specialist consults into the experience improves timely resolution of the members' care needs and drives cost savings and differentiated value for the client. As I have shared previously, having visits and other interactions serve as broader engagement points is central to our strategy and value proposition, which we believe will ultimately drive overall growth in virtual care revenues. In Chronic care, where program enrollment in the third quarter grew 4% on a sequential basis, we also continue to advance important innovations there as well. In addition to new connected devices and new program features, we are developing enhanced clinical intervention models for rising risk and high-risk populations. These models will apply AI-enabled risk evaluation and stratification capabilities and leverage our clinical and care delivery capabilities to identify and activate intervention opportunities. And through these interventions, including engaging with the patient's existing care provider to develop and support the respective care plan, we see additional opportunities to improve clinical outcomes and drive greater client ROI and impact. We have active pilots underway and expect to bring these new innovations to market in 2026. And through Catapult acquired earlier in the year, we now have a greater ability to engage members earlier in their health journey, including through health screenings, at-home diagnostic testing and clinical support. Our integration with Catapult also provides additional opportunities to create awareness of other eligible Teladoc services and support member activation. We are seeing strong client interest in Catapult, both as a stand-alone offering and as part of a broader health engagement capability. We believe that our unique and scaled position at the intersection of technology and clinical care will continue to provide opportunities to expand services and impact over time. As a partner to our clients, we deliver, enable and orchestrate care across a wide spectrum of needs, meeting members where they are, supporting their health and mental well-being and driving better outcomes. As we've shared previously, virtual care revenue models continue to move towards fee-for-service visits, and we're leaning into this change with an approach built around engagement, activation and measurable value. Visit-based revenues in 2025 now comprise over 50% of our U.S. virtual care revenues compared to approximately 40% in 2023. While we expect this mix shift to continue, we also expect the level of impact on overall revenues going forward to see some moderation compared to the impact over the past few years. And through the strength of our model and ability to serve expanded clinical use cases through our new product enhancements, we look to participate in the value we create, which we believe puts us on a path to sustainable underlying growth in our virtual care business. Now turning to our second strategic priority, leveraging our scaled mental health position. In the third quarter, we again achieved double-digit growth in B2B mental health visits and remain on track for generating over $150 million in total revenue, excluding BetterHelp's new entry into insurance covered benefits. We're excited about building on this success with our new employee assistance program offering called Wellbound, which leverages strength of both integrated care and BetterHelp, including unmatched scale, a robust network, consumer engagement capabilities and efficient connectivity to a range of services. While early, we're seeing strong interest in Wellbound and our pipeline continues to build out. With respect to BetterHelp's new insurance offering, the UpLift acquisition has brought together important capabilities and payer arrangements. As I shared last quarter, BetterHelp's first state for insurance, Virginia, was launched within 60 days of the transaction closing. This initial state demonstrated the strength and effectiveness of our combined technology, operations and ability to effectively deliver on our user and provider experience objectives. Key metrics at this point are in line with our expectations, including conversion rates, user growth and sessions per user, among others. We're encouraged by the results, and we're continuing to invest to support the broader rollout of this business. We are now live in 7 states, including the additions of Florida, Texas and New York as well as being live in the District of Columbia. Several more states are planned over the remainder of 2025. We also continue to expand the credentialed therapist network for insurance to support the rollout. With BetterHelp's substantial network of therapists in the U.S. supporting our D2C business, the strong interest we've seen from our network in the new offering as well as UpLift's existing 1,500-plus credentialed providers, we expect to be able to add the necessary capacity to meet demand. Separately, BetterHelp's non-U.S. business continued to perform well in this quarter, delivering high single-digit user growth, aided in part by our localized market launches. As we've shared previously, the rollout and scaling of insurance as well as growth in non-U.S. markets continue to be essential to BetterHelp's future given continued pressure on the U.S. cash pay business. Our third strategic priority is driving continued growth in our International Integrated Care business. For the third quarter, revenues grew 14% year-over-year on a constant currency basis, and we see continued opportunities for growth ahead. This includes in Australia, where we recently acquired Telecare, which operates Australia's leading virtual care clinic and provides software solutions across the health care sector. We intend to build on our existing presence in Australia and deepen our penetration in the public health sector. Finally, operational excellence remains a key strategic priority. In terms of elevating performance, I'm pleased that we recently achieved ISO 9001 certification for key processes within U.S. Integrated Care. This speaks to the great work done by our operations team to deliver a high-quality experience for our clients and members. We are seeing operational improvements and other client service enhancements reflected in the results of our client survey data, which showed across-the-board strengthening in Net Promoter Scores in our U.S. Integrated Care business. In terms of cost efficiencies, we've driven improvements in a number of areas, including technology and development, administrative costs and share-based compensation. And as we close out the year and move into 2026, we will continue to focus on opportunities to further streamline our cost structure across expense categories and capital expenditures. In closing, while we've made considerable progress across each of our strategic priorities, we know that we have important work ahead of us. The challenges in health care are substantial, including affordability and rising costs, prevalence of chronic disease, unmet mental health need and intense pressure on providers, among others. And as the market leader, we know that our clients rely on us to help mitigate the impact of these pressures. We remain committed to driving the next evolution of virtual care and believe that our strategic priorities, investments and product innovations will provide opportunities to drive even greater value and impact going forward. Before I turn it over to Mala to share more on our results, I want to take a moment to recognize her contributions to Teladoc Health. As we announced last week, Mala will be stepping down as Chief Financial Officer next month. Over the past 6 years, Mala has played a pivotal role in shaping Teladoc's financial strategy and strategic growth initiatives through a period of significant transformation. On behalf of the Board, our leadership team and all of Teladoc Health, we thank Mala for her outstanding contributions and wish her continued success in her next chapter. With that, let me turn it over to Mala.
Mala Murthy, CFO
Thank you, Chuck, and good afternoon, everyone. As Chuck outlined, we are executing well against our strategic priorities, and our third quarter results reflect that momentum with consolidated revenue of $626 million above the midpoint of our guidance range. Revenue declined 2.2% year-over-year as growth in our Integrated Care segment was offset by a decline at BetterHelp. Adjusted EBITDA of $70 million was at the high end of our guidance range, representing 11.2% margin and reflecting disciplined execution across the business. Net loss per share was $0.28, which included a noncash goodwill impairment charge of $0.07 per share pretax. A charge that was not contemplated in our guidance range as it occurred after the guidance was issued. As outlined in our second quarter 10-Q, the carrying value of the Integrated Care reporting unit continued to exceed its fair value, which triggered the impairment charge. Net loss per share in the quarter also included amortization of intangibles of $0.48 per share pretax and stock-based compensation expense of $0.10 per share pretax. Free cash flow was $68 million in the third quarter, bringing year-to-date free cash flow to $113 million. We ended the quarter with $726 million in cash and cash equivalents, an increase of $47 million sequentially, further reinforcing our strong liquidity position. Turning to our segment results. Integrated Care revenue was $390 million, up 1.5% over the prior year period. As previously discussed, the resolution of a prior period billing adjustment in the third quarter of 2024 created a 115 basis point headwind to revenue growth this quarter. We see continued strong performance in our international business, which delivered mid-teens growth on a constant currency basis alongside solid growth in visit revenue. The acquisitions of Catapult and Telecare contributed approximately 245 basis points to segment growth. We delivered solid results across key underlying metrics. U.S. Integrated Care membership ended the quarter at 102.5 million members at the high end of the guidance range and up 9% year-over-year. And as Chuck mentioned, chronic care program enrollment grew 4% on a sequential basis, adding 48,000 lives and reaching 1.17 million and marking a return to sequential growth. Third quarter Integrated Care adjusted EBITDA was $66 million, representing a 17% margin, which was above the high end of our guidance range. Excluding the 95 basis point benefit from the prior period billing adjustment in the third quarter of 2024, adjusted EBITDA margin would have increased modestly year-over-year. The upside in the quarter reflects the revenue mix and flow-through as well as continued cost discipline, including hiring deferrals. We saw year-over-year improvement in both technology and development and G&A expenses, 2 key areas of focus. Moving to the BetterHelp segment. Third quarter revenue was $236.9 million, which included approximately $4 million in insurance revenue, the majority of which was from UpLift. As Chuck mentioned, we are still in the early stages of the BetterHelp Insurance rollout, and we are encouraged by the initial traction. Average paying users declined 4% year-over-year to 382,000 with high single-digit growth in non-U.S. users only partially offsetting a high single-digit decline in U.S. users. The backdrop we discussed last quarter, including weaker consumer sentiment and macroeconomic uncertainty has remained consistent through the third quarter. Further, while growing consumer willingness to access mental health therapy through covered benefits is a headwind to our cash pay business, it validates our insurance initiatives. We continue to believe insurance, coupled with non-U.S. growth, positions BetterHelp for a return to growth over time. Adjusted EBITDA for BetterHelp was $4 million, representing a margin of 1.6%. The year-over-year decline was primarily driven by lower revenue and investments to support the insurance rollout, partly offset by lower ad spend. Turning to guidance. We now expect 2025 consolidated revenue of $2.510 billion to $2.539 billion and adjusted EBITDA of $270 million to $287 million, with the midpoint of both ranges essentially unchanged versus our previous outlook. Free cash flow is expected to be in the range of $170 million to $185 million. We now expect 2025 stock-based compensation expense of $85 million to $95 million, a $10 million reduction versus our prior outlook. The full year net loss per share guidance range has been narrowed with the midpoint remaining unchanged. The third quarter goodwill impairment is expected to be largely offset by the reduction in stock-based compensation expense. Our full year guidance implies fourth quarter consolidated revenue in the range of $622 million to $652 million and adjusted EBITDA of $73 million to $90 million. Moving to the segments. Starting with Integrated Care, we are raising and narrowing our full year 2025 revenue and adjusted EBITDA guidance range. We now expect revenue to be up 2.4% to 3.5% over 2024, an increase of 40 basis points at the midpoint versus our prior range. Roughly half of this increase relates to the Telecare acquisition, with the remainder reflecting strong year-to-date performance and execution. We continue to expect Catapult to contribute approximately 200 basis points to full year revenue growth. We now expect full year 2025 adjusted EBITDA margin of 15% to 15.4%, up by approximately 30 basis points at the midpoint versus prior guidance, reflecting strong 3Q performance, partially offset by a pull forward of marketing spend in 4Q. While the tariff situation remains fluid, we are maintaining our estimate of a roughly $3 million headwind to adjusted EBITDA. We will continue to monitor tariff-related developments and evaluate mitigation strategies, including alternative sourcing arrangements to diversify our supply chain. For the fourth quarter, Integrated Care segment revenue is expected to increase 1% to 5.2% over the prior year period. Adjusted EBITDA margin is expected to be in the range of 15.3% and 16.8%, up approximately 250 basis points year-over-year at the midpoint, reflecting cost discipline and a higher level of investment spend in the prior year period. Moving to BetterHelp. We have narrowed our full year revenue outlook to the lower half of the prior guidance range. The expected year-over-year revenue decline of 8% to 9.2% reflects the ongoing headwinds we have discussed in our U.S. cash pay business, partially offset by our non-U.S. business and insurance rollout and growth initiatives. As Chuck outlined, we are encouraged by the early progress of our insurance rollout. And based on early performance from recent state launches, we expect to generate $12 million to $14 million in total insurance revenue in 2025. We now expect BetterHelp adjusted EBITDA margin of 3.8% to 4.6% for the full year, with the midpoint down approximately 55 basis points versus our prior guidance. This largely reflects the flow-through impact from lower revenue as well as accelerated investments to support the insurance initiative based on the successful early launches. Our updated full year outlook implies fourth quarter BetterHelp segment revenue down 3.8% to 8.8% year-over-year and an adjusted EBITDA margin of 5.5% to 8.6%, with a sequential margin improvement driven by the typical seasonal pullback in advertising spend during the holiday period. Lastly, our balance sheet remains strong. In August, we completed the acquisition of Telecare for $17 million in net cash. We ended the quarter with $726 million in cash and equivalents and net debt to trailing adjusted EBITDA was under 1x at quarter end. We continue to believe our strong cash balance, cash flow generation and business position provide us with optionality in the future. With that, let me turn the call back to Chuck.
Charles Divita, CEO
Thanks, Mala. Before we open up for questions, I also wanted to share that we were recently named one of Time Magazine's Top Health Tech Companies of 2025. The list honors the most innovative and impactful organizations transforming health care through technology. Our company was recognized with the top ranking of outstanding in the telehealth and treatment category, reflecting our high marks across the key evaluation areas of financial performance, reputation analysis and online engagement. I couldn't be more proud of our colleagues whose dedication and contributions made this recognition possible. Operator, we're now ready for questions.
Operator, Moderator
Our first question comes from Lisa Gill of JPMorgan.
Lisa Gill, Analyst
First off, Mala, I want to wish you the very best in your next endeavor. It's been great working with you the last, I guess, now 6 years. And on to my question, Chuck, just to really maybe better understand, in the last year or so, you've talked about it's going to take time for these initiatives to gain traction. As we sit here today, I would anticipate that you've had most of your conversations for the 2026 selling season. So really 2 things I want to better understand. One, how are you feeling about things that you're selling for 2026? And one of the things that stood out to me in your prepared comments is you want to participate in the value you create. So should we be assuming that the way that you're contracting is changing in any way, what the plan sponsor is buying in any way? So any color you can give us around that, the timeline of gaining that traction and what you're actually seeing come to fruition for this year's selling season?
Charles Divita, CEO
I appreciate your question. I want to share a few thoughts. As I mentioned earlier, we see 2025 as a year for repositioning in many ways. This involves enhancing our performance through various initiatives and fostering product innovation to strengthen our value proposition. We've focused on making our member interactions more valuable by leveraging our clinical expertise and product range, along with making significant investments. I believe this effort is starting to show results, reflected in the conversations we have with our clients and in the new products and improvements we're launching in areas like virtual care, chronic care, and mental health. While we've discussed Wellbound, there are additional pilots in development that we plan to introduce in 2026. Overall, I feel we've made substantial progress in these areas, and I'm enthusiastic about the new offerings we'll present during the 2026 selling season. Regarding the current selling season, we're actively pursuing several opportunities as we conclude the year. The market conditions align with what we've previously discussed—solid results in employer channels across our solutions, but ongoing challenges within the health plan sector. We've achieved some important wins and service expansions, although there are pressures to navigate as well. Our efforts to innovate and deliver greater value are resonating. The discussions we're having are becoming more strategic, focusing on the specific problems our clients need to address and how Teladoc can meet those needs. Additionally, clients are increasingly looking for not just the value our services deliver but also wanting assurance of performance levels. As we meet those expectations, we believe we should share in the value created. Over time, while we already have contracts reflecting this approach, we anticipate seeing an increase in such arrangements, which will help differentiate us because we are capable of delivering results.
Operator, Moderator
Our next question comes from the line of David Roman of Goldman Sachs.
Unknown Analyst, Analyst
This is Jamie on for David. I wanted to ask about BetterHelp margins. They were 1.6% in the third quarter. Just as you start to gain some traction shifting some of your visits away from cash pay towards the insurance offering, it would seem like that would come with some pricing pressure offset maybe by lower customer acquisition costs. Is that thinking appropriate? And any other dynamics to consider as that process happens? And then just as this transition occurs, it would seem like there could be some lumpiness in overall margin for BetterHelp. I know we have the guidance for the fourth quarter, but could you frame how this process should impact the profitability of that business on a longer-term basis?
Mala Murthy, CFO
Thank you, Jamie. While we won't delve into the specifics of our 2026 BetterHelp margin guidance or any projections, I want to provide some context on our expectations. We have shared guidance for the fourth quarter, and when we consider the BetterHelp business, we can break it down into three areas. The first is our U.S. cash pay segment. The second is our BetterHelp International segment, which is also cash pay. Lastly, we have the insurance segment, which includes UpLift. We are enthusiastic about the growth in our BetterHelp International business, which saw solid high single-digit user growth in the third quarter. Our investments in creating localized experiences in various countries, including France and Germany, are starting to yield positive results in user acquisition and revenue growth. Regarding the BetterHelp insurance segment, based on our earlier remarks, we are seeing promising initial signs of progress. We have launched in seven states and Washington D.C., with plans to expand to more states by the end of this year. By the end of 2026, we aim to be largely national. As for revenue expectations for BetterHelp insurance, we will need to closely monitor margins. However, the metrics we are tracking, such as conversion rates, session numbers, and user growth, are aligning with our expectations. Although it is still early in the process, we are starting to see operating metrics that match our predictions. On the other hand, our U.S. direct-to-consumer cash pay business continues to face challenges, primarily due to strong competition from other market players offering insurance. This environment reinforces our strategy of pivoting BetterHelp to include insurance as an option, and we anticipate this will continue to develop over the coming months. Overall, it’s important to view the progress of BetterHelp through this lens as we move towards the end of 2026.
Operator, Moderator
Our next question comes from the line of Jessica Tassan of Piper Sandler.
Jessica Tassan, Analyst
Mala, thank you for all the help over the last few years. I appreciate it and wish you good luck when you leave us. My question is regarding the BetterHelp margins in the third quarter. Should we understand that current BetterHelp margins are primarily influenced by the customer acquisition cost from direct-to-consumer advertising in relation to commercial reimbursement? Additionally, does this indicate a potential opportunity as we look toward 2026, allowing a reduction in direct-to-consumer ad spending due to full insurance coverage, leading customer acquisition costs to align more closely with those of integrated care members?
Mala Murthy, CFO
Thank you, Jess. BetterHelp is a major player with over 4 million users coming through our platform. The advertising investment we make in BetterHelp is what drives this traffic. Our challenge has been converting those users into paying customers. Progress we're making with insurance will certainly help improve conversion rates over time, leading to greater efficiency in customer acquisition costs. It's important to note that we don't anticipate BetterHelp becoming solely an insurance business; it will always involve a combination of direct-to-consumer and cash pay options. Over time, we expect to achieve efficiencies in our customer acquisition costs, but we will need to see how that develops. In the short term, insurance revenue, as mentioned in our prepared remarks, is estimated to be between $12 million to $14 million, which is relatively small compared to the overall BetterHelp business. Therefore, the economics and margins we currently see are largely based on cash pay customers.
Operator, Moderator
Our next question comes from the line of Daniel Grosslight of Citi.
Daniel Grosslight, Analyst
You've mentioned before that one of the reasons for the Catapult acquisition was to create a larger sales funnel, particularly for your chronic care solutions and P360 enrollment. I am curious if you could provide any qualitative or quantitative data regarding any cross-sales or connections that have developed between Catapult and other areas of the Integrated Care business.
Charles Divita, CEO
I appreciate the question and I would categorize it into three areas. First is the Catapult stand-alone offering, which continues to maintain a strong pipeline and grow as it was prior to our acquisition. Second, as members go through the Catapult experience, we can present and activate additional Teladoc solutions that may be relevant for them. This integration is working well in addressing members' needs. Third, in regard to your main point, the ability to bundle doesn't quite capture it. It's more about collaborating and integrating the offering to engage more lives effectively. This approach is resonating significantly with our customer base, including health plans. The strategic discussions we are having emphasize Catapult's importance, especially for populations that are under-engaged or managing conditions poorly. There are challenges with their access to healthcare delivery. Using Catapult and other methods, we can reach out to people and raise awareness about their conditions. A notable portion of those who come through Catapult are newly diagnosed with conditions that were previously unknown, meaning they were not flagged in health plan claims data or known to the patients themselves. This situation is critical, especially for those with high blood pressure or high sugar levels. Overall, the offering is appealing in three ways: as a stand-alone solution, for cross-engaging members, and as part of Teladoc's broader engagement capabilities.
Operator, Moderator
Our next question comes from the line of Jailendra Singh of Truist.
Eduardo Ron, Analyst
This is Eduardo Ron on for Jailendra. Mala, again, thanks for all the help. Maybe just to follow up on one of the remarks you had about the top of the funnel. I mean, you guys are now live in 7 states in D.C. coming off the pilot. Just curious what share of new sign-ups that you're seeing come in are choosing insurance versus the cash pay in those states? And I guess maybe our main question was just if you could provide an update on your expectations for the 2027 converts and whether you guys anticipate refinancing those or using cash to pay it down.
Mala Murthy, CFO
I don’t want to go into detailed metrics about the conversion we're experiencing right now. Virginia, which was the first state to launch, has shown some level of stability in the data, but it's just one state. We have launched in six other states and D.C. and need some time for these states to establish stability in the conversion and session metrics. As this initiative expands, we plan to provide updates. While it’s early for us to share specific details, we are in line with our initial expectations. Regarding the 2027 convert, you can see the cash and equivalents we have at the end of the third quarter. We will continue to generate free cash flow, which will increase our cash balance. Our balance sheet is strong, and our leverage metrics are well-managed. Our plans for 2027 will depend on our organic and inorganic investments next year. We have received numerous offers for M&A opportunities, and we'll evaluate them. This year, we have demonstrated that our acquisitions—UpLift, Catapult, and Telecare—align with our strategic priorities. We’ve been disciplined in our inorganic investment decisions. Our specific plans regarding the 2027 convert will depend on our activities throughout next year. We are already in the planning stage for options to refinance the 2027 note, considering the rate environment and our internal needs.
Operator, Moderator
Our next question comes from the line of Elizabeth Anderson of Evercore ISI.
Unknown Analyst, Analyst
This is Ayush on for Elizabeth. As we think about 4Q '25 and the setup for 2026, how should we view the spending cadence across both sales and marketing expenses? Should we think that you are planning on typical 4Q spending patterns as we have seen in recent years? And anything to call out in terms of how you guys expect that to impact the growth cadence in 4Q and 1Q '26?
Mala Murthy, CFO
I'll address this by segment. Most of our marketing expenditure is focused on BetterHelp, and we anticipate a decrease in marketing expenses in the fourth quarter of 2025 compared to the third quarter, consistent with previous years. However, the reduction in the fourth quarter of 2025 is expected to be slightly greater than the decline we saw from the third to the fourth quarter for BetterHelp in 2024, though the overall trend will remain the same. Regarding Integrated Care, we decided to allocate a bit more marketing spend to the fourth quarter due to the profitability we achieved in the third quarter, allowing us to ramp up for key client launches and priorities for the next year. Therefore, overall patterns and timing will largely remain consistent. It’s worth noting that last year in the fourth quarter, we had a substantial marketing spend, but this year's investment in Integrated Care marketing won’t see as significant an increase as it did in 2024.
Operator, Moderator
Our next question is from the line of Stan Berenshteyn of Wells Fargo Securities.
Stanislav Berenshteyn, Analyst
I want to first echo my well wishes to Mala in her next role. As for my question, I just want to circle back to Integrated Care. So you mentioned you're seeing continued mix shift towards fee-for-service. But I'm curious, what are you seeing in terms of pricing trends for customers that are renewing their PMPM subscriptions?
Charles Divita, CEO
I think, generally speaking, the pricing is in line. I think it's more of the mix shift that's the factor there. So I haven't seen that much pressure in that area. But obviously, in a highly competitive market, that could be a factor. And if we're expanding services and other things, we take all that into consideration.
Operator, Moderator
Our next question is from the line of Scott Schoenhaus of KeyBanc.
Scott Schoenhaus, Analyst
Congrats, Mala, on your new role and the opportunity. Switching back to BetterHelp, can you provide some insight into what the payers are discussing regarding reimbursement? Other players in the payer space have typically seen low to mid-single-digit increases in reimbursement. What are your conversations like with the payers? Also, as you credential your therapists, could you share your thoughts on the upfront margin challenges that could eventually turn into advantages?
Mala Murthy, CFO
I won't go into specifics about the reimbursement. However, since we announced the UpLift acquisition, we have added several new payers to our business, resulting in millions of additional lives covered by insurance on the BetterHelp side. That's as much as I can share on your first question. Regarding your second question, we believe this will definitely be an insurance business. There are established public benchmarks for insured margins in this area that we will keep an eye on. From a unit economics perspective, we have taken this into account as we pivot strategically toward insurance. Our primary focus is on margins, but the exciting part is that this will help us attract more paying users, increase session volumes, and thus enhance lifetime value. This all translates to revenue growth and profit dollar growth, which we aim to expand in the coming months. As you mentioned, this will require time; we need to see revenue development. We are making careful investments in our backend capabilities and revenue cycle management. We are scaling up relatively quickly and are optimistic about it, but we need revenue to increase throughout next year to achieve the dollar profitability growth we envision.
Charles Divita, CEO
I agree with what Mala said. I want to add that as we expand the credentialed network and the necessary efforts that come with that, we expect the revenue will increase through the addition of users and sessions. BetterHelp has a unique approach, particularly in how they're managing the credentialing process and leveraging their already significant network to enhance the therapist experience by allowing users to express interest and facilitate progress. This strategy should provide us with scale advantages as we increase our revenues. However, it's important to note that expanding the therapist network requires significant investment.
Operator, Moderator
Our next question comes from the line of Brian Tanquilut of Jefferies.
Brian Tanquilut, Analyst
Maybe kind of along the same lines of the last question, but slightly different here. As I think about Integrated Care and seeing how the utilization-based revenue there is starting to grow, are there any conversations happening with payers, whether that's rate driven or just trying to figure out how to manage on their side, the utilization of that service?
Charles Divita, CEO
Yes, that's an excellent question. There are a couple of important points to discuss. Our customer base clearly recognizes and continues to appreciate the value of our virtual capabilities. We have good utilization compared to other players in the market, which helps drive savings, particularly in areas like avoiding emergency room visits. As I mentioned earlier regarding our strategic discussions, these interactions go beyond just visits; they serve as engagement opportunities. As we expand our offerings in 2026, particularly with our 24/7 care service, we will be able to meet more care needs for our members. This includes reducing unnecessary specialist referrals by providing access to specialist consultations, closing care gaps, helping members navigate their healthcare, and conducting follow-ups and lab orders. Clients will find even more value in our approach. We anticipate not only increased chances for activation but also opportunities for shared value through improved outcomes. As we move towards a visit-based model, as I indicated earlier, we're fully committed to this strategy. The encouraging news is that we facilitate millions of visits each year, making us the largest provider in this space, which is a key component of our integrated care strategy. So, all of this supports our virtual care initiatives.
Operator, Moderator
Our next question comes from the line of Kevin Caliendo of UBS.
Jack Senft, Analyst
This is Jack Senft on for Kevin. Mala, I also want to wish you the best of luck in your next endeavor. In your prepared remarks, you guys mentioned that you expect to add necessary capacity to meet demand in the BetterHelp business just as you take it in network. I mean the BetterHelp users have been declining. What does the supply-demand imbalance look like now for the insurance offering? And I guess, like how do you expect that to change going forward? And maybe just a second part to that, like how much supply or I guess, like how many clinicians do you need to add to meet the extended demand there? Just kind of interested to hear how the clinicians are viewing the offering versus staying cash pay. I hope that makes sense.
Charles Divita, CEO
Yes, it made sense. Currently, we are meeting the demand in the states where we've launched. A key criterion before launching is ensuring we have sufficient therapist capacity to maintain a strong user experience and access. We have achieved this, and it is a crucial component of our scaling plan to effectively align the therapist network with demand. Given the interest we've seen and our ability to credential therapists, we are confident in our capacity to keep pace. So far, we've successfully met demand on the direct-to-consumer side, matching therapists with consumers over 90% of the time in less than 48 hours. Since this is a consumer-focused business, whether it involves cash pay or insurance, we aim to uphold a strong Net Promoter Score and user experience. At this moment, this is a vital aspect of our rollout strategy. We only go live in a state when we believe we have the necessary capacity to support demand.
Operator, Moderator
Our next questions are from the line of Jeff Garro of Stephens.
Jeffrey Garro, Analyst
I want to hit on chronic care enrollment trends. Nice to see that rebound sequentially in Q3, but curious how that played out relative to expectations? How we should think about the ability to ramp from here? And any comments you could give on kind of the built-in growth opportunity there versus the need to sell additional solutions into the client base before converting potential members?
Charles Divita, CEO
I'll share a few thoughts, and then Mala can follow up. I want to avoid discussing 2026 in this context. However, we were pleased to witness sequential growth this quarter, which we anticipated and communicated, and we successfully achieved it. We're excited about this development. We have millions of potential recruits in our chronic care programs, and there's significant interest in program bundling. This opens up numerous opportunities with what we've already offered. Additionally, as I mentioned earlier, we're introducing new innovations to the market. We started 2025 mostly with the same product portfolio as in 2024, but now we have several innovations including new connected devices that will be efficient and beneficial, along with enhanced program features. Most importantly, we're focused on developing interventions for rising risk and high-risk populations. Given the unique nature of Teladoc, we believe we can engage those who are struggling to manage their health, understand their needs, and determine if they have an existing care provider. If they do, we aim to complement that care; if not, we intend to intervene to help control their conditions and enhance their health outcomes. This approach will not only improve clinical results, which is essential, but also yield better financial returns for our customers as patients receive improved care. This, in turn, will allow us to activate more engagement strategies with these customers. There are several strategies we can employ to further build on the progress we made in the third quarter. Mala, do you have anything to add?
Mala Murthy, CFO
I believe that was very well articulated. I would like to add that we are also working on integrating all of our data to support our providers at the point of care with the right information and a comprehensive view. This will ensure they are not only assisting the critically ill but also addressing the needs of those who are beginning to show symptoms. When Chuck refers to participating in the value and achieving better ROI, it really hinges on both aspects.
Operator, Moderator
Our next question comes from the line of David Larsen of BTIG.
David Larsen, Analyst
Can you discuss BetterHelp? After one year, what percentage of patients continue with therapy? What can you tell us about continuity of care? It seems to me that when someone uses insurance and does not have to pay out of pocket, they are more likely to remain in therapy. What are your thoughts on this? Additionally, what percentage of BetterHelp members are also part of the integrated care platform? If you are working with employer groups or plans, referring them to BetterHelp could create an immediate opportunity for mental health visits to be covered by insurance. Any insights on this would be appreciated.
Charles Divita, CEO
Yes, I'll make some general comments and see if Mala wants to add anything. We do expect and believe that as people activate their insurance, they will have better access to therapy if they need more. Currently, consumers using BetterHelp are making decisions based on their financial priorities, which often means they haven't entirely addressed their mental health needs and are facing challenges. We perform well in this area, achieving strong clinical outcomes with BetterHelp. However, having the option to use their insurance should be beneficial. As for your second point, our significant connection between integrated care and BetterHelp is the launch of our new Wellbound product. This combines the best of both services to support individuals with various mental health needs and other types of assistance. I believe this is where we'll see BetterHelp effectively contribute to integrated care. Mala, would you like to add anything?
Mala Murthy, CFO
I think that's well put.
Operator, Moderator
That was all the time we have for questions for today's call. So that will be the conclusion for today's call. Thank you for your participation. You may now disconnect your lines.